Practice Quizzes
Quiz Review

1.Being financially secure involves balancing what you make with
A: what you spend
B: your investments
C: your retirement plans
D: your current level of debt
2. How do most college / university students finance their education?
A: work their way through college
B: borrow the money
C: Pell grants and other grants
D: parents and relatives
3.  What periods of time do short-term, intermediate-term, and long-term goals cover?
A: less than one year, one to three years, three to five years
B: less than six months, six months to ten years, more than ten years
C: less than one year, one to ten years, more than ten years
D: one to three years, three to ten years, more than ten years
4. What is the significance of the financial life cycle?
A: to help you to keep up with other people
B: to better understand the timing and areas of financial concern you’ll experience
C: to allow you to focus on typical concerns earlier and to plan ahead with fewer problems
D: both b and c
5. 31. What is the primary factor in determining your income level?
A: education attained
B: who you know
C: your age
D: the company you work for
6.  In order for your financial plan to be realistic it needs to be based upon your
A: budget
B: income level
C: number of tax deductions, exemption, exclusions, and credits
D: balance sheet
7.  Suppose that you just completed your first year of college with $11,000 in loans, and plan to borrow the maximum each year from now until graduation.  You have never accounted for the way you spend your money, do not have a budget, and want to insure that you will be able to repay your loans after college. What is the most important thing you can do right now?
A: talk to your parents
B: visit your guidance counselor
C: immediately begin to develop a personal financial plan
D: ask a friend who took the Personal Finance course for advice
8. Which of the following axioms would apply most appropriately to a 20-year-old college student?
A: the time value of money – a dollar today is worth more than a dollar in the future
B: nothing happens without a plan – even (or especially) a simple plan
C: the best protection is knowledge
D: all of the above
9.  Chapter 1 discusses fifteen principles that form the foundation of personal finance.  The principle that considers the fact that one expects to earn additional return for increasing investment risk is the__________ principle
A: risk-return tradeoff
B: diversification reduces risk
C: nothing happens without a plan
D: curse of competitive investment markets
10. At what stage of the financial life cycle would a 56 year old be?
A: stage 1
B: stage 2
C: stage 3
D: stage 4
11.Suppose that you are a 56 year old with inadequate insurance - it simply will not take care of your family’s needs. You did not make any investments toward retirement, and did not give your financial future much thought because you always thought, “tomorrow will take care of itself.” Which of the following axioms did you not neglect?
A:  the agency problem
B: pay yourself first
C: the risk-return tradeoff
D: the time value of money
12. Suppose that you are a 35 year old with inadequate insurance - it simply will not take care of your family’s needs. You have not made any investments toward retirement, and do not give your financial future much thought because you believe, “tomorrow will take care of itself.” What would be your most serious shortcoming?
A: failure to find a more competent tax preparer
B: not shopping around for the best buy in insurance
C: failure to involve your wife in decision making
D: neglecting axiom #8 – nothing happens without a plan
13. Chapter 1 discusses fifteen principles that form the foundation of personal finance.  The principle that suggests that you set aside your savings first is the____________ principle
A: pay yourself first
B: money isn’t everything
C: time value of money
D: time dimension of investing
14. Chapter 1 discusses fifteen principles that form the foundation of personal finance.  The principle that considers the value of compound interest is the _____________ principle
A: all risk is not equal
B: time value of money
C: time dimension of investing
D: pay yourself first
15. Chapter 1 discusses fifteen principles that form the foundation of personal finance.  The principle that considers the importance of insurance is the __________ principle.
A: agency problem – beware the sales pitch
B: all risk is not equal
C: protect yourself against major catastrophes
D: time value of money

16.A financial plan that is capable of responding to changes in your life or unexpected events would be considered a ____________ financial plan
A: liquid
B: protected
C: protected
D: flexible
17. Chapter 1 discusses fifteen principles that form the foundation of personal finance.  The principle that considers that stockbrokers may actually be acting in their own interest is the __________ principle
A: agency problem – beware the sales pitch
B: all risk is not equal
C: time value of money
D: time dimension of investing
18.  The term that considers having money available when you need it is the concept of __________.
A: flexibility
B: liquidity
C: protection
D: tax minimization
19. When you are involved in ___________ planning, you are planning for your eventual death and the passage of your wealth to your heirs
A: retirement
B: educational
C: estate
D: actuarial
20. Chapter 1 discusses fifteen principles that form the foundation of personal finance.  The principle that indicates you can take on a riskier investment if you intend to hold it for a long period is called the ____________ principle
A: all risk is not equal
B: pay yourself first
C: protect yourself against major catastrophes
D: time dimension of investing
21. For most people the biggest investment in their lifetime, purchasing a home, occurs during which years of the life cycle?
A: Stage 1: The Early Years
B: Stage 2: The Golden Years
C: Stage 3: The Retirement Years
D: Stage 4: The Mortuary Years
22.  An economic condition in which rising prices reduce the purchasing power of money is termed _____________.
A: the trade deficit
B: inflation
C: stagflation
D: balance of trade
23. Step 3 of the personal financial planning process is to “Develop a Plan of Action”. Which of the following is not one of the “common concerns” that should guide all financial plans?
A: Flexibility
B: Liquidity
C: Long-term profitability
D: Protection
24.  After retirement, your paramount financial decisions should revolve around
A: developing a regular pattern of saving
B: decisions about the diversification of risks
C: effects of inflation
D: estate planning
25.  Assume that you retired at age 65 and have been living off your retirement plan. What stage of the financial life cycle are you in?
A: stage 3
B: stage 5
C: stage 2
D: stage 1
 
 

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