Multiple Choice Answers

Question 1
The first step of the financial planning process is to:
A. develop financial goals.
B. implement the financial plan.
C. analyze your current personal and financial situation.
D. evaluate and revise your actions.

Question 2
The uncertainty associated with decision making is referred to as:
A. opportunity cost.
B. selection of alternatives.
C. financial goals.
D. risk.

Question 3
The financial planning process concludes with efforts to:
A. review and revise your actions.
B. create a financial plan of action.
C. analyze your current personal and financial situation.
D. review the financial plan.

Question 4
Lynn Roy wants to travel around the world. Lynn Roy has several options she can pursue. She can continue to work full time to earn the money she needs for her trip. She can work part time so that she can still earn some money but have the time necessary to complete her trip. She can take full retirement so that she has all the time necessary to complete her trip. Which step in the financial planning process does this scenario demonstrate?
A. Determining her current financial situation
B. Developing her financial goals
C. Identifying alternative courses of action
D. Evaluating her alternatives

Question 5
Higher consumer prices are likely to be accompanied by:
A. lower union wages.
B. lower interest rates.
C. lower production costs.
D. higher interest rates.

Question
Which of the following would cause prices to drop?
A. Increased production by business
B. Increased taxes on business
C. Higher levels of demand by consumers
D. A reduction in the money supply

Question
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.

Question
The amount of interest is determined by multiplying the amount in savings by the:
A. annual interest rate.
B. annual interest rate and the time period.
C. time period.
D. time period and number of months.

Question 9
If a person deposited $50 a month for 6 years earning 8%, this would involve what type of computation?
A. Present value of a series of deposits
B. Future value of a single amount
C. Future value of a series of deposits
D. Present value of a single amount

Question 10
Which type of computation would a person use to determine current value of a desired amount for the future?
A. Present value of a series of deposits
B. Future value of a single amount
C. Future value of a series of deposits
D. Present value of a single amount

Question 11
Future value calculations are also referred to as:
A. discounting.
B. add-on interest.
C. compounding.
D. simple interest.

Question 12
Which is a question associated with the saving component of financial planning?
A. Do you have an adequate emergency fund?
B. Is your investment program appropriate to your income and tax situation?
C. Do you have a realistic budget for your current financial situation?
D. Are your transportation expenses minimized through careful planning?

Question 13
A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends a direction for your financial activities is a(n):
A. insurance prospectus.
B. financial plan.
C. budget.
D. investment forecast.

Question 14
One aspect of financial planning is to make sure you maintain adequate insurance coverage for your needs. Which aspect of financial planning does this deal with?
A. Retirement and Estate Planning
B. Spending
C. Managing Risk
D. Investing

Question15).
The first step of the career planning process is to:
A. evaluate the job market.
B. assess your interests, abilities, and goals.
C. identify potential job opportunities.
D. develop a résumé and cover letter.
The first step of the career planning process is to:
A. evaluate the job market.
B. assess your interests, abilities, and goals.
C. identify potential job opportunities.
D. develop a résumé and cover letter.

Question 16 of 20
Josh Turner has done some research and has found that the population in the U.S. is aging, and this means that there will be an increased need for health care professionals in the future. This is an example of __________ influencing jobs in the future.
A. demographic trends
B. economic conditions
C. industry trends
D. geographic trends

Question 17 of 20
Blake Williams has done some research and has discovered that economists believe interest rates will rise significantly over the next two years. Blake believes that this will lead to fewer homes being sold and fewer jobs in the banking and mortgage industries. What type of influence is this an example of?
A. Demographic trends
B. Economic conditions
C. Industry trends
D. Geographic trends

Question 18 of 20
To assess the current value of a lump-sum retirement benefit that will be received in 10 years, use the __________ calculation.
A. present value of annuity
B. present value of a single amount
C. future value of an annuity
D. future value of a single amount

Question 19 of 20
Barb Hotchkins is in the 28 percent tax bracket. A tax-exempt employee benefit with a value of $500 would have a tax-equivalent value of:
A. $694.
B. $528.
C. $500.
D. $360.

Question 20 of 20
__________ is a benefit on which you pay no taxes.
A. Networking
B. Vesting
C. A tax deferred benefit
D. A tax exempt benefit