Question 1

Higher inflation usually results in lower interest rates.

Accepted Answer

A) True 
 B)False

Question 2

What types of economic conditions are commonly associated with personal financial decisions? How can these risks be evaluated and minimized to reduce personal and financial difficulties?

Accepted Answer

Common risks are inflation, changing int...

Question 3

A decrease in the demand for a product or service may result in a decrease in wages for people producing that item.

Accepted Answer

A) True 
 B)False

Question 4

Reduced funds available for investment in our economy could result from

Accepted Answer

A)   expanded savings by consumers.
B)   higher imports than exports.
C)   reduced spending for consumer goods.
D)   higher exports than imports.
E)   higher opportunity costs.

Question 5

Intermediate goals are usually achieved within the next year or so.

Accepted Answer

A) True 
 B)False

Question 6

Future value calculations consider:

Accepted Answer

A)   compounding.
B)   add-on interest.
C)   discounting
D)   simple interest.
E)   an annuity.

Question 7

Inflation reduces the buying power of money.

Accepted Answer

A) True 
 B)False

Question 8

Higher consumer prices are likely to be accompanied by:

Accepted Answer

A)   lower union wages.
B)   lower interest rates.
C)   lower production costs.
D)   higher interest rates.
E)   higher exports.

Question 9

Your goal is to pay down your student loan in 3 years. The balance today is $9,434. If you are charged a rate of 9%, compounded monthly, what will be your monthly, end-of-period payment?

Accepted Answer

A)   $527
B)   $406
C)   $300
D)   $262
E)   $193

Question 10

A higher opportunity cost implies a lower current value.

Accepted Answer

A) True 
 B)False

Question 11

Hope Appleton is trying to decide whether to keep her money in a savings account or in a mutual fund. What would you tell her to help her analyze her decision?

Accepted Answer

Hope should consider the risk and opport...

Question 12

Increased consumer spending will usually cause:

Accepted Answer

A)   lower consumer prices.
B)   reduced employment levels.
C)   lower tax revenues.
D)   higher employment levels.
E)   lower interest rates.

Question 13

Liquidity is the ability to convert financial resources into usable cash with ease.

Accepted Answer

A) True 
 B)False

Question 14

A question associated with the saving component of financial planning is:

Accepted Answer

A)   Is your will current?
B)   Do you have an adequate emergency fund?
C)   Is your investment program appropriate to your income and tax situation?
D)   Do you have a realistic budget for your current financial situation?
E)   Are your transportation expenses minimized through careful planning?

Question 15

The problem of bankruptcy is associated with poor decisions in the ______________ component of financial planning.

Accepted Answer

A)   financial goals
B)   saving
C)   planning
D)   restructuring debt
E)   liquidity

Question 16

When prices are increasing at a rate of 6 percent, the cost of products would double in about 12 years.

Accepted Answer

A) True 
 B)False

Question 17

The major function of a financial plan is to:

Accepted Answer

A)   reduce taxes.
B)   increase savings.
C)   achieve financial goals.
D)   improve your credit rating.
E)   obtain adequate insurance protection.

Question 18

The time value of money refers to:

Accepted Answer

A)   personal opportunity costs such as time lost on an activity.
B)   financial decisions that require borrowing funds from a financial institution.
C)   changes in interest rates due to changes in the supply and demand for money in our economy.
D)   increases in an amount of money as a result of interest.
E)   changing demographic trends in our society.

Question 19

Briefly explain three types of financial and economic risks that tend to affect everyone.

Accepted Answer

Interest rate risk: Changing interest ra...

Question 20

Higher prices are likely to result from:

Accepted Answer

A)   increased spending by consumers.
B)   increased production by business.
C)   lower interest rates.
D)   lower demand by consumers
E)   an increase in the supply of a product.

Exam 1: Personal Financial Planning: An Introduction

Higher prices are likely to result from:

Correct AnswerverifiedShow Answer

A decrease in the demand for a product or service may result in a decrease in wages for people producing that item.

Correct AnswerverifiedShow Answer

Briefly explain three types of financial and economic risks that tend to affect everyone.

Correct AnswerverifiedInterest rate risk: Changing interest ra...View AnswerShow Answer

Higher consumer prices are likely to be accompanied by:

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Liquidity is the ability to convert financial resources into usable cash with ease.

Correct AnswerverifiedShow Answer

Intermediate goals are usually achieved within the next year or so.

Correct AnswerverifiedShow Answer

Reduced funds available for investment in our economy could result from

Correct AnswerverifiedShow Answer

The major function of a financial plan is to:

Correct AnswerverifiedShow Answer

A higher opportunity cost implies a lower current value.

Correct AnswerverifiedShow Answer

What types of economic conditions are commonly associated with personal financial decisions? How can these risks be evaluated and minimized to reduce personal and financial difficulties?

Correct AnswerverifiedCommon risks are inflation, changing int...View AnswerShow Answer

A question associated with the saving component of financial planning is:

Correct AnswerverifiedShow Answer

The problem of bankruptcy is associated with poor decisions in the ______________ component of financial planning.

Correct AnswerverifiedShow Answer

The time value of money refers to:

Correct AnswerverifiedShow Answer

Increased consumer spending will usually cause:

Correct AnswerverifiedShow Answer

Higher inflation usually results in lower interest rates.

Correct AnswerverifiedShow Answer

Your goal is to pay down your student loan in 3 years. The balance today is $9,434. If you are charged a rate of 9%, compounded monthly, what will be your monthly, end-of-period payment?

Correct AnswerverifiedShow Answer

Future value calculations consider:

Correct AnswerverifiedShow Answer

Hope Appleton is trying to decide whether to keep her money in a savings account or in a mutual fund. What would you tell her to help her analyze her decision?

Correct AnswerverifiedHope should consider the risk and opport...View AnswerShow Answer

Inflation reduces the buying power of money.

Correct AnswerverifiedShow Answer

When prices are increasing at a rate of 6 percent, the cost of products would double in about 12 years.

Correct AnswerverifiedShow Answer

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Interest rate risk: Changing interest ra...
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Common risks are inflation, changing int...
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Hope should consider the risk and opport...
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Correct Answer
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Correct Answer
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