Question 1

The rising or falling of prices that causes changes in buying power is referred to as ____________ risk.

Accepted Answer

A)   interest-rate
B)   inflation
C)   income
D)   personal
E)   liquidity

Question 2

If Melinda Miller estimates that her $100 weekly grocery bill will increase at an annual inflation rate of 4%, what should her weekly grocery bill be in 3 years?

Accepted Answer

A)  $100.00
B)  $112.00
C)  $112.50
D)  $114.00
E)  $121.60

Question 3

As borrowing by consumers and businesses increases, interest rates are likely to decrease.

Accepted Answer

A) True 
 B)False

Question 4

Annual earnings on a $500 Certificate of Deposit earning 3% would be

Accepted Answer

A)   $5.00
B)   $15.00
C)   $25.00
D)   $30.00
E)   $500.00

Question 5

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.

Question 6

The problem of bankruptcy is associated with overuse and misuse of credit in the ______________ component of financial planning.

Accepted Answer

A)   Sharing
B)   Savings
C)   Obtaining
D)   Borrowing
E)   Protecting

Question 7

The difficulty of converting savings and investments to cash is referred to as ____________ risk.

Accepted Answer

A)   interest-rate
B)   inflation
C)   income
D)   personal
E)   liquidity

Question 8

The tangible and intangible factors that create a less than desirable situation is referred to as ____________ risk.

Accepted Answer

A)   interest-rate
B)   inflation
C)   income
D)   liquidity
E)   personal

Question 9

The consumer price index measures:

Accepted Answer

A)   The prices of goods and services in the United States
B)   The prices of goods and services in Bolivia
C)   The average change in prices of goods and services of urban consumers
D)   The change in prices of goods and services around the world
E)   None of the above

Question 10

There are only 3 possible courses of action when developing alternatives for decision making.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following goals would be the easiest to implement and measure?

Accepted Answer

A)   Put money into an investment fund.
B)   Reduce credit card debt.
C)   Save funds for an annual vacation.
D)   Save $100 a month to create a $2,400 emergency fund in 2 years.
E)   Spend less each month.

Question 12

If a $10,000 investment earns interest of $500 in one year, what is its rate of return?

Accepted Answer

A)   .5 percent
B)   10 percent
C)   50 percent
D)   75 percent
E)   100 percent

Question 13

If inflation is expected to be 8 percent, how long will it take for prices to double?

Accepted Answer

A)   6 years
B)   7 years
C)   9 years
D)   12 years
E)   18 years

Question 14

There are only 3 methods of calculating time value of money.

Accepted Answer

A) True 
 B)False

Question 15

Robert Brown is interested in attending a concert next weekend. Unfortunately, he is scheduled to work. If he finds a substitute for his shift so he can attend the concert, what kind of cost is he incurring?

Accepted Answer

A)   Personal opportunity cost relating to health
B)   Personal opportunity cost relating to time
C)   Personal opportunity cost relating to abilities
D)   Personal opportunity cost relating to knowledge
E)   Unexpected personal opportunity cost

Question 16

Future value computations are often referred to as

Accepted Answer

A)   Discounting.
B)   Present value.
C)   Compounding.
D)   Simple interest.
E)   An annuity.

Question 17

Which of the following intermediate goals is stated most clearly using the SMART approach?

Accepted Answer

A)   Buy a car for less than $15,000 within 6 months
B)   Retire in 10 years at age 65 with $2,000,000 in my 401(k)  account
C)   Purchase a house with a mortgage no greater than $150,000 within 5 years
D)   Set up an emergency fund
E)   Invest $50 per month for the next 12 years for my nephew's college fund

Question 18

Increased consumer saving and investing is likely to be accompanied by

Accepted Answer

A)   Lower union wages
B)   Higher interest rates
C)   Lower production costs
D)   Lower interest rates
E)   Higher inflation

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Patrick Guitman recently graduated from college with $20,000 in student loans and $5,000 in credit card debt. He usually makes minimum payments on his debt and he has been late with three payments in the last year. He wants to buy a new car but was told that his interest rate on a loan would be very high. What is the most likely reason this might be so?

Accepted Answer

A)   General interest rates are very low
B)   His credit rating is poor which results in a higher interest rate
C)   He already has a student loan outstanding
D)   Recent graduates are not allowed to have more than $25,000 in debt outstanding
E)   Interest rates must be tied to the CPI

Exam 1: Personal Financial Planning in Action

If inflation is expected to be 8 percent, how long will it take for prices to double?

Correct Answer
verified

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

Correct Answer
verified

Which of the following intermediate goals is stated most clearly using the SMART approach?

Correct Answer
verified

There are only 3 possible courses of action when developing alternatives for decision making.

Correct Answer
verified

There are only 3 methods of calculating time value of money.

Correct Answer
verified

An example of a personal opportunity cost would be

Correct Answer
verified

The tangible and intangible factors that create a less than desirable situation is referred to as ____________ risk.

Correct Answer
verified

The consumer price index measures:

Correct Answer
verified

If Melinda Miller estimates that her $100 weekly grocery bill will increase at an annual inflation rate of 4%, what should her weekly grocery bill be in 3 years?

Correct Answer
verified

Which of the following goals would be the easiest to implement and measure?

Correct Answer
verified

The problem of bankruptcy is associated with overuse and misuse of credit in the ______________ component of financial planning.

Correct Answer
verified

Annual earnings on a $500 Certificate of Deposit earning 3% would be

Correct Answer
verified

The difficulty of converting savings and investments to cash is referred to as ____________ risk.

Correct Answer
verified

If a $10,000 investment earns interest of $500 in one year, what is its rate of return?

Correct Answer
verified

Future value computations are often referred to as

Correct Answer
verified

Correct Answer
verified

Robert Brown is interested in attending a concert next weekend. Unfortunately, he is scheduled to work. If he finds a substitute for his shift so he can attend the concert, what kind of cost is he incurring?

Correct Answer
verified

As borrowing by consumers and businesses increases, interest rates are likely to decrease.

Correct Answer
verified

The rising or falling of prices that causes changes in buying power is referred to as ____________ risk.

Correct Answer
verified

Increased consumer saving and investing is likely to be accompanied by

Correct Answer
verified

Exam 1: Personal Financial Planning in Action

If inflation is expected to be 8 percent, how long will it take for prices to double?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following intermediate goals is stated most clearly using the SMART approach?

Correct AnswerverifiedShow Answer

There are only 3 possible courses of action when developing alternatives for decision making.

Correct AnswerverifiedShow Answer

There are only 3 methods of calculating time value of money.

Correct AnswerverifiedShow Answer

An example of a personal opportunity cost would be

Correct AnswerverifiedShow Answer

The tangible and intangible factors that create a less than desirable situation is referred to as ____________ risk.

Correct AnswerverifiedShow Answer

The consumer price index measures:

Correct AnswerverifiedShow Answer

If Melinda Miller estimates that her $100 weekly grocery bill will increase at an annual inflation rate of 4%, what should her weekly grocery bill be in 3 years?

Correct AnswerverifiedShow Answer

Which of the following goals would be the easiest to implement and measure?

Correct AnswerverifiedShow Answer

The problem of bankruptcy is associated with overuse and misuse of credit in the ______________ component of financial planning.

Correct AnswerverifiedShow Answer

Annual earnings on a $500 Certificate of Deposit earning 3% would be

Correct AnswerverifiedShow Answer

The difficulty of converting savings and investments to cash is referred to as ____________ risk.

Correct AnswerverifiedShow Answer

If a $10,000 investment earns interest of $500 in one year, what is its rate of return?

Correct AnswerverifiedShow Answer

Future value computations are often referred to as

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Robert Brown is interested in attending a concert next weekend. Unfortunately, he is scheduled to work. If he finds a substitute for his shift so he can attend the concert, what kind of cost is he incurring?

Correct AnswerverifiedShow Answer

As borrowing by consumers and businesses increases, interest rates are likely to decrease.

Correct AnswerverifiedShow Answer

The rising or falling of prices that causes changes in buying power is referred to as ____________ risk.

Correct AnswerverifiedShow Answer

Increased consumer saving and investing is likely to be accompanied by

Correct AnswerverifiedShow Answer

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