FINC 251 Exam 1
What four common concerns should guide the development of their financial plan? (Select the best answer below.) A. The four principles of flexibility, liquidity, protection, and minimization of retirement years should guide the development of any financial plan. B. The four principles of flexibility, liquidity, protection, and maximization of retirement savings should guide the development of any financial plan. C. The four principles of flexibility, liquidity, protection, and minimization of taxes should guide the development of any financial plan. D. The four principles of flexibility, liquidity, protection, and maximization of taxes should guide the development of any financial plan.
The four principles of flexibility, liquidity, protection, and minimization of taxes should guide the development of any financial plan.
Judge whether the following statement is true or false. "Since the accumulation-of-wealth stage extends into the mid-50s, financing the cost of education could remain important to me should I choose to continue my education or for the education of others who are important to me (spouse, child, etc.). It is not until Stage 2: Approaching Retirement - The Golden Years that the goal of educating children is usually accomplished. During Stage 3: The Retirement Years, estate planning issues are significant, and leaving part of my estate to fund education for my grandchildren could become important."
TRUE
A long term goal that should be important to Jeremiah and Bethany is: (Select the best answer below.) A. saving for retirement. B. paying off any debt they brought to the marriage, reviewing their insurance coverage, and beginning to save for an emergency fund. C. beginning to save for an emergency fund and changing careers. D. calculating how much they will receive from Social Security when they retire, so they can retire as soon as possible
saving for retirement.
Which of the following statements describe a good, or effective, job interview? (Choose all that apply.) A. Gain a thorough knowledge of the company. B. Develop answers to the most common interview questions. C. Find as much information as possible about the interviewer. D. Look and act with professional confidence.
A, B, & D
invest intelligently so that you can avoid the problem of: A. having to work during your "golden years" or having to sell your home because you can no longer afford it. B. never taking that trip to Australia that you once promised yourself. C. choosing poor investment advisors and investment products. D. going to the coin-operated laundry because your washer is beyond repair and you have no emergency funds for buying a new one. .E. paying more taxes than necessary on your income or your investments.
choosing poor investment advisers and investment products.
Why is financial planning, or just plain money management, a challenge for most people? (Choose all that apply.) A. Learning financial planning skills isn't always easy. B. Good financial management can only be achieved by a professional analyst. C. Financial planning is challenging for some people due to a lack of financial knowledge. D. Financial planning skills have to be learned. E. In many families a fear of finance may develop from disagreements about money.
A, C, D, & E
Which of the following are the steps that make up the financial planning process? (Choose all that apply.) A. Developing a plan of action. B. Defining your financial goals. C. Evaluating your financial health. D. Implementing your plan. E. Reviewing your progress, reevaluating, and revising your plan.
All of these steps make up the financial planning process.
Why do "ethical violations end careers"? (Select the best answer below.) A. Although ethical behavior has always been a professional expectation, recent national attention on the "transparency" of corporate and individual actions has increased the importance of ethical behavior. A boost of confidence by the boss or other co-workers in individual professional integrity can end a career. B. Although ethical behavior has always been a professional expectation, recent national attention on the "transparency" of corporate and individual actions has increased the importance of ethical behavior. A loss of confidence by the boss or other co-workers in individual professional integrity can end a career. C. Although ethical behavior has always been a professional expectation, recent national attention on the "transparency" of corporate and individual actions has decreased the importance of ethical behavior. A loss of confidence by the boss or other co-workers in individual professional integrity doesn't usually end a career. D. Recent national attention on the "transparency" of corporate and individual actions means it is harder to hide unethical behavior. Most corporations now have a professional expectation of ethical behavior, which should be upheld unless you are sure no one will find out about your unethical behavior.
Although ethical behavior has always been a professional expectation, recent national attention on the "transparency" of corporate and individual actions has increased the importance of ethical behavior. A loss of confidence by the boss or other co-workers in individual professional integrity can end a career.
________________means that an investor buys several investments, each with a unique level of risk, instead of putting all the money in one investment. _________________ refers to the speed and ease associated with turning noncash assets, such as investments or other tangibles, into cash. (Select the best answer: diversification or liquidity.) For example, the _________of exchange-traded stocks is much higher than collections (e.g., baseball cards, stamps, jewelry, etc.) and _______occurs when an investor chooses a combination of stocks, bonds, and mutual funds.(Select the best answers: diversification or liquidity)
Answers in order of blanks. diversification liquidity liquidity diversification
Financial security comes from balancing what you _____with what you ____to meet the needs of today and tomorrow. Financial planning is critical to making that happen. Principle 4 cautions that the tax implications of earning and investing require Jeremiah and Bethany to consider how to______ the money available after paying their taxes. Principles 5 and 7 parallel the other principles of plan development. _______events in life demand access to cash and ______in the budget, or financial plan, to accommodate those costs. _______insures access to savings without a loss of value. Likewise, planning ahead by purchasing insurance _____provides coverage in the event the loss exceeds what can comfortably be paid from personal savings due to a major (or minor) catastrophe.
Answers in order of blanks. earn spend maximize unexpected flexibility liquidity protection
Short-term, intermediate-term, and long-term goals are similar in that all represent important financial objectives to be accomplished in the future. They differ in time horizon. A __________goal can be accomplished within a 1-year period. An ____________goal may take from 1 year to 10 years to accomplish. A __________goal is one for which it takes more than 10 years to accumulate the money. (short-term, intermediate-term, and long-term goals.) Saving enough money for a down payment on a home is an example of an___________goal, saving enough money for retirement is an example of a ________goal, and paying off a credit card is an example of a ___________goal. (short-term, intermediate-term, and long-term goals.)
Answers in order of blanks. short-term intermediate-term long-term intermediate-term long-term short-term
Young professionals can insure success in their chosen careers by: (Select all that apply.) A. doing whatever it takes, legal or illegal, to get to the top. B. understanding and using the organizational power structure to their benefit, including being loyal and supportive of the boss. C. developing a strong network of people knowledgeable of their character and capabilities. D. updating and maintaining marketable skills, especially those that are not easy to duplicate. .E. building a visible reputation for good work, a willingness to take on new challenges, and an image that fits the organization. F. highlighting their ability to multi-task by talking on the phone with their friends while working.
B, C, D, & E
List five tips for Bethany to keep in mind when preparing for interviews. (Select all that apply.) A. Ask family and friends to call the interviewer to let him/her know you are a good worker. B. Thank the interviewer and immediately send a follow-up letter. .C. Make a good impression by getting a good night's sleep, dressing appropriately, and arriving early. .D. Use the library, the Internet, or other sources to learn about the company. .E. Look and act confident, but relaxed. .F. Find a friend to go to the interview with you for moral support. G. Review the commonly asked questions, prepare and practice a succinct answer for each.
B, C, D, E, & G
There are five basic steps to personal financial planning and their related tasks. Arrange these steps and examples of related tasks in the order of their presence during the financial planning process. A. Develop a plan of action. Develop a budget matching income and projected expenses for the remainder of this academic year. B. Evaluate your financial health. Record all expenses for a month to compare income and expenses. C. Review progress on the plan, reevaluate the plan, and revise the plan or start over with a new one. Based on this year, develop a revised budget for next year based on projected income and expenses. D. Define your financial goals. Pay off credit card(s) by the end of this school term. E. Implement the plan. Reduce expenses in problem areas so amounts do not exceed budgeted projections
B->D->A->E->C
financial planning is critical to _____success as the process is repeated throughout ______ in response to changing financial and life situations. Through financial planning, _____ are accomplished and new ___ are identified. The five-step process begins and ends with ____.
Financial planning is critical to financial success as the process is repeated throughout the life cycle in response to changing financial and life situations. Through financial planning, goals are accomplished and new goals are identified. The five-step process begins and ends with evaluation.
Why is Principle 10 the most important principle? Why is it equally relevant to financial and career planning? (Select the best answer below.) A. Principle 10, "just do it", means that Jeremiah and Bethany must avoid commitments and procrastinate - both critical strategies for success in financial or career planning. Furthermore, making progress toward their goals, their careers and their finances should provide momentum even without committment. B. Principle 10, "just do it", means that Jeremiah and Bethany must make a commitment and avoid procrastination - both critical strategies for success in financial or career planning. Furthermore, positive reinforcement from making progress toward their goals and taking control of their careers and their finances should provide momentum to keep them committed and successful.
Principle 10, "just do it", means that Jeremiah and Bethany must make a commitment and avoid procrastination - both critical strategies for success in financial or career planning. Furthermore, positive reinforcement from making progress toward their goals and taking control of their careers and their finances should provide momentum to keep them committed and successful.
What strategies will you develop as a result of studying personal financial planning?
accumulate wealth for special goals, invest intelligently, save for retirement, use insurance to cover your assets, minimize your tax payments, manage unplanned events.
Use insurance to cover your assets so that you can avoid the problem of? A. having to work during your "golden years" or having to sell your home because you can no longer afford it. B. never taking that trip to Australia that you once promised yourself. C. choosing poor investment advisors and investment products. D. going to the coin-operated laundry because your washer is beyond repair and you have no emergency funds for buying a new one. E. paying more taxes than necessary on your income or your investments.
driving a car with badly dented fender because you couldn't afford the repair bill.
The five steps in the financial planning process are: (Select the best answer below.) A. evaluate your financial goals, define your career goals, develop a plan of action, implement your plan, and finally, review your progress, reevaluate, and revise your plan. B. evaluate your financial health, define your financial goals, develop a plan of action, implement your plan, and finally, review your progress, reevaluate, and revise your plan. C. evaluate your financial health, define your financial goals, develop a plan of action, implement your plan, and finally, review your progress to see that you have achieved all your goals. Then your financial planning process is complete. D. evaluate your financial health, define your career goals, develop a plan of action, obtain a full-time job, and finally, review your progress, reevaluate, and revise your plan
evaluate your financial health, define your financial goals, develop a plan of action, implement your plan, and finally, review your progress, reevaluate, and revise your plan.
Intermediate goals, within the next one to ten years, important to Jeremiah and Bethany might include: (Select the best answer below.) A. beginning to save for an emergency fund and changing careers. B. funds for a home purchase as well as other assets to support their lifestyle. With children come additional financial planning needs for savings, insurance, and estate planning. C. saving for retirement. D. paying off any debt they brought to the marriage, reviewing their insurance coverage, and beginning to save for an emergency fund.
funds for a home purchase as well as other assets to support their lifestyle. With children come additional financial planning needs for savings, insurance, and estate planning.
You should manage unplanned events so that you can avoid the problem of? A. having to work during your "golden years" or having to sell your home because you can no longer afford it. B. never taking that trip to Australia that you once promised yourself. C. choosing poor investment advisors and investment products. D. going to the coin-operated laundry because your washer is beyond repair and you have no emergency funds for buying a new one. E. paying more taxes than necessary on your income or your investments.
going to the coin-operated laundry because your washer is beyond repair and you have no emergency funds for buying a new one.
save for your retirement so that you can avoid the problem of? A. having to work during your "golden years" or having to sell your home because you can no longer afford it. B. never taking that trip to Australia that you once promised yourself. C. choosing poor investment advisors and investment products. D. going to the coin-operated laundry because your washer is beyond repair and you have no emergency funds for buying a new one. E. paying more taxes than necessary on your income or your investments.
having to work during your "golden years" or having to sell your home because you can no longer afford it.
You should accumulate wealth for special goals so that you can avoid the problem of? A. having to work during your "golden years" or having to sell your home because you can no longer afford it. B. never taking that trip to Australia that you once promised yourself. C. choosing poor investment advisors and investment products. D. going to the coin-operated laundry because your washer is beyond repair and you have no emergency funds for buying a new one. .E. paying more taxes than necessary on your income or your investments.
never taking that trip to Australia that you once promised yourself.
minimize your tax payments so that you can avoid the problem of: A. having to work during your "golden years" or having to sell your home because you can no longer afford it. B. never taking that trip to Australia that you once promised yourself. C. choosing poor investment advisors and investment products. D. going to the coin-operated laundry because your washer is beyond repair and you have no emergency funds for buying a new one. E. paying more taxes than necessary on your income or your investments.
paying more taxes than necessary on your income or your investments.
As newlyweds, short-term goals important to Jeremiah and Bethany might include: (Select the best answer below.) A. purchasing a home and starting a college fund for any children they might have. B. paying off any debt they brought to the marriage, reviewing their insurance coverage, and beginning to save for an emergency fund. C. saving for retirement. D. paying off any debt they brought to the marriage and planning their second honeymoon for their 25th anniversary.
paying off any debt they brought to the marriage, reviewing their insurance coverage, and beginning to save for an emergency fund.
