Test Bank for PFIN 7th Edition by Billingsley A+

a.

True

b.

False

ANSWER:

False

RATIONALE:

Wealth is commonly viewed as a key determinant of standard of living. See 1-1: The Rewards of Sound Financial Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Identify the benefits of using personal financial planning techniques to manage your finances.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

True

RATIONALE:

Personal financial planning helps in improving your standard of living by allowing you to gain more enjoyment from your income. See 1-1: The Rewards of Sound Financial Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Identify the benefits of using personal financial planning techniques to manage your finances.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

True

RATIONALE:

Standard of living is defined as the necessities, comforts, and luxuries enjoyed or desired by an individual or family. See 1-1: The Rewards of Sound Financial Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Identify the benefits of using personal financial planning techniques to manage your finances.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

False

RATIONALE:

Our quality of life is closely tied to our standard of living. Material items include a house, car, and clothing. See 1-1: The Rewards of Sound Financial Planning.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Identify the benefits of using personal financial planning techniques to manage your finances.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

True

RATIONALE:

The best way to achieve financial objectives is through personal financial planning, which helps define your financial goals and develop appropriate strategies to reach them. See 1-1: The Rewards of Sound Financial Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Analyzing

REFERENCES:

Identify the benefits of using personal financial planning techniques to manage your finances.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/27/2018 4:56 PM

a.

True

b.

False

ANSWER:

True

RATIONALE:

Two people with significantly different incomes could have the same average propensity to consume because of differences in their standards of living. See 1-1: The Rewards of Sound Financial Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Understanding

REFERENCES:

Identify the benefits of using personal financial planning techniques to manage your finances.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

False

RATIONALE:

Your average propensity to consume is the percentage of each dollar of income, on average, that is spent for current needs rather than savings. Mike’s propensity to consume = $30,000 ÷ $45,000 = 67%. See 1-1: The Rewards of Sound Financial Planning.

POINTS:

1

DIFFICULTY:

Challenging
Bloom's: Applying

REFERENCES:

Identify the benefits of using personal financial planning techniques to manage your finances.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial Planning

ACCREDITING STANDARDS:

22785893 - Reflective Thinking

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

False

RATIONALE:

Tangible assets are either held for consumption or investment purposes. See 1-1: The Rewards of Sound Financial Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Identify the benefits of using personal financial planning techniques to manage your finances.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

False

RATIONALE:

It is highly unlikely that you can change your partner’s style, but you can work out your differences through financial planning. See 1-2: The Personal Financial Planning Process.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Describe the personal financial planning process and define your goals.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.02 - 1-2 The Personal Financial Planning Process

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

False

RATIONALE:

Everyone—including recent college graduates, young married couples, and others—needs to develop a personal financial plan. Whether you have a lot of money or not enough, you need personal financial planning. See 1-2: The Personal Financial Planning Process.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Describe the personal financial planning process and define your goals.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.02 - 1-2 The Personal Financial Planning Process

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

False

RATIONALE:

A financial plan cannot be done once for a lifetime. It has to be redefined and revised as personal circumstances change. See 1-2: The Personal Financial Planning Process.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Describe the personal financial planning process and define your goals.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.02 - 1-2 The Personal Financial Planning Process

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

True

RATIONALE:

Short-term financial goals are set each year and cover a 12-month period. See 1-2: The Personal Financial Planning Process.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Applying

REFERENCES:

Describe the personal financial planning process and define your goals.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.02 - 1-2 The Personal Financial Planning Process

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

True

RATIONALE:

Short-term planning should also include establishing an emergency fund with at least 6 months’ worth of income. See 1-2: The Personal Financial Planning Process.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Describe the personal financial planning process and define your goals.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.02 - 1-2 The Personal Financial Planning Process

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

True

RATIONALE:

In addition to discussing your financial goals and attitudes toward money with your partner, you must allocate responsibility for money management tasks and decisions. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

True

RATIONALE:

Managing employee benefit plans and coordinating them with other financial plans is an important part of the overall personal financial planning process. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

False

RATIONALE:

Estate planning involves planning how to pass personal wealth to heirs in the most effective manner. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

True

RATIONALE:

A longer wait to begin retirement planning usually results in a substantially reduced level of retirement income. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

True

RATIONALE:

Tax plans are closely tied to investment plans and will often specify certain investment strategies. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

False

RATIONALE:

Most people tend to be more cautious about their expenditures during a recession or crisis. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

False

RATIONALE:

You should always spend less than what you earn so that the excess amount can be saved for the future. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

False

RATIONALE:

Commission-based financial planners earn commissions on the financial products they sell. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

False

RATIONALE:

Fee-only financial planners charge fees based on the complexity of the financial plan they prepare. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

True

RATIONALE:

While you’re still working, you should be managing your finances to attain those goals you feel are important after you retire. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

False

RATIONALE:

Recessions and financial crises affect everyone. They affect some people directly and severely through job loss; some people are marginally hurt by reduced income, while some are not directly hurt. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

True

RATIONALE:

Financial planning takes place in a dynamic economic environment created by the actions of the government, business, and consumers. See 1-4: The Planning Environment.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Examine the economic environment’s influence on personal financial planning.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.04 - 1-4 The Planning Environment

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

False

RATIONALE:

Your purchase, saving, investment, and retirement plans and decisions are influenced by both the present and future states of the economy. See 1-4: The Planning Environment.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Examine the economic environment’s influence on personal financial planning.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.04 - 1-4 The Planning Environment

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

False

RATIONALE:

Government, business, and consumers are the major players in our economic system. They interact with one another to produce the environment in which we carry out our financial plans. See 1-4: The Planning Environment.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Examine the economic environment’s influence on personal financial planning.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.04 - 1-4 The Planning Environment

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

False

RATIONALE:

Living costs vary considerably throughout the country. See 1-5: What Determines Your Personal Income?

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Evaluate the impact of age, education, and geographic location on personal income.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.05 - 1-5 What Determines Your Personal Income?

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

True

RATIONALE:

Geographic factors affect your earning power. Factors like economic conditions, labor supply, and industrial base affect salary levels in different areas. See 1-5: What Determines Your Personal Income?

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Evaluate the impact of age, education, and geographic location on personal income.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.05 - 1-5 What Determines Your Personal Income?

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

True

RATIONALE:

Income largely depends on factors like age, marital status, education, geographic location, and choice of career. See 1-5: What Determines Your Personal Income?

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Evaluate the impact of age, education, and geographic location on personal income.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.05 - 1-5 What Determines Your Personal Income?

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

False

RATIONALE:

Career planning and personal financial planning are closely related activities, so the decisions you make in one area affect the other. See 1-5: What Determines Your Personal Income?

POINTS:

1

DIFFICULTY:

Bloom's: Remembering
Easy

REFERENCES:

Understand the importance of career choices and their relationship to personal financial planning.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.06 - 1-5 What Determines Your Personal Income?

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

True

b.

False

ANSWER:

True

RATIONALE:

Like financial planning, career planning is a lifelong process that includes short- and long-term goals. See 1-5: What Determines Your Personal Income?

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Understand the importance of career choices and their relationship to personal financial planning.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.06 - 1-5 What Determines Your Personal Income?

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/27/2018 5:15 PM

a.

True

b.

False

ANSWER:

False

RATIONALE:

Career plans are similar to financial plans, and they have to be reviewed and revised as the situation changes. See 1-5: What Determines Your Personal Income?

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Understand the importance of career choices and their relationship to personal financial planning.

QUESTION TYPE:

True / False

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.06 - 1-5 What Determines Your Personal Income?

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

controls inflation.

b.

limits consumption.

c.

reduces social disparity.

d.

results in an improved standard of living.

e.

reduces economic differences among individuals.

ANSWER:

d

RATIONALE:

Personal financial management is important because it helps in achieving financial goals and developing appropriate strategies to reach them. It also brings rewards that include greater flexibility, an improved standard of living, wise spending habits, and increased wealth. See 1-1: The Rewards of Sound Financial Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Identify the benefits of using personal financial planning techniques to manage your finances.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

control inflation.

b.

have flexibility to handle job loss.

c.

control unemployment rates.

d.

obtain a Social Security number.

e.

decrease national debt.

ANSWER:

b

RATIONALE:

Financial planning helps us spend wisely and brings rewards that include greater flexibility to handle such contingencies as illness, job loss, and even financial crises. See 1-1: The Rewards of Sound Financial Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Identify the benefits of using personal financial planning techniques to manage your finances.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

political orientation.

b.

charitable contributions.

c.

pollution control efforts.

d.

standard of living.

e.

educational qualifications.

ANSWER:

d

RATIONALE:

The key determinant of quality of life is wealth. An individual’s quality of life is closely tied to his or her standard of living. See 1-1: The Rewards of Sound Financial Planning.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Identify the benefits of using personal financial planning techniques to manage your finances.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

tax bill.

b.

financial goal.

c.

wealth.

d.

motivation.

e.

growth potential.

ANSWER:

c

RATIONALE:

A key determinant of the quality of life of an individual is his or her wealth. Wealth consists of financial and tangible assets. See 1-1: The Rewards of Sound Financial Planning.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Identify the benefits of using personal financial planning techniques to manage your finances.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

the dollars of income spent on luxury goods.

b.

the dollars of income saved by an individual.

c.

expenditures on the basic necessities of life.

d.

the percentage of income spent for current consumption.

e.

the fact that people with higher propensity to consume earn lower income.

ANSWER:

d

RATIONALE:

The average propensity to consume refers to the percentage of each dollar of income, on average, that a person spends for current needs rather than savings. See 1-1: The Rewards of Sound Financial Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Identify the benefits of using personal financial planning techniques to manage your finances.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

5 percent

b.

25 percent

c.

60 percent

d.

88 percent

e.

94 percent

ANSWER:

e

RATIONALE:

Becky’s Average Propensity to Consume = ($85,000 – $5,000) ÷ $85,000 = 94%. See 1-1: The Rewards of Sound Financial Planning.

POINTS:

1

DIFFICULTY:

Challenging
Bloom's: Applying

REFERENCES:

Identify the benefits of using personal financial planning techniques to manage your finances.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial Planning

ACCREDITING STANDARDS:

22785893 - Reflective Thinking

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

The amount of savings decreases, and the consumption of necessities increases.

b.

The expenditure on luxury goods increases, and the amount of savings decreases.

c.

The expenditure on luxury goods represents only a small portion of income.

d.

The amount of savings represents only a small portion of income.

e.

The cost of necessities represents only a small portion of income.

ANSWER:

e

RATIONALE:

As income increases, the average propensity to consume decreases because the cost of necessities represents a small portion of income. See 1-1: The Rewards of Sound Financial Planning.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Understanding

REFERENCES:

Identify the benefits of using personal financial planning techniques to manage your finances.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/27/2018 5:16 PM

a.

Wealth

b.

Propensity to consume

c.

Consumer price index

d.

Purchasing power

e.

Credit debt

ANSWER:

a

RATIONALE:

Wealth is the net total value of all the items that an individual owns and consists of financial and tangible assets. Financial assets are intangible assets, such as stocks and bonds. Tangible assets are physical assets, such as real estate and automobiles. See 1-1: The Rewards of Sound Financial Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Identify the benefits of using personal financial planning techniques to manage your finances.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

physical

b.

earning

c.

fixed

d.

tangible

e.

real

ANSWER:

b

RATIONALE:

Financial assets are intangible, paper assets such as savings accounts and securities (stocks, bonds, mutual funds, and so forth). They are earning assets that are held for their expected future returns. See 1-1: The Rewards of Sound Financial Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Identify the benefits of using personal financial planning techniques to manage your finances.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.01 - 1-1 The Rewards of Sound Financial Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

develop financial plans and strategies to achieve goals.

b.

use financial statements to evaluate results of plans and budgets, taking corrective action as required.

c.

implement financial plans and strategies.

d.

redefine goals and revise plans and strategies as personal circumstances change.

e.

periodically develop and implement budgets to monitor and control progress toward goals.

ANSWER:

d

RATIONALE:

The last step of financial planning involves redefining goals so that they better meet current needs and revising financial strategies accordingly. See 1-2: The Personal Financial Planning Process.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Describe the personal financial planning process and define your goals.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.02 - 1-2 The Personal Financial Planning Process

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

short-term goals.

b.

intermediate goals.

c.

long-term goals.

d.

goals that are not time-bound.

e.

goals that are unrealistic.

ANSWER:

c

RATIONALE:

Long-term financial goals are set first, followed by a series of corresponding short-term and intermediate goals. Long-term goals change over time, and one needs to revise them accordingly. See 1-2: The Personal Financial Planning Process.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Describe the personal financial planning process and define your goals.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.02 - 1-2 The Personal Financial Planning Process

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

Make a $12,000 down payment on an automobile in 4 years.

b.

Retire with a comfortable lifestyle in 25 years.

c.

Buy a $125,000 house.

d.

Purchase a $40,000 boat.

e.

Join the county club on retirement in 20 years.

ANSWER:

a

RATIONALE:

The goal to make a $12,000 down payment on an automobile in 4 years is specific and has a target date. Therefore, it is the most useful in developing a financial plan. See 1-2: The Personal Financial Planning Process.

POINTS:

1

DIFFICULTY:

Challenging
Bloom's: Applying

REFERENCES:

Describe the personal financial planning process and define your goals.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.02 - 1-2 The Personal Financial Planning Process

ACCREDITING STANDARDS:

22785893 - Reflective Thinking

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

dates in the future when the goals are expected to be achieved.

b.

dates in the future when the goals will be compared with other goals that have already been achieved.

c.

dates in the past when the goals were revised and redefined.

d.

dates in the past when the goals were set.

e.

dates in the future when the goals will be discussed with family members.

ANSWER:

a

RATIONALE:

Financial plans include setting goal dates, which are target dates in the future when certain financial objectives are expected to be completed. See 1-2: The Personal Financial Planning Process.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Describe the personal financial planning process and define your goals.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.02 - 1-2 The Personal Financial Planning Process

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

The goals should be very ambitious.

b.

The goals should be realistic.

c.

The goals should be attained in 6 months to a year.

d.

The goals should be easy to meet.

e.

The goals should be set and remain unchanged.

ANSWER:

b

RATIONALE:

Long-term goals will change over time, and you will need to revise them accordingly. If the goals seem too ambitious, you’ll want to make them more realistic. If they’re too conservative, you’ll want to adjust them to a level that encourages you to make financially responsible decisions rather than squander surplus funds. See 1-2: The Personal Financial Planning Process.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Evaluating

REFERENCES:

Describe the personal financial planning process and define your goals.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.02 - 1-2 The Personal Financial Planning Process

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

Career choices

b.

Hobbies

c.

Friends

d.

Money

e.

Retirement planning

ANSWER:

d

RATIONALE:

Money can be one of the most emotional issues in any relationship, including that with a partner, parents, or children. See 1-2: The Personal Financial Planning Process.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Describe the personal financial planning process and define your goals.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.02 - 1-2 The Personal Financial Planning Process

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

ensure that only one person in the family makes financial decisions.

b.

communicate consistently about money matters with family members.

c.

ensure that individuals do not interfere in other family members’ financial matters.

d.

use a third party, who is not a part of the family, to set financial goals.

e.

maintain confidentiality regarding the reasons behind specific decisions.

ANSWER:

b

RATIONALE:

The best way for a family to handle financial decisions is to be aware of your family members’ financial style, consistently communicate openly, and be willing to compromise. See 1-2: The Personal Financial Planning Process.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Describe the personal financial planning process and define your goals.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.02 - 1-2 The Personal Financial Planning Process

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

Life cycle analysis

b.

Personality development

c.

Financial planning

d.

Personal counseling

e.

Stress management

ANSWER:

c

RATIONALE:

Financial planning is an important part of the conflict resolution process. Family members need to work together to develop their financial goals. See 1-2: The Personal Financial Planning Process.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Describe the personal financial planning process and define your goals.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.02 - 1-2 The Personal Financial Planning Process

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

It is highly possible to change a partner’s financial style.

b.

One of the most important aspects of a marriage is financial compatibility.

c.

Money does not cause emotional issues in any relationship.

d.

The best way to resolve a money dispute is to avoid such a discussion.

e.

Financial planning does not help in resolving conflicts related to money.

ANSWER:

b

RATIONALE:

One of the most important aspects of a marriage is financial compatibility. Financial planning is an important part of the conflict resolution process. See 1-2: The Personal Financial Planning Process.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Evaluating

REFERENCES:

Describe the personal financial planning process and define your goals.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.02 - 1-2 The Personal Financial Planning Process

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

career.

b.

insurance.

c.

investment.

d.

taxes.

e.

retirement.

ANSWER:

a

RATIONALE:

Financial planning for young people primarily concerns career. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

asset acquisition planning.

b.

liability planning.

c.

estate planning.

d.

insurance planning.

e.

savings planning.

ANSWER:

c

RATIONALE:

Martha’s most pressing financial concern is probably her estate, which will help in retirement planning. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Applying

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785893 - Reflective Thinking

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

asset purchases.

b.

life insurance.

c.

child-care assistance programs.

d.

pension payments.

e.

subsidized food services.

ANSWER:

a

RATIONALE:

Employee benefits may include pension plans, child care, health care, profit-sharing plans, and insurance. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Understanding

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/27/2018 5:17 PM

a.

determine the tax penalty.

b.

evade taxes.

c.

minimize taxes.

d.

pay taxes the person considers to be fair.

e.

learn the tax code.

ANSWER:

c

RATIONALE:

Tax planning involves looking at individuals’ current and projected earnings and then developing strategies that will defer and minimize taxes. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

considering how your wealth can be most effectively passed on to your heirs.

b.

determining the income you need to maintain.

c.

the dissolution of all privately held corporations.

d.

the valuation and auctioning of your valuables by hiring a professional tax planner.

e.

planning for retirement.

ANSWER:

a

RATIONALE:

Estate planning involves considering how your wealth can be most effectively passed on to your heirs. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

during the year before retirement.

b.

when the last child has left home.

c.

as soon as the mortgage is paid off.

d.

when you get married.

e.

as soon as you start earning.

ANSWER:

e

RATIONALE:

Ideally, retirement planning should begin as soon as one starts earning. This will help individuals save more for retirement and take advantage of the compounding effect of money. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

provide services on a fee or commission basis.

b.

provide services to wealthy investors only.

c.

set the financial goals of retired investors.

d.

make financial decisions for investors.

e.

are most effective during retirement years.

ANSWER:

a

RATIONALE:

Professional financial planners provide services on a fee and commission basis. Many financial planners take a hybrid approach and charge fees and collect commissions on the products they sell, offering lower fees if you make product transactions through them. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

18–24

b.

25–34

c.

35–44

d.

45–64

e.

65 and older

ANSWER:

d

RATIONALE:

The people in the pre-retirement stage or 45–64 age group tend to have higher income than those younger than age 45. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

asset acquisition

b.

tax

c.

retirement

d.

estate

e.

employee benefit

ANSWER:

e

RATIONALE:

Employee benefit planning may involve planning for life, health, and disability insurance; tuition reimbursement programs for continuing education; and pension, profit-sharing, and 401(k) retirement plans. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

Career plans

b.

Retirement plans

c.

Tax deferment plans

d.

Personal asset plans

e.

Bankruptcy recovery plans

ANSWER:

b

RATIONALE:

Employee benefits packages cover a full spectrum that includes pension, profit-sharing, and 401(k) retirement plans. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

As income increases, the need for investment planning decreases.

b.

Keeping money idle is a form of investment.

c.

Higher returns on investment will lead to the accumulation of less wealth.

d.

Investment is measured by the amount of debt incurred.

e.

The length of time for which money is invested is important.

ANSWER:

e

RATIONALE:

The length of time for which money is invested is just as important as the rate of return an individual earns on his or her investments. One can accumulate more wealth by investing for 40 rather than 30 years. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Evaluating

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

Ben will receive more money at the end of 30 years compared to the money received at the end of 40 years.

b.

Ben will receive more money at a 3 percent rate of interest instead of the existing rate.

c.

Ben will receive interest of $5,000 at the end of 10 years.

d.

Ben will receive no interest on his investment at the end of the investment period.

e.

Ben will receive a significant amount at the end of the investment period, due to the feature of compounding.

ANSWER:

e

RATIONALE:

One can accumulate more wealth by investing for 40 rather than 30 years. This is because of compound interest. Thus, Ben will receive a significant amount at the end of 40 years due to the compounding feature. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Applying

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785893 - Reflective Thinking

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

Tax evasion

b.

Tax shelter

c.

Tax penalty

d.

Tax accounting

e.

Tax portfolio

ANSWER:

b

RATIONALE:

Tax shelters use various aspects of the tax code (such as depreciation expenses) to legitimately reduce an investor’s tax liability. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

Spending more than his or her earnings to maintain a good lifestyle

b.

Investing small amounts regularly to achieve long-term financial goals

c.

Establishing an emergency fund with 6 months’ worth of income

d.

Developing financial plans only after reaching the highest tax brackets

e.

Planning tax without considering tax shelters

ANSWER:

c

RATIONALE:

Short-term planning should also include establishing an emergency fund with at least 6 months’ worth of income. This special savings account serves as a safety reserve in case of financial emergencies such as a temporary loss of income. See 1-2: The Personal Financial Planning Process.

POINTS:

1

DIFFICULTY:

Bloom's: Remembering
Moderate

REFERENCES:

Describe the personal financial planning process and define your goals.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.02 - 1-2 The Personal Financial Planning Process

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

An increase in the standard of living

b.

A decrease in unemployment

c.

An increase in the expenditure on luxury goods

d.

A decrease in the value of retirement accounts

e.

An increase in the value of insurance purchased

ANSWER:

d

RATIONALE:

As a result of recession, retirement accounts typically drop in value, and financial plans must be revised to accommodate these changes. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Challenging
Bloom's: Evaluating

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785893 - Reflective Thinking

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

skill management

b.

stress management

c.

household management

d.

money management

e.

business cycle management

ANSWER:

d

RATIONALE:

In addition to discussing your financial goals and attitudes toward money with your partner, you must allocate responsibility for money management tasks and decisions. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

An asset

b.

An estate

c.

A liability

d.

Insurance

e.

A goal

ANSWER:

c

RATIONALE:

A liability is something we owe, which is measured by the amount of debt we incur. The acquisition of assets, such as houses and cars, creates liabilities that must be repaid at some future time. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

increasing assets.

b.

increasing debts.

c.

reducing utility.

d.

reducing financial flexibility.

e.

increasing financial risk.

ANSWER:

a

RATIONALE:

The financial planning process helps to focus on acquiring major assets, controlling borrowing, reducing financial risk, and providing for emergency funds and future wealth accumulation. The process helps in covering all the important financial elements in an individual’s life. See 1-3: From Goals to Plans: A Lifetime of Planning.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Remembering

REFERENCES:

Explain the life cycle of financial plans, their role in achieving your financial goals, how to deal with special planning concerns, and the use of professional financial planners.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.03 - 1-3 From Goals to Plans: A Lifetime of Planning

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/27/2018 5:28 PM

a.

Purchasing low-utility products

b.

Accumulating debt

c.

Acquiring assets with low financial value

d.

Saving money regularly for emergency funds

e.

Planning for retirement

ANSWER:

d

RATIONALE:

Individuals should set up an emergency fund or reduce monthly expenses to protect themselves from financial shocks. See 1-2: The Personal Financial Planning Process.

POINTS:

1

DIFFICULTY:

Bloom's: Understanding
Moderate

REFERENCES:

Describe the personal financial planning process and define your goals.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.02 - 1-2 The Personal Financial Planning Process

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

government, regulators, and business.

b.

government, consultants, and business.

c.

consumers, economists, and business.

d.

consumers, business, and managers.

e.

government, consumers, and business.

ANSWER:

e

RATIONALE:

The three key groups in the economic environment are government, consumers, and business. See 1-4: The Planning Environment.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Examine the economic environment’s influence on personal financial planning.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.04 - 1-4 The Planning Environment

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

leverage policy.

b.

taxation.

c.

competition.

d.

budgetary deficits.

e.

the free-enterprise system.

ANSWER:

b

RATIONALE:

The two major constraints placed by the government from the perspective of personal financial planning are taxation and regulation. See 1-4: The Planning Environment.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Examine the economic environment’s influence on personal financial planning.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.04 - 1-4 The Planning Environment

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

Businesses provide goods and services and receive payment in money.

b.

Businesses frame rules and regulations to maintain the law and order in a country.

c.

Businesses determine the kinds of goods and services that a government will use.

d.

Businesses do not interact with other players in the economy.

e.

Businesses are seldom affected by economic cycles.

ANSWER:

a

RATIONALE:

Businesses provide goods and services to consumers and in turn receive payment in the form of money. They hire labor and use land and financial capital to produce goods and services. See 1-4: The Planning Environment.

POINTS:

1

DIFFICULTY:

Moderate
Bloom's: Evaluating

REFERENCES:

Examine the economic environment’s influence on personal financial planning.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.04 - 1-4 The Planning Environment

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

inflation.

b.

the consumer price index.

c.

the purchasing power.

d.

the gross domestic product.

e.

the opportunity cost.

ANSWER:

c

RATIONALE:

The amount of goods and services that each dollar buys at a given time is called the purchasing power. See 1-4: The Planning Environment.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Examine the economic environment’s influence on personal financial planning.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.04 - 1-4 The Planning Environment

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

a member of the business group.

b.

the central player in the financial planning environment.

c.

an important force in the government.

d.

an advocacy group that fights corruption in the government.

e.

relatively unimportant to the business or the government.

ANSWER:

b

RATIONALE:

The consumer is the central player in the financial planning environment. See 1-4: The Planning Environment.

POINTS:

1

DIFFICULTY:

Easy
Bloom's: Remembering

REFERENCES:

Examine the economic environment’s influence on personal financial planning.

QUESTION TYPE:

Multiple Choice

HAS VARIABLES:

False

LEARNING OBJECTIVES:

PFIN7.BILL.20.01.04 - 1-4 The Planning Environment

ACCREDITING STANDARDS:

22785889 - Analytic

DATE CREATED:

7/25/2018 9:48 AM

DATE MODIFIED:

9/13/2018 6:09 PM

a.

a low gross domestic product.

b.

high tax percentages.

c.

high employment opportunities.

d.

low tax penalty rates.

e.

a low value of retirement accounts.

ANSWER:

c

RATIONALE:

The stronger the economy, the higher the levels of real gross domestic product (GDP) and employment. Therefore, a strong economy will have high employment opportunities. See 1-4: The Planning Environment.

POINTS: