TEST BANK
PFIN: PERSONAL FINANCE
,Test Bank For
Pfin 8th Edition By Randall Billingsley, Lawrence Gitman, Michael Joehnk
Chapter 1-15 Answers Are At The End Of Each Chapter
Chapter 1
Indicate Whether The Statement Is True Or False.
1. Saving $400 For A Large, Flat-Screen Tv Within The Next Four Months Is An Example Of A Short-Term Goal.
A. True
B. False
2. Commission-Based Financial Planners Charge Fees Based On The Complexity Of The Plan They Prepare.
A. True
B. False
3. In The United States, Salaries Tend To Be Higher In The Northeast And West Than In The South.
A. True
B. False
4. Setting Long- And Short-Term Career Goals Helps In Career Planning.
A. True
B. False
5. Financial Planning Takes Place In A Dynamic Economic Environment Created By The Actions Of The Government,
Business, And Consumers.
A. True
B. False
6. You Should Discuss Your Financial Goals And Attitudes Toward Money With Your Partner.
A. True
B. False
7. Accumulating Wealth For Later Years Is Called Estate Planning.
A. True
B. False
8. It Is Easy To Change Your Partner’s Financial Style, So There Is No Need For Financial Planning To Resolve
Conflicts Regarding Money Matters.
a. True
, b. False
9. Tax Plans Are Closely Tied To Investment Plans.
A. True
B. False
10. Recessions And Financial Crises Will Always Result In Job Loss.
A. True
B. False
11. The Longer You Wait To Begin Retirement Planning, The Less You Are Likely To Have In Your Retirement Fund.
A. True
B. False
12. Career Plans Should Not Be Changed After Long- And Short-Term Career Goals Are Set.
A. True
B. False
13. You Should Limit Your Spending To No More Than 20 Percent More Than What You Earn.
A. True
B. False
14. Morgan Has An Annual Income Of $45,000 And Spends $30,000 For Current Needs. Morgan’s Average
Propensity To Consume Is 80 Percent.
A. True
B. False
15. The Most Effective Way To Achieve Financial Objectives Is Through Personal Financial Planning.
A. True
B. False
16. Tangible (Physical) Assets Are Earning Assets That Are Held For The Returns They Promise.
A. True
B. False
17. Two People With Significantly Different Incomes Can Have Equal Average Propensities To Consume
Because Of Differences In Their Standard Of Living.
A. True
B. False
18. The Need For Financial Planning Declines As Your Income Increases.
A. True
B. False
,19. Retirement Planning Includes Taking Advantage Of And Managing Employer-Sponsored Benefits.
A. True
B. False
20. Geographic Factors Affect Your Earning Power.
A. True
B. False
21. Fee-Only Financial Planners Earn Commissions For The Products They Sell.
A. True
B. False
22. Marital Status Affects The Income Level Of Individuals.
A. True
B. False
23. Your Purchase, Saving, Investment, And Retirement Plans And Decisions Are Not Influenced By The Present State
Of The Economy.
A. True
B. False
24. For Employees Of Large Firms, Managing Employee Benefits Is An Important Part Of Financial Planning.
A. True
B. False
25. Short-Term Planning Should Include Creating And Maintaining An Emergency Fund With At Least Six Months’
Worth Of Income.
A. True
B. False
26. The Federal Government Delegates Its Regulation Of Economic Activity Function To Businesses And Consumers.
A. True
B. False
27. The Support Of Philanthropic Organizations Is A Material Item That Contributes To Our Quality Of Life.
A. True
B. False
28. The Average Propensity To Consume Is Commonly Viewed As A Key Determinant Of Standard Of Living.
A. True
B. False
,29. Financial Planning Can Improve Your Standard Of Living.
A. True
B. False
30. When You Get Your First Job, You Should Make A Good Financial Plan That You Can Follow Without Making
Changes Until You Retire.
A. True
B. False
31. Living Costs Are Constant Throughout The Country.
A. True
B. False
32. Standard Of Living Is Defined As The Necessities, Comforts, And Luxuries Desired By An Individual Or A Family.
A. True
B. False
33. The Decisions You Make In Career Planning Are Independent Of The Decisions You Make In Financial Planning.
A. True
B. False
34. Most People Tend To Be More Liberal About Their Expenditures During A Recession Or Crisis.
A. True
B. False
Indicate The Answer Choice That Best Completes The Statement Or Answers The Question.
35. Tax Planning Is Most Common Among Individuals With:
A. Low Incomes.
B. High Incomes.
C. No Incomes.
D. Erratic Incomes.
E. Decreasing Incomes.
36. Which Of The Following Would Not Be Considered An Asset?
A. Savings Account
B. Land
C. Credit Card Balance
D. Jewelry
E. Money Market
Funds
37. When Applying For A Job Within A Large Nationwide Company, You Notice That Salaries For The Same Position
Differ Based On Geographic Region. In Which Of The Following Regions Would You Most Likely Receive The Highest
,Salary?
A. Small Town In The Midwest
B. Metropolitan Area In The
Northeast
C. Rural Area In The West
D. Metropolitan Area In The South
38. The Best Way To Achieve Your Financial Objectives Is To:
A. Have A Luxurious Standard Of Living.
B. Spend Your Money At Once To Reach Your Objectives
Swiftly.
C. Develop A Sound Financial Plan.
D. Create A Good Tax Deferment Strategy.
E. Monitor Your Spending.
39. Which Of The Following Would Be Considered Real Property?
A. Stocks
B. Land
C. Cash
D. Bonds
E. Clothing
40. Stocks, Bonds, And Mutual Funds Are Considered What Type Of Assets?
A. Physical
B. Earning
C. Fixed
D. Tangible
E. Real
41. Which Of The Following Statements About Money And Relationships Is True?
A. It Is Highly Possible To Change A Partner’s Financial Style.
B. One Of The Most Important Aspects Of 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.
42. Financial Planning Helps Us:
A. Control Inflation.
B. Have Flexibility To Handle Job
Loss.
C. Control Unemployment Rates.
D. Obtain A Social Security Number.
, E. Decrease National Debt.
43. Which Of The Following Statements Is True Of Career Planning?
A. It Does Not Require Any Goal Setting.
B. It Is Not Related To Personal Financial
Planning.
C. It Does Not Influence An Individual’s Lifetime
Earnings.
D. It Impacts An Employer’s Stability.
E. It Helps In Improving Professional Satisfaction.
44. Managing Life, Health, And Disability Insurance Is An Important Part Of What Type Of Planning?
A. Asset Acquisition
B. Tax
C. Retirement
D. Estate
E. Employee Benefit
45. Between The Ages Of 65 And 80, Income Tends To:
A. Increase.
B. Decrease.
C. Stabilize.
D. Fluctuate.
E. Decrease And Then Increase
Slowly.
46. An Example Of The Purchase Of A Financial Asset Would Be The Purchase Of
A. A Painting.
B. Stocks.
C. A Car.
D. Jewelry.
E. A Vacation
Home.
47. Which Of The Following Is One Of The Most Emotional Issues In Any Relationship, Including That With A Partner,
Parents, Or Children?
A. Career Choices
B. Hobbies
C. Friends
D. Money
E. Retirement Planning
48. Which Of The Following Statements About Investments Is True?
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.
49. Which Of The Following Will Legally Reduce An Investor’s Tax Liability?
A. Tax Evasion
B. Tax Shelter
C. Tax Penalty
D. Tax Accounting
E. Tax Portfolio
50. Which Of The Following Statements About Businesses Is True?
A. Businesses Provide Consumers With Goods And Services And Receive Payment In The Form Of
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.
51. When Setting Financial Goals, One Should Typically Start By Setting:
A. Short-Term Goals.
B. Intermediate Goals.
C. Long-Term Goals.
D. Goals That Are Not Time-
Bound.
E. Goals That Are Very
Aggressive.
52. The Last Step In The Financial Planning Process Is To:
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.
53. Typically, An Individual’s Salary Will Be Lower If They Live In What Type Of Area?
A. Metropolitan
B. Overpopulated
C. Industrial
D. Rural
E. Well-Developed
,54. Which Of The Following Practices Helps An Individual Survive In A Financial Crisis?
A. Spending More Than Their Earnings To Maintain A Good Lifestyle
B. Investing Small Amounts Regularly To Achieve Long-Term Financial
Goals
C. Establishing An Emergency Fund With Six Months’ Worth Of Income
D. Developing Financial Plans Only After Reaching The Highest Tax
Brackets
E. Hiring A Noncertified Financial Planner
55. If Your Salary Increased 4 Percent Last Year And Inflation Averaged 4 Percent, Your Purchasing Power Would:
A. Have Increased.
B. Have
Decreased.
C. Have Doubled.
D. Have Remained The
Same.
E. Be Impossible To Tell.
56. What Is The Term For The Net Total Value Of All The Items That An Individual Owns?
A. Wealth
B. Propensity To Consume
C. The Consumer Price Index (Cpi)
D. Purchasing Power
E. Credit Debt
57. Tax Planning Is Most Commonly Done To:
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.
58. In Addition To Discussing Your Financial Goals With Your Partner, You Must Allocate Responsibility For What
Management Tasks And Decisions?
A. Skill
B. Stress
C. Household
D. Money
E. Business-Cycle
59. What Does An Economy Experience After A Peak?
A. A Convolution
B. An Expansion
C. A Contraction
, D. Recovery
E. Prosperity
60. An Individual’s Quality Of Life Is Closely Tied To Their:
A. Political Orientation.
B. Charitable Contributions.
C. Pollution Control Efforts.
D. Standard Of Living.
E. Educational Qualifications.
61. Which Of The Following Is A Typical Effect Of An Economic Recession?
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
62. A Strong Economy Leads To:
A. A Low Gross Domestic Product
(Gdp).
B. High Tax Percentages.
C. High Employment Opportunities.
D. Low Tax Penalty Rates.
E. A Low Value Of Retirement
Accounts.
63. A Trend With A Profound Effect On People’s Standard Of Living And That Requires Greater Responsibility To
Manage Money Wisely Is The:
A. Single-Income Family.
B. Two-Income Family.
C. Investment Family.
D. Retirement-Income
Family.
E. Government.
64. In What Type Of Plans Does An Employer Allocate A Certain Amount Of Money To Each Employee And Lets
The Employee Spend That Money For Benefits That Suit Them?
A. Cafeteria
B. Fixed-Benefit
C. Estate
D. Profit-Sharing
E. Saving
PFIN: PERSONAL FINANCE
,Test Bank For
Pfin 8th Edition By Randall Billingsley, Lawrence Gitman, Michael Joehnk
Chapter 1-15 Answers Are At The End Of Each Chapter
Chapter 1
Indicate Whether The Statement Is True Or False.
1. Saving $400 For A Large, Flat-Screen Tv Within The Next Four Months Is An Example Of A Short-Term Goal.
A. True
B. False
2. Commission-Based Financial Planners Charge Fees Based On The Complexity Of The Plan They Prepare.
A. True
B. False
3. In The United States, Salaries Tend To Be Higher In The Northeast And West Than In The South.
A. True
B. False
4. Setting Long- And Short-Term Career Goals Helps In Career Planning.
A. True
B. False
5. Financial Planning Takes Place In A Dynamic Economic Environment Created By The Actions Of The Government,
Business, And Consumers.
A. True
B. False
6. You Should Discuss Your Financial Goals And Attitudes Toward Money With Your Partner.
A. True
B. False
7. Accumulating Wealth For Later Years Is Called Estate Planning.
A. True
B. False
8. It Is Easy To Change Your Partner’s Financial Style, So There Is No Need For Financial Planning To Resolve
Conflicts Regarding Money Matters.
a. True
, b. False
9. Tax Plans Are Closely Tied To Investment Plans.
A. True
B. False
10. Recessions And Financial Crises Will Always Result In Job Loss.
A. True
B. False
11. The Longer You Wait To Begin Retirement Planning, The Less You Are Likely To Have In Your Retirement Fund.
A. True
B. False
12. Career Plans Should Not Be Changed After Long- And Short-Term Career Goals Are Set.
A. True
B. False
13. You Should Limit Your Spending To No More Than 20 Percent More Than What You Earn.
A. True
B. False
14. Morgan Has An Annual Income Of $45,000 And Spends $30,000 For Current Needs. Morgan’s Average
Propensity To Consume Is 80 Percent.
A. True
B. False
15. The Most Effective Way To Achieve Financial Objectives Is Through Personal Financial Planning.
A. True
B. False
16. Tangible (Physical) Assets Are Earning Assets That Are Held For The Returns They Promise.
A. True
B. False
17. Two People With Significantly Different Incomes Can Have Equal Average Propensities To Consume
Because Of Differences In Their Standard Of Living.
A. True
B. False
18. The Need For Financial Planning Declines As Your Income Increases.
A. True
B. False
,19. Retirement Planning Includes Taking Advantage Of And Managing Employer-Sponsored Benefits.
A. True
B. False
20. Geographic Factors Affect Your Earning Power.
A. True
B. False
21. Fee-Only Financial Planners Earn Commissions For The Products They Sell.
A. True
B. False
22. Marital Status Affects The Income Level Of Individuals.
A. True
B. False
23. Your Purchase, Saving, Investment, And Retirement Plans And Decisions Are Not Influenced By The Present State
Of The Economy.
A. True
B. False
24. For Employees Of Large Firms, Managing Employee Benefits Is An Important Part Of Financial Planning.
A. True
B. False
25. Short-Term Planning Should Include Creating And Maintaining An Emergency Fund With At Least Six Months’
Worth Of Income.
A. True
B. False
26. The Federal Government Delegates Its Regulation Of Economic Activity Function To Businesses And Consumers.
A. True
B. False
27. The Support Of Philanthropic Organizations Is A Material Item That Contributes To Our Quality Of Life.
A. True
B. False
28. The Average Propensity To Consume Is Commonly Viewed As A Key Determinant Of Standard Of Living.
A. True
B. False
,29. Financial Planning Can Improve Your Standard Of Living.
A. True
B. False
30. When You Get Your First Job, You Should Make A Good Financial Plan That You Can Follow Without Making
Changes Until You Retire.
A. True
B. False
31. Living Costs Are Constant Throughout The Country.
A. True
B. False
32. Standard Of Living Is Defined As The Necessities, Comforts, And Luxuries Desired By An Individual Or A Family.
A. True
B. False
33. The Decisions You Make In Career Planning Are Independent Of The Decisions You Make In Financial Planning.
A. True
B. False
34. Most People Tend To Be More Liberal About Their Expenditures During A Recession Or Crisis.
A. True
B. False
Indicate The Answer Choice That Best Completes The Statement Or Answers The Question.
35. Tax Planning Is Most Common Among Individuals With:
A. Low Incomes.
B. High Incomes.
C. No Incomes.
D. Erratic Incomes.
E. Decreasing Incomes.
36. Which Of The Following Would Not Be Considered An Asset?
A. Savings Account
B. Land
C. Credit Card Balance
D. Jewelry
E. Money Market
Funds
37. When Applying For A Job Within A Large Nationwide Company, You Notice That Salaries For The Same Position
Differ Based On Geographic Region. In Which Of The Following Regions Would You Most Likely Receive The Highest
,Salary?
A. Small Town In The Midwest
B. Metropolitan Area In The
Northeast
C. Rural Area In The West
D. Metropolitan Area In The South
38. The Best Way To Achieve Your Financial Objectives Is To:
A. Have A Luxurious Standard Of Living.
B. Spend Your Money At Once To Reach Your Objectives
Swiftly.
C. Develop A Sound Financial Plan.
D. Create A Good Tax Deferment Strategy.
E. Monitor Your Spending.
39. Which Of The Following Would Be Considered Real Property?
A. Stocks
B. Land
C. Cash
D. Bonds
E. Clothing
40. Stocks, Bonds, And Mutual Funds Are Considered What Type Of Assets?
A. Physical
B. Earning
C. Fixed
D. Tangible
E. Real
41. Which Of The Following Statements About Money And Relationships Is True?
A. It Is Highly Possible To Change A Partner’s Financial Style.
B. One Of The Most Important Aspects Of 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.
42. Financial Planning Helps Us:
A. Control Inflation.
B. Have Flexibility To Handle Job
Loss.
C. Control Unemployment Rates.
D. Obtain A Social Security Number.
, E. Decrease National Debt.
43. Which Of The Following Statements Is True Of Career Planning?
A. It Does Not Require Any Goal Setting.
B. It Is Not Related To Personal Financial
Planning.
C. It Does Not Influence An Individual’s Lifetime
Earnings.
D. It Impacts An Employer’s Stability.
E. It Helps In Improving Professional Satisfaction.
44. Managing Life, Health, And Disability Insurance Is An Important Part Of What Type Of Planning?
A. Asset Acquisition
B. Tax
C. Retirement
D. Estate
E. Employee Benefit
45. Between The Ages Of 65 And 80, Income Tends To:
A. Increase.
B. Decrease.
C. Stabilize.
D. Fluctuate.
E. Decrease And Then Increase
Slowly.
46. An Example Of The Purchase Of A Financial Asset Would Be The Purchase Of
A. A Painting.
B. Stocks.
C. A Car.
D. Jewelry.
E. A Vacation
Home.
47. Which Of The Following Is One Of The Most Emotional Issues In Any Relationship, Including That With A Partner,
Parents, Or Children?
A. Career Choices
B. Hobbies
C. Friends
D. Money
E. Retirement Planning
48. Which Of The Following Statements About Investments Is True?
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.
49. Which Of The Following Will Legally Reduce An Investor’s Tax Liability?
A. Tax Evasion
B. Tax Shelter
C. Tax Penalty
D. Tax Accounting
E. Tax Portfolio
50. Which Of The Following Statements About Businesses Is True?
A. Businesses Provide Consumers With Goods And Services And Receive Payment In The Form Of
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.
51. When Setting Financial Goals, One Should Typically Start By Setting:
A. Short-Term Goals.
B. Intermediate Goals.
C. Long-Term Goals.
D. Goals That Are Not Time-
Bound.
E. Goals That Are Very
Aggressive.
52. The Last Step In The Financial Planning Process Is To:
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.
53. Typically, An Individual’s Salary Will Be Lower If They Live In What Type Of Area?
A. Metropolitan
B. Overpopulated
C. Industrial
D. Rural
E. Well-Developed
,54. Which Of The Following Practices Helps An Individual Survive In A Financial Crisis?
A. Spending More Than Their Earnings To Maintain A Good Lifestyle
B. Investing Small Amounts Regularly To Achieve Long-Term Financial
Goals
C. Establishing An Emergency Fund With Six Months’ Worth Of Income
D. Developing Financial Plans Only After Reaching The Highest Tax
Brackets
E. Hiring A Noncertified Financial Planner
55. If Your Salary Increased 4 Percent Last Year And Inflation Averaged 4 Percent, Your Purchasing Power Would:
A. Have Increased.
B. Have
Decreased.
C. Have Doubled.
D. Have Remained The
Same.
E. Be Impossible To Tell.
56. What Is The Term For The Net Total Value Of All The Items That An Individual Owns?
A. Wealth
B. Propensity To Consume
C. The Consumer Price Index (Cpi)
D. Purchasing Power
E. Credit Debt
57. Tax Planning Is Most Commonly Done To:
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.
58. In Addition To Discussing Your Financial Goals With Your Partner, You Must Allocate Responsibility For What
Management Tasks And Decisions?
A. Skill
B. Stress
C. Household
D. Money
E. Business-Cycle
59. What Does An Economy Experience After A Peak?
A. A Convolution
B. An Expansion
C. A Contraction
, D. Recovery
E. Prosperity
60. An Individual’s Quality Of Life Is Closely Tied To Their:
A. Political Orientation.
B. Charitable Contributions.
C. Pollution Control Efforts.
D. Standard Of Living.
E. Educational Qualifications.
61. Which Of The Following Is A Typical Effect Of An Economic Recession?
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
62. A Strong Economy Leads To:
A. A Low Gross Domestic Product
(Gdp).
B. High Tax Percentages.
C. High Employment Opportunities.
D. Low Tax Penalty Rates.
E. A Low Value Of Retirement
Accounts.
63. A Trend With A Profound Effect On People’s Standard Of Living And That Requires Greater Responsibility To
Manage Money Wisely Is The:
A. Single-Income Family.
B. Two-Income Family.
C. Investment Family.
D. Retirement-Income
Family.
E. Government.
64. In What Type Of Plans Does An Employer Allocate A Certain Amount Of Money To Each Employee And Lets
The Employee Spend That Money For Benefits That Suit Them?
A. Cafeteria
B. Fixed-Benefit
C. Estate
D. Profit-Sharing
E. Saving
