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Exam 1: The Financial Planning Process

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Question 21

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Integrity of the profession is essential to its long-term success. Which professional is not required to pass a comprehensive exam and adhere to a rigorous code of ethics?

A) Certified Public Accountants (CPAs)
B) Attorneys
C) Certified Financial Planner (CFP®)
D) All these professionals are required.

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Question 22

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The financial planning process includes five steps. Four of the steps are listed next: .Analyze your current financial status. .Implement your financial plan. .Monitor your progress and revise your plan as needed. .Organize your financial information and set short-term and long-term goals. What is the missing step?

A) Identify and evaluate alternative strategies for meeting your goals.
B) Understand the personal financial planning process.
C) Acquire the necessary decision-making skills and tools.
D) Build wealth and protection against emergencies.

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Question 23

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Desiree currently works as a manager of an electronics store earning an annual salary of $50,000. She noticed an internal job opening for a regional manager that pays $100,000 salary, but an MBA is required for consideration. The cost for a full-time MBA program in two years is $60,000. What is her opportunity cost for attending graduate school, without consideration for time value of money?

In deciding whether to attend graduate school full-time, estimating your lost earnings while you are in school is an example of

The Federal Reserve often __________ the __________ rate to stimulate the economy.

Your goals will differ depending on your stage in the life cycle and your family makeup. Which is not an appropriate short-term savings goal?

You are calculating your potential return on your stock investments. If you calculate different possible returns based on assuming a variety of interest rates and stock market conditions, this is an example of

Holly is uncomfortable with change. She spends a lot of time thinking over alternatives, even for relatively inconsequential decisions. She is a typical

Henry pays his financial planner a one percent fee based on the value of the assets in his investment account. He noticed on his year-end statement that the firm rebated a $1,200 credit to his account. His planner said that was because the firm made $1,200 in dealer concessions from an IPO that he purchased. What type of fee arrangement is this?

You have estimated that, if your investments earn 10 percent per year, you can retire at age 65. If you reestimate your retirement date assuming a lower investment return, you are using

Which is not a necessary activity in securing your basic needs?

Rosa graduated at the top of her high school class, and has set the following goal as part of her financial plan: "graduate from college with a B. S. in Business Management." Which aspect of the SMART goal model is missing from her goal?

When the consumer price index (CPI) increases,

The federal funds rate is the rate that

Personal finance is a specialized area of study that focuses

An expansion is a phase in the economic cycle that is characterized by _____ business investment and ______ employment opportunities.

For many households, repayment of high-interest debt is an important financial goal. Using the following table, estimate the payments necessary to pay off $2,500 in credit card debt in two years at 15% APR.

Your salary increased from $20,000 to $30,000 in five years. What is the percentage increase?

Which is not a necessary activity in building and protecting wealth?

Which type of decision maker is most likely to have trouble sticking to a budget and, as a result, may fall into debt?