Test Bank for Personal Financial Planning, 16th Edition by Randy Billingsley.pdf

Test Bank for Personal Financial Planning, 13th Edition,
m m m m m m m m



by J. Gitman, Michael D. Joehnk, and R Billingsley.
m m m m m m m m




Chapter m1—Understanding mthemFinancialmPlanning mProcess


TRUE/FALSE

1. Standard mofmlivingmismdefinedmasmthemnecessities,mcomforts,mandmluxuriesmdesired mby man mindividualmormgroup.

ANS:m T PTS:m m 1 DIF: Easy OBJ:m m LO:m1-1
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mKnowledge

2. Yourmaverage mpropensity mtomconsumemismthempercentagemofmeach mdollarmofmincome,mon mthemaverage,mth
atmismspentmformcurrentmneedsmrathermthan msavings.

ANS:m T PTS:m m 1 DIF: Easy OBJ:m m LO:m1-1
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mKnowledge

3. Amgood mfinancialmplan mcompleted mwhen monemismin mtheirm30smwillmtypically mlastmamlifetime.

ANS:m F PTS:m m 1 DIF: Challenging OBJ:m m LO:m1-2
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mSynthesis

4. Financialmplanningmismamcontinuing,mlife-longmprocess.

ANS:m T PTS:m m 1 DIF: Easy OBJ:m m LO:m1-2
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mComprehension

5. Financialmplanningmcan mimprove myourmstandard mof mliving.

ANS:m T PTS:m m 1 DIF: Easy OBJ:m m LO:m1-1
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mComprehension

6. Currentmconsumption misminversely mrelated mto msavingmformthemfuture.

ANS:m T PTS:m m 1 DIF: Challenging OBJ:m m LO:m1-1
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mAnalysis

7. Aboutm20% mof mAmericansmsay mretirementmplanningmismtheirmmostmpressingmfinancialmconcern.

, ANS:m F PTS:m m 1 DIF: Moderate OBJ:m m LO:m1-1
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mKnowledge

8. Themmostmeffective mway mto machieve mfinancialmobjectivesmismthrough mfinancialmplanning.

ANS:m T PTS:m m 1 DIF: Moderate OBJ:m m LO:m1-1
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mComprehension

9. Definingmfinancialmgoalsmisman mimportantmfirstmstep min mpersonalmfinancialmplanningmprocess.

ANS:m T PTS:m m 1 DIF: Easy OBJ:m m LO:m1-2
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mComprehension

10. Two mpersonsmwith mequalmaveragempropensitiesmto mconsumemwillmnotmnecessarily mhavemequalmstandard
smof mlivingmbecause mof mdifferencesmin mincome.

ANS:m T PTS:m m 1 DIF: Challenging OBJ:m m LO:m1-1
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mEvaluation

11. Themneed mformfinancialmplanningmdeclinesmasmyourmincome mincreases.

ANS:m F PTS:m m 1 DIF: Moderate OBJ:m m LO:m1-1
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mSynthesis

12. Currentmconsumption meffectsmfuture mconsumption.

ANS:m T PTS:m m 1 DIF: Challenging OBJ:m m LO:m1-1
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mAnalysis

13. Amperson mwhomhasm$2,000mmonthly mincomemandmspendsm$1,800mmonthlymhasman maveragempropensit
y mto mconsume mof m90%.

ANS:m T PTS:m m 1 DIF: Challenging OBJ:m m LO:m1-1
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mEvaluation

14. Amperson mmakingm$35,000 mand mspendingm$30,800 mhasman maverage mpropensity mto mconsume mof m80%.

ANS:m F PTS:m m 1 DIF: Challenging OBJ:m m LO:m1-1
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mEvaluation

,15. Mostmfamiliesmfind mitmdifficultmto mdiscussmmoney mmatters.

ANS:m T PTS:m m 1 DIF: Easy OBJ:m m LO:m1-2

, NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mKnowledge

16. Averagempropensity mtomconsumemrefersmto mhowmmuch mofmyourmmoney myou mplanmtomsavemin myourmfina
ncialmplan.

ANS:m F PTS:m m 1 DIF: Challenging OBJ:m m LO:m1-1
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mComprehension

17. Tangiblemassetsmaremearningmassetsmthatmaremheld mformthemreturnsmthey mpromise.

ANS:m F PTS:m m 1 DIF: Challenging OBJ:m m LO:m1-1
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mComprehension

18. Financialmassetsmarempapermassets,msuch masmsavingsmaccountsmand msecurities.

ANS:m T PTS:m m 1 DIF: Moderate OBJ:m m LO:m1-1
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mComprehension

19. Mutualmfundsmaremexamplesmof mfinancialmassets.

ANS:m T PTS:m m 1 DIF: Easy OBJ:m m LO:m1-1
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mApplication

20. Spendingmformyourmchild'smprivate-schoolmeducation misman mexample mof mdeferred mconsumption.

ANS:m F PTS:m m 1 DIF: Challenging OBJ:m m LO:m1-1
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mApplication

21. Wealth mcan mbemdefined masmthemtotalmvaluemof mallmthemthingsmyou mown.

ANS:m T PTS:m m 1 DIF: Easy OBJ:m m LO:m1-1
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmand mInterestmRat
esmKEY:m Bloom's:mKnowledge

22. Wealth mismthemkeymconsiderationmismestablishingmfinancialmgoalsmasmitmismthemmeasuremofmvalueminmfina
ncialmtransactions.

ANS:m F PTS:m m 1 DIF: Challenging OBJ:m m LO:m1-1
NAT:m BUSPROG:mReflective mthinking
STA:m DISC:mFinancialmMarketsmandmInterestmRate
smKEY:m Bloom's:mComprehension