Chapter 1 Personal Finance

Which of the following is NOT a type of risk in personal financial planning: a. Inflation Risk b. Fraud Risk c. Personal Risk d. Interest Rate Risk e. Liquidity Risk

B. Fraud risk

The three main elements that affect financial planing activities does NOT include A. Personal values B. Location C. Life situation D. Economic factors

B. Location

What does the S in SMART (goals) mean? a. short b. specific c. safe d. savings

B. Specific

Personal financial planning is the process of managing your money to achieve A. wealth by middle age. B. personal financial goals. C. the purchase of your dream car/house. D. personal educational goals.

B. personal financial goals

What is the Second step in the financial planning process? A) Develop financial goals B) Identify alternate courses of action C) Evaluate your alternatives D) determine your current financial situation

A) Develop financial goals.

What is a future value? a. money in the future b. the amount to which current savings will grow based on a certain interest rate c. money in the present

B. the amount to which current savings will grow based on a certain interest rate

The first step in the financial planning process is A: Develop your financial goals B: Determine current financial situation C: Create and implement your financial action plan D: Identify alternative courses of action E: Review and revise the financial plan

B: Determine your current financial situation

Financial planning are decisions that are affected by a person's life situations, personal values, and: a. net worth b. investments c. economic factors d. life goals

C. economic factors

The amount to which current savings will increase based on a certain interest rate and a certain time period is called? A. Future Value B. Present Value C. Deflation Rate D. Discount Interest

A. Future Value

Which of the following is NOT an example of financial goal setting? A. Goals should be based on whenever you want to get them done. B .Goals should be specific. C. Goals should indicate the type of action to be taken. D. Goals should be realistic.

A. Goals should be based on whenever you want to get them done.

What is the first step in the financial planning process? A. Develop you financial goals B. Evaluate Alternatives C. Identify alternative courses of action D. Determine current financial situation

D. Determine current financial situation

What is the third step in the financial planning process? A. Determine your current financial situation B. Identify alternative courses of action C. Develop financial goals D. Evaluate your alternatives

B. Identify alternative courses of action

The third step in the Financial Planning Process is: A. develop financial goals B. evaluate your alternatives C. identify alternative courses of action D. review and revise your plan E. start saving money

C. identify alternative courses of action

Saving for four years for a down payment on a house affect how soon you are able to purchase a home. This is an example of: A. an intermediate goal that affects a long-term goal B. a series of short-term goal C. realizing a long-term goal D. a short-term goal followed by an intermediate goal

A. an intermediate goal that affects a long-term goal

What is the first step in the Financial Planning Process? A. Develop your financial goals B. Determine current financial situation C. Review and revise the financial plan D. Identify alternative course of action

B. Determine current financial situation

What is the fourth step in the financial planning process? A. Review and revise your plan B. Develop financial goals C. Evaluate your alternatives D. Determine current financial situation E. Identify alternative courses of action

C. Evaluate your alternatives.

What could you do if you over extend yourself with debt that you cannot pay back? A. Take out another loan to pay back debt. B. Forget that you have the debt. C. File for bankruptcy to restructure the debt to pay it off. D. Leave the country so you can avoid the debt.

C. File for Bankruptcy to restructure the debt to pay it off.

A long term goal is? A. saving for a vaction or paying off debts, will achieve in the next year. B. have a time frame onfe to five years. C. Financial plans that are more than five years off.

C. Financial plans that are more than five years off

What is the formula for interest rate? A. Principal=interest x rate of interest x time B. Time= principal x rate of interest x interest C. Interest= Principal x rate of interest x time D. Interest= Rate of interest x time

C. Interest = Principal x rate of interest time

What is the 6th step in the financial planning process? A. Create and implement your financial action plan B. Identify alternative courses of action C. Review and revise your financial plan D. Determine your financial situation

C. Review and revise the financial plan

Which of the following is not considered a financial risk? A. Liquidy B. Personal C. Settlement D. Inflation

C. Settlement

What are the three different timing of goals involved in financial goal setting? A. Career Goals, Spiritual Goals and Retirement Goals B. Short-term, Financial Goals and Long-term Goals C. Short-term Goals, Intermediate Goals and Long-term Goals D. All of the above

C. Short-term Goals, Intermediate Goals and Long-term Goals

The financial system and daily economic activities influence _________. A. investments B. financial markets C. personal financial decisions D. consumer prices

C. personal financial decisions

The fifth step of the financial planning progress is to create and implement the financial action plan. what is involved in this process? A. Creating a plan of action that evaluates and implements your alternative plans. B. Creating an action plan that decreases overall risk. C. Creating an action plan for banking services. D. Developing an action plan that identifies ways to achieve your financial goals.

D. Developing an action plan that identifies ways to achieve your financial goals.

Which is NOT considered a personal opportunity cost? A. Time B. Effort C. Health D. Investments

D. Investments

The first step in the financial planning process is: A) creating financial goals B) evaluating the effectiveness of the financial planning process C) determining your financial position compared with others to provide a benchmark to success D) determining your financial situation regarding income, savings, living expenses, and debts

D. determining your financial situation regarding income, savings, living expenses, and debts

You should analyze your financial values and goals several times a year by doing all except: A. reflecting on your financial prioritiesB. identifying your thought and feelings about moneyC. considering the economic impact on your goalsD. taking a large monetary sum to invest into new, unresearched stock market optionsE. reflecting on whether your feelings about money are based of your personal knowledge or a result of peer pressure

taking a large monetary sum to invest into new, unresearched stock market options