Question 1

John is planning to go to graduate school in a program that will take three years. John wants to have available $10,000 available each year for his school and living expenses. If he earns 6% on his investments, how much must be deposited at the start of his studies for him to withdraw $10,000 a year for three years?

Accepted Answer

A)   $10,000
B)   $18,390
C)   $26,730
D)   $29,100
E)   $30,000F) A) and D)
G) A) and C)

Question 2

Economics is the study of using money to achieve financial goals.

Accepted Answer

A) True 
 B)False

Question 3

Opportunity costs refer to what a person gives up when making a decision.

Accepted Answer

A) True 
 B)False

Question 4

John Gleason is interested in purchasing a 46" rear projection TV for his living room. John knows that right now the TV will cost approximately $1500. John is not sure he can afford this TV right now but is worried that if he waits, the cost of the TV will rise to $1800. Which type of risk is John worried about?

Accepted Answer

A)   Inflation risk
B)   Interest rate risk
C)   Income risk
D)   Personal risk
E)   Liquidity riskF) A) and E)
G) C) and E)

Question 5

The changing cost of money is referred to as ____________ risk.

Accepted Answer

A)   interest-rate
B)   inflation
C)   economic
D)   trade-off
E)   personalF) B) and E)
G) A) and D)

Question 6

People are commonly overwhelmed by the many influences on personal financial decisions. What are the factors affecting financial planning?

Accepted Answer

The answer of People are commonly overwhelmed by the many...

Question 7

Developing and using a budget is part of the "obtaining" component of financial planning.

Accepted Answer

A) True 
 B)False

Question 8

Higher interest rates can be caused by:

Accepted Answer

A)   a lower money supply.
B)   an increase in the money supply.
C)   a decrease in consumer borrowing.
D)   lower government spending.
E)   increased saving and investing by consumers.F) B) and C)
G) All of the above

Question 9

____________ goals relate to personal relationships, health, and education.

Accepted Answer

A)   Durable-product
B)   Short-term
C)   Consumable-product
D)   Intangible-purchase
E)   IntermediateF) B) and C)
G) A) and B)

Question 10

The financial planning process concludes with efforts to:

Accepted Answer

A)   develop financial goals.
B)   create a financial plan of action.
C)   analyze your current personal and financial situation.
D)   review the financial plan.
E)   review and revise your actions.F) D) and E)
G) B) and C)

Question 11

The uncertainty associated with decision making is referred to as:

Accepted Answer

A)   opportunity cost.
B)   selection of alternatives.
C)   financial goals.
D)   personal values.
E)   risk.F) C) and E)
G) All of the above

Question 12

Using the services of financial institutions will be most evident in your effort to:

Accepted Answer

A)   develop financial goals.
B)   evaluate and revise your actions.
C)   analyze your current personal and financial situation.
D)   implement the financial plan.
E)   create a financial plan of action.F) D) and E)
G) A) and E)

Question 13

The main goal of personal financial planning is:

Accepted Answer

A)   saving and investing for future needs.
B)   reducing a person's tax liability.
C)   achieving personal economic satisfaction.
D)   spending to achieve financial objectives.
E)   saving, spending, and borrowing based on current needs.F) B) and D)
G) B) and C)

Question 14

If you desire your money to double in 6 years, what rate of return would you need to earn?

Accepted Answer

A)   6 percent
B)   8 percent
C)   9 percent
D)   10 percent
E)   12 percentF) B) and E)
G) A) and B)

Question 15

Developing financial goals is the ______ step in the financial planning process.

Accepted Answer

A)   first
B)   second
C)   third
D)   fourth
E)   fifthF) B) and C)
G) D) and E)

Question 16

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

Accepted Answer

The answer of What types of risks are commonly associated...

Question 17

When prices are increasing at a rate of 6 percent, the cost of products would double in about how many years?

Accepted Answer

A)   7.2 years
B)   10 years
C)   6 years
D)   12 years
E)   18 yearsF) A) and C)
G) B) and E)

Question 18

Lenders benefit more than borrowers in times of high inflation.

Accepted Answer

A) True 
 B)False

Question 19

Lynn Roy wants to travel around the world. Lynn Roy has several options she can pursue. She can continue to work full time to earn the money she needs for her trip. She can work part time so that she can still earn some money but have the time necessary to complete her trip. She can take full retirement so that she has all the time necessary to complete her trip. Which step in the financial planning process does this scenario demonstrate?

Accepted Answer

A)   Determining her current financial situation
B)   Developing her financial goals
C)   Identifying alternative courses of action
D)   Evaluating her alternatives
E)   Implementing her financial planF) A) and E)
G) None of the above

Question 20

An example of a personal opportunity cost would be:

Accepted Answer

A)   interest lost by using savings to make a purchase.
B)   higher earnings on savings that must be kept on deposit a minimum of six months.
C)   lost wages due to continuing as a full-time student.
D)   time comparing several brands of personal computers.
E)   having to pay a tax penalty due to not having enough withheld from your monthly salary.F) A) and E)
G) None of the above

Exam 1: Personal Finance Basics and the Time Value of Money

Developing financial goals is the ______ step in the financial planning process.

Correct Answer
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Opportunity costs refer to what a person gives up when making a decision.

Correct Answer
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Lenders benefit more than borrowers in times of high inflation.

Correct Answer
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The changing cost of money is referred to as ____________ risk.

Correct Answer
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The financial planning process concludes with efforts to:

Correct Answer
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Developing and using a budget is part of the "obtaining" component of financial planning.

Correct Answer
verified

The uncertainty associated with decision making is referred to as:

Correct Answer
verified

Correct Answer
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When prices are increasing at a rate of 6 percent, the cost of products would double in about how many years?

Correct Answer
verified

People are commonly overwhelmed by the many influences on personal financial decisions. What are the factors affecting financial planning?

Correct Answer
verified

If you desire your money to double in 6 years, what rate of return would you need to earn?

Correct Answer
verified

Using the services of financial institutions will be most evident in your effort to:

Correct Answer
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An example of a personal opportunity cost would be:

Correct Answer
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Higher interest rates can be caused by:

Correct Answer
verified

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

Correct Answer
verified

The main goal of personal financial planning is:

Correct Answer
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Correct Answer
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Correct Answer
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____________ goals relate to personal relationships, health, and education.

Correct Answer
verified

Economics is the study of using money to achieve financial goals.

Correct Answer
verified

Exam 1: Personal Finance Basics and the Time Value of Money

Developing financial goals is the ______ step in the financial planning process.

Correct AnswerverifiedShow Answer

Opportunity costs refer to what a person gives up when making a decision.

Correct AnswerverifiedShow Answer

Lenders benefit more than borrowers in times of high inflation.

Correct AnswerverifiedShow Answer

The changing cost of money is referred to as ____________ risk.

Correct AnswerverifiedShow Answer

The financial planning process concludes with efforts to:

Correct AnswerverifiedShow Answer

Developing and using a budget is part of the "obtaining" component of financial planning.

Correct AnswerverifiedShow Answer

The uncertainty associated with decision making is referred to as:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When prices are increasing at a rate of 6 percent, the cost of products would double in about how many years?

Correct AnswerverifiedShow Answer

People are commonly overwhelmed by the many influences on personal financial decisions. What are the factors affecting financial planning?

Correct AnswerverifiedShow Answer

If you desire your money to double in 6 years, what rate of return would you need to earn?

Correct AnswerverifiedShow Answer

Using the services of financial institutions will be most evident in your effort to:

Correct AnswerverifiedShow Answer

An example of a personal opportunity cost would be:

Correct AnswerverifiedShow Answer

Higher interest rates can be caused by:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The main goal of personal financial planning is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

____________ goals relate to personal relationships, health, and education.

Correct AnswerverifiedShow Answer

Economics is the study of using money to achieve financial goals.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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