Chapter 01 Personal Financial Planning in Action

Posted on Posted in General General Questions, General Questions

31. (p. 6-7) 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
E. Higher exports

32. (p. 7) An
investor should expect to receive a risk premium for
A. Expanded exports
B. Lower consumer prices
C. Higher potential
earnings due to uncertainty
D. Reduced availability of investments
E. Expected lower inflation

33. (p. 7) Which
of the following would increase the interest rate for a loan?
A. Poor credit rating
B. Higher down payment
C. Constant interest rates
D. Lower consumer prices
E. Short time to maturity

34. (p. 7) Patrick
Guitman recently graduated from college with $20,000 in student loans and
$5,000 in credit card debt. He usually makes minimum payments on his debt and
he has been late with three payments in the last year. He wants to buy a new
car but was told that his interest rate on a loan would be very high. What is
the most likely reason this might be so?
A. General interest rates are very low
B. His credit rating is
poor because of his late payments
C. He already has a student loan outstanding
D. Recent graduates are not allowed to have more than
$25,000 in debt outstanding
E. Interest rates must be tied to the CPI


35. (p. 7) Attempts
to increase income are part of the _____________ component of financial
planning.
A. Obtaining
B. Planning
C. Saving
D. Borrowing
E. Spending


36. (p. 7-8) The
‘borrowing’ activity in a financial plan relates to
A. Acquiring adequate insurance coverage
B. Investing for long-term growth
C. Setting up a budget
D. Obtaining financial resources from employment,
investments or ownership
E. Maintaining control of
credit-buying habits

37. (p. 8) The
problem of bankruptcy is associated with poor decisions in the ______________
component of financial planning.
A. Sharing
B. Savings
C. Obtaining
D. Borrowing
E. Protecting


38. (p. 7) A
question associated with the saving component of financial planning is:
A. Do you have an adequate
emergency fund?
B. Is your will current?
C. Is your investment program appropriate to your income
and tax situation?
D. Do you have a realistic budget for your current
financial situation?
E. Are your transportation expenses minimized through
careful planning?

39. (p. 9 – 11) Which of the following short-term goals is
stated most clearly?
A. Buy a car for less than
$17,000 within 6 months
B. Retire at age 65 with $2,000,000 in my 401(k) account
C. Purchase a house with a mortgage no greater than
$150,000 within 5 years
D. Set up an emergency fund
E. Invest $50 per month for the next 18 years for my
nephew’s college fund

40. (p. 9 – 11) Which of the following long-term goals is
stated most clearly?
A. Buy a car for less than $17,000 within 6 months
B. Retire at age 65
C. Purchase a house with a mortgage no greater than
$150,000 within 3 years
D. Set up an emergency fund
E. Invest $50 per month for
the next 18 years for my nephew’s college fund

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