Chapter 4

A financial planner who profits from the investments a client chooses is more likely to recommend investment products that best meet the needs of the client.

False

Financial goals should be set before personal goals, because your personal goals will be dependent on them.

False

If you spend less money on an item than you planned to spend, this is an unfavorable variance in your budget analysis.

False

One advantage of manual records of financial information is that they do not require protection from unauthorized uses and users.

False

Savings should be added to income when balancing the budget.

False

Savings should be included in your list of cash inflows when creating the personal cash flow statement.

False

Your wealth can be measured using the personal cash flow statement.

False

A personal net worth statement shows a person's cash inflows and cash outflows for a period of time.

Fasle

Which of the following is a common Internet scam in which an email is sent from someone posing as your bank or other legitimate business asking for personal information?

Phishing

Goals you wish to achieve in the next two to five years are

Short term goals

A goal you expect to achieve by next year would be classified as a short-term goal.

True

Although people's financial resources are limited, their wants and needs are unlimited and growing.

True

Because most people do not have enough resources to meet all their needs and wants, they must make choices.

True

Benchmarks may consist of steps or specific actions to take.

True

The amount owed on your credit card is an example of a liability.

True

When preparing a personal budget, you should plan to put money into savings before you consider other expenses.

True

With every buying decision, there is a tradeoff and an opportunity cost.

True

A utility bill is an example of

a variable expense

Your net worth can be computed as

assets minus liabilities

Standards against which progress is measured in reaching goals are called

benchmarks