Straighterline Personal Finance Topic 1 Quiz

Randy Hill wants to retire in 40 years with $2,000,000. If he can earn 10% per year on his investments, how much does he need to deposit each year to reach his goal? a. $4,518 b. $5,000 c. $44,190 d. $50,000 e. None of the above

a. $4,518

Present value computations are also referred to as Select one: a. Discounting. b. Add-on interest. c. Compounding. d. Simple interest. e. An annuity.

a. Discounting

Which of the following would increase the interest rate for a loan? a. Poor credit rating b. Higher down payment c. Constant interest rates d. Lower consumer prices e. Short time to maturity

a. Poor credit rating

The step in the personal financial planning process that follows "Create and implement your financial action plan" is: a. Review and revise your plan b. Identify alternative courses of action c. Determine your current financial situation d. Evaluate your alternatives e. Develop your financial goals

a. Review and revise your plan

The changing cost of money is referred to as ____________ risk. Select one: a. interest-rate b. inflation c. economic d. trade-off e. personal

a. interest-rate

The amount of interest earned on a $2,000 Certificate of Deposit earning 3.15% for one year would be Select one: a. $31 b. $63 c. $126 d. $2000 e. $2630

b. $63

Rob Redbird is interested in attending a concert next weekend; unfortunately, he needs to study for school. His decision to use his time to go to the concert instead of studying is a(n) ________________ cost. a. Fixed b. Opportunity c. Unexpected d. Unavoidable e. Tangible

b. Opportunity

The Rule of 72 is: a. A tool to determine the number of years until retirement for an employee b. Used to estimate how long it takes for prices to double using a given annual inflation rate c. The legal code for requiring companies to provide a match on retirement savings d. Used to calculate interest rates for savings e. The number of steps required to complete a financial plan

b. Used to estimate how long it takes for prices to double using a given annual inflation rate

The rising of prices that causes changes in buying power is referred to as ____________ risk. a. interest-rate b. inflation c. economic d. trade-off e. personal

b. inflation

Future value computations are also referred to as a. Discounting. b. Add-on interest. c. Compounding. d. Simple interest. e. An annuity.

c. Compounding.

The consumer price index reflects: a. The prices of products and services in the United States b. The prices of products and services around the world c. The change in prices of products and services of urban consumers d. The change in prices of products and services around the world e. None of the above

c. The change in prices of products and services of urban consumers

The loss of a job is referred to as ____________ risk. Select one: a. interest-rate b. inflation c. income d. trade-off e. personal

c. income

Place the following steps for a personal financial plan in the proper order: 1. Review and revise your plan 2. Identify alternative courses of action 3. Create and implement your financial action plan 4. Determine your current financial situation 5. Evaluate your alternatives 6. Develop your financial goals Select one: a. 6, 1, 2, 5, 3, 4 b. 4, 2, 6, 5, 3, 1 c. 3, 6, 4, 2, 5, 1 d. 4, 6, 2, 5, 3, 1 e. 6, 2, 5, 4, 1, 3

d. 4, 6, 2, 5, 3, 1

The stages that an individual goes through based on stages in the family and financial needs is called the Select one: a. Financial planning process b. Budgeting procedure c. Personal economic cycle d. Adult life cycle e. Tax planning process

d. Adult life cycle

To calculate the time value of money, we need to consider: a. Principal b. Annual interest rate. c. Length of time the money is invested. d. All of the above. e. None of the above

d. All of the above

The time value of money refers to 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 earned. e. Changing demographic trends in our society.

d. Increases in an amount of money as a result of interest earned.

Sally Smith's friends have told her that they think she should consider a visit to a personal financial planner. Why do you think her friends made the suggestion? a. Sally usually saves 10 percent of her paycheck for long-term goals. b. Sally has no credit card debt. c. Sally tracks her investments and makes changes to her allocations once per year. d. Sally plans to quit her job and volunteer for local organizations. e. Sally has used a budget for years.

d. Sally plans to quit her job and volunteer for local organizations.

Which of the following goals would be the easiest to implement and measure? a. Invest $2,000 a year for retirement. b. Reduce our debt payments. c. Save funds for an annual vacation. d. Save $100 a month to create a $4,000 emergency fund. e. Spend less each month.

d. Save $100 a month to create a $4,000 emergency fund.

The uncertainty associated with decision making is referred to as: a. Informational sources. b. Selection of alternatives. c. Financial goals. d. Personal values. e. Risk.

e. Risk

The tangible and intangible factors that create a less than desirable situation is referred to as ____________ risk. a. interest-rate b. inflation c. economic d. trade-off e. personal

e. personal