,TESTBANK FOR Personal Finance 3e Bajtelsmit
Notes
1- The file is chapter after chapter.
2- We have shown you few pages sample.
3- The file contains all Appendix and Excel sheet
if it exists.
4- We have all what you need, we make update
at every time. There are many new editions
waiting you.
5- If you think you purchased the wrong file You
can contact us at every time, we can replace it
with true one.
Our email:
,Personal Finance, 3e (Bajtelsmit)
Chapter 1 The Financial Planning Process
1) Personal finance is a specialized area of study that focuses
A) exclusively on investments and retirement planning.
B) on financial management, household budgets, and investments.
C) exclusively on investment management and household budgets.
D) on individual and household financial decisions, such as budgeting, saving, spending, tax
planning, insurance, and investments.
Answer: D
Explanation: Personal finance is a specialized area of study that focuses on individual and
household financial decisions, such as budgeting, saving, spending, tax-planning, insurance, and
investments.
Diff: 1 Var: 1
Section: 1.1 What Is Personal Financial Planning?
Learning Objective: 1.1 Describe the personal financial planning process, and explain how the
elements of a comprehensive financial plan fit together.
Bloomcode: Knowledge
AACSB: Knowledge
Expected Time to Complete: 1 minute
2) Critical to the success of building a comprehensive financial plan is that you approach its
creation in a logical order. The proper steps in creating a successful financial plan fall in this
order:
A) Secure basic needs, build and protect wealth, and establish a firm foundation.
B) Secure basic needs, establish a firm foundation, and build and protect wealth.
C) Build and protect wealth, establish a firm foundation, and secure basic needs.
D) Establish a firm foundation, secure basic needs, and build and protect wealth.
Answer: D
Explanation: Critical to the success of building a comprehensive financial plan is that you
approach its creation in a logical order. The steps to success are: establish a firm foundation,
secure basic needs, and build and protect wealth.
Diff: 2 Var: 1
Section: 1.1 What Is Personal Financial Planning?
Learning Objective: 1.1 Describe the personal financial planning process, and explain how the
elements of a comprehensive financial plan fit together.
Bloomcode: Comprehension
AACSB: Comprehension
Expected Time to Complete: 2 minutes
1
,3) The financial planning process includes five steps. Four of the steps are listed next:
• Analyze your current financial status.
• Implement your financial plan.
• Monitor your progress and revise your plan as needed.
• Organize your financial information and set short-term and long-term goals.
What is the missing step?
A) Identify and evaluate alternative strategies for meeting your goals.
B) Understand the personal financial planning process.
C) Acquire the necessary decision-making skills and tools.
D) Build wealth and protection against emergencies.
Answer: A
Explanation: The five steps in the financial planning process are as follows:
1. Organize your financial information and set short-term and long-term goals.
2. Analyze your current financial status.
3. Identify and evaluate alternative strategies for achieving your goals.
4. Implement your financial plan.
5. Monitor your progress and revise your plan as needed.
Diff: 2 Var: 1
Section: 1.1 What Is Personal Financial Planning?
Learning Objective: 1.1 Describe the personal financial planning process, and explain how the
elements of a comprehensive financial plan fit together.
Bloomcode: Comprehension
AACSB: Comprehension
Expected Time to Complete: 2 minutes
4) An effective financial plan must be adaptable to changing circumstances. Which would not be
a reason to take you back to Step 1 of the financial planning process?
A) Changes in economic conditions
B) Birth of a child
C) Purchase of life insurance
D) Marriage
Answer: C
Explanation: Many changes will occur over the course of your life. Not only will changes in
your personal circumstances (a new job, marriage, and children) affect your financial planning
objectives and strategies but also may changes in economic conditions necessitate a revision of
your comprehensive financial plan. Thus, revising your plan takes you continually back to the
beginning of the process again. Life insurance is a result of changing a financial plan.
Diff: 2 Var: 1
Section: 1.1 What Is Personal Financial Planning?
Learning Objective: 1.1 Describe the personal financial planning process, and explain how the
elements of a comprehensive financial plan fit together.
Bloomcode: Application
AACSB: Reflective Thinking
Expected Time to Complete: 1 minute
2
,5) Personal financial planning does not include which of the following?
A) Buying insurance
B) Deciding which make and model of car to buy
C) Budgeting
D) Assessing attitude toward risk
Answer: B
Explanation: Personal financial planning includes budgeting, savings, buying insurance, and
assessing attitudes toward risk. While determining the cheapest form of financing and the
opportunity cost associated with purchasing a car is part of financial planning, the qualitative
factors involved in the make and model of a vehicle is not.
Diff: 2 Var: 1
Section: 1.1 What Is Personal Financial Planning?
Learning Objective: 1.1 Describe the personal financial planning process, and explain how the
elements of a comprehensive financial plan fit together.
Bloomcode: Comprehension
AACSB: Comprehension
Expected Time to Complete: 1 minute
6) Which is not a necessary activity in securing your basic needs?
A) Making purchase and credit decisions
B) Managing cash for liquidity and emergencies
C) Selecting financial institutions for checking and savings accounts
D) Investing to achieve long-term goals
Answer: D
Explanation: Securing your basic needs is the second element of a comprehensive financial
plan. Making purchase and credit decisions, managing cash for liquidity and emergencies, and
selecting financial institutions for checking and savings accounts are all activities necessary to
completing this part of your plan, not long-term investments.
Diff: 2 Var: 1
Section: 1.1 What Is Personal Financial Planning?
Learning Objective: 1.1 Describe the personal financial planning process, and explain how the
elements of a comprehensive financial plan fit together.
Bloomcode: Comprehension
AACSB: Comprehension
Expected Time to Complete: 1 minute
3
,7) Which is not a necessary activity in establishing a firm foundation?
A) Protecting income and wealth from losses
B) Acquiring necessary decision-making skills and tools
C) Understanding the personal financial planning process
D) Setting short-term and long-term goals
Answer: A
Explanation: Establishing a firm foundation is the first element of a comprehensive financial
plan. Acquiring necessary decision-making skills and tools, understanding the personal financial
planning process, and setting short-term and long-term goals are all activities necessary to
completing this part of your plan, not insurance protection.
Diff: 2 Var: 1
Section: 1.1 What Is Personal Financial Planning?
Learning Objective: 1.1 Describe the personal financial planning process, and explain how the
elements of a comprehensive financial plan fit together.
Bloomcode: Comprehension
AACSB: Reflective Thinking
Expected Time to Complete: 1 minute
8) Which is not a necessary activity in building and protecting wealth?
A) Writing a will
B) Investing to achieve long-term goals
C) Buying property and liability insurance
D) Managing cash for liquidity and emergencies
Answer: D
Explanation: Writing a will, investing to achieve long-term goals, protecting income and
wealth from losses, and buying property and liability insurance are all activities necessary to
completing this part of your plan, not cash/liquidity management.
Diff: 2 Var: 1
Section: 1.1 What Is Personal Financial Planning?
Learning Objective: 1.1 Describe the personal financial planning process, and explain how the
elements of a comprehensive financial plan fit together.
Bloomcode: Comprehension
AACSB: Reflective Thinking
Expected Time to Complete: 1 minute
4
,9) As you build your financial plan, you'll need to consider the unique characteristics of your
household that may influence spending and saving. Which of these factors is not unique to your
household?
A) Life cycle stage
B) Family makeup
C) Inflation and interest rates
D) Values and attitudes
Answer: C
Explanation: Factors unique to your household are your life cycle stage, family makeup, and
values and attitudes. While economic factors, such as inflation and interest rates, are important
considerations for everyone who is developing and implementing financial plans.
Diff: 2 Var: 1
Section: 1.2 Factors That Influence Financial Planning Decisions
Learning Objective: 1.2 Describe how individual characteristics and economic factors
influence personal financial planning.
Bloomcode: Comprehension
AACSB: Comprehension
Expected Time to Complete: 1 minute
10) If your ________ are larger than your ________, your wealth is negative.
A) expenses; debts
B) debts; assets
C) assets; debts
D) assets; income
Answer: B
Explanation: If your debts are larger than your assets, your wealth is negative.
Diff: 2 Var: 1
Section: 1.2 Factors That Influence Financial Planning Decisions
Learning Objective: 1.2 Describe how individual characteristics and economic factors
influence personal financial planning.
Bloomcode: Comprehension
AACSB: Reflective Thinking
Expected Time to Complete: 1 minute
5
,11) A person's fundamental beliefs concerning what is important in life are referred to as
A) judgments.
B) values.
C) attitudes.
D) opinions.
Answer: B
Explanation: Values are fundamental beliefs about what is important in life.
Diff: 1 Var: 1
Section: 1.2 Factors That Influence Financial Planning Decisions
Learning Objective: 1.2 Describe how individual characteristics and economic factors
influence personal financial planning.
Bloomcode: Knowledge
AACSB: Knowledge
Expected Time to Complete: 1 minute
12) When the consumer price index (CPI) increases,
A) you can buy goods and services cheaper.
B) the prices of goods and services are more expensive.
C) the value of the dollar is high.
D) you will earn less on your investments.
Answer: B
Explanation: In the United States, inflation is typically measured by the change in the CPI,
which is a representative basket of more than 400 goods and services used by urban households,
including food, housing, consumer goods, gasoline, and clothing. When the consumer price
index (CPI) increases, the prices of goods and services become more expensive.
Diff: 2 Var: 1
Section: 1.2 Factors That Influence Financial Planning Decisions
Learning Objective: 1.2 Describe how individual characteristics and economic factors
influence personal financial planning.
Bloomcode: Application
AACSB: Analytic
Expected Time to Complete: 1 minute
6
,13) As inflation ________, the spending power of money ________.
A) increases; increases
B) decreases; decreases
C) increases; decreases
D) decreases; remains the same
Answer: C
Explanation: Inflation refers to an increase in prices. As prices of goods and services go up, the
spending power of your money goes down; thus, a dollar will not purchase as much as it
previously did.
Diff: 2 Var: 1
Section: 1.2 Factors That Influence Financial Planning Decisions
Learning Objective: 1.2 Describe how individual characteristics and economic factors
influence personal financial planning.
Bloomcode: Application
AACSB: Analytic
Expected Time to Complete: 1 minute
14) Your salary was $32,000 in 2019. It increased to $35,000 in 2020. What was the percentage
increase in your salary from 2019 to 2020?
A) 8.57%
B) 9.14%
C) 9.38%
D) 33.5%
Answer: C
Explanation: Percent change =
Percent change = = 0.0938, or 9.38%
Diff: 2 Var: 1
Section: 1.2 Factors That Influence Financial Planning Decisions
Learning Objective: 1.2 Describe how individual characteristics and economic factors
influence personal financial planning.
Bloomcode: Analysis
AACSB: Analytic
Expected Time to Complete: 2 minutes
7
, 15) Your salary was $28,000 in 2018 and $30,000 in 2019. In 2020, your salary was $34,000.
What was the percentage increase in your salary from 2018 to 2020?
A) 7.14%
B) 11.76%
C) 14.29%
D) 21.43%
Answer: D
Explanation: Percent change =
Percent change = = 0.2143, or 21.43%
Diff: 2 Var: 1
Section: 1.2 Factors That Influence Financial Planning Decisions
Learning Objective: 1.2 Describe how individual characteristics and economic factors
influence personal financial planning.
Bloomcode: Analysis
AACSB: Analytic
Expected Time to Complete: 2 minutes
16) Your salary increased from $20,000 to $30,000 in five years. What is the percentage
increase?
A) 33%
B) 50%
C) 100%
D) 150%
Answer: B
Explanation: Percent change =
Percent change = = 0.50, or 50%
Diff: 2 Var: 1
Section: 1.2 Factors That Influence Financial Planning Decisions
Learning Objective: 1.2 Describe how individual characteristics and economic factors
influence personal financial planning.
Bloomcode: Analysis
AACSB: Analytic
Expected Time to Complete: 2 minutes
8
Notes
1- The file is chapter after chapter.
2- We have shown you few pages sample.
3- The file contains all Appendix and Excel sheet
if it exists.
4- We have all what you need, we make update
at every time. There are many new editions
waiting you.
5- If you think you purchased the wrong file You
can contact us at every time, we can replace it
with true one.
Our email:
,Personal Finance, 3e (Bajtelsmit)
Chapter 1 The Financial Planning Process
1) Personal finance is a specialized area of study that focuses
A) exclusively on investments and retirement planning.
B) on financial management, household budgets, and investments.
C) exclusively on investment management and household budgets.
D) on individual and household financial decisions, such as budgeting, saving, spending, tax
planning, insurance, and investments.
Answer: D
Explanation: Personal finance is a specialized area of study that focuses on individual and
household financial decisions, such as budgeting, saving, spending, tax-planning, insurance, and
investments.
Diff: 1 Var: 1
Section: 1.1 What Is Personal Financial Planning?
Learning Objective: 1.1 Describe the personal financial planning process, and explain how the
elements of a comprehensive financial plan fit together.
Bloomcode: Knowledge
AACSB: Knowledge
Expected Time to Complete: 1 minute
2) Critical to the success of building a comprehensive financial plan is that you approach its
creation in a logical order. The proper steps in creating a successful financial plan fall in this
order:
A) Secure basic needs, build and protect wealth, and establish a firm foundation.
B) Secure basic needs, establish a firm foundation, and build and protect wealth.
C) Build and protect wealth, establish a firm foundation, and secure basic needs.
D) Establish a firm foundation, secure basic needs, and build and protect wealth.
Answer: D
Explanation: Critical to the success of building a comprehensive financial plan is that you
approach its creation in a logical order. The steps to success are: establish a firm foundation,
secure basic needs, and build and protect wealth.
Diff: 2 Var: 1
Section: 1.1 What Is Personal Financial Planning?
Learning Objective: 1.1 Describe the personal financial planning process, and explain how the
elements of a comprehensive financial plan fit together.
Bloomcode: Comprehension
AACSB: Comprehension
Expected Time to Complete: 2 minutes
1
,3) The financial planning process includes five steps. Four of the steps are listed next:
• Analyze your current financial status.
• Implement your financial plan.
• Monitor your progress and revise your plan as needed.
• Organize your financial information and set short-term and long-term goals.
What is the missing step?
A) Identify and evaluate alternative strategies for meeting your goals.
B) Understand the personal financial planning process.
C) Acquire the necessary decision-making skills and tools.
D) Build wealth and protection against emergencies.
Answer: A
Explanation: The five steps in the financial planning process are as follows:
1. Organize your financial information and set short-term and long-term goals.
2. Analyze your current financial status.
3. Identify and evaluate alternative strategies for achieving your goals.
4. Implement your financial plan.
5. Monitor your progress and revise your plan as needed.
Diff: 2 Var: 1
Section: 1.1 What Is Personal Financial Planning?
Learning Objective: 1.1 Describe the personal financial planning process, and explain how the
elements of a comprehensive financial plan fit together.
Bloomcode: Comprehension
AACSB: Comprehension
Expected Time to Complete: 2 minutes
4) An effective financial plan must be adaptable to changing circumstances. Which would not be
a reason to take you back to Step 1 of the financial planning process?
A) Changes in economic conditions
B) Birth of a child
C) Purchase of life insurance
D) Marriage
Answer: C
Explanation: Many changes will occur over the course of your life. Not only will changes in
your personal circumstances (a new job, marriage, and children) affect your financial planning
objectives and strategies but also may changes in economic conditions necessitate a revision of
your comprehensive financial plan. Thus, revising your plan takes you continually back to the
beginning of the process again. Life insurance is a result of changing a financial plan.
Diff: 2 Var: 1
Section: 1.1 What Is Personal Financial Planning?
Learning Objective: 1.1 Describe the personal financial planning process, and explain how the
elements of a comprehensive financial plan fit together.
Bloomcode: Application
AACSB: Reflective Thinking
Expected Time to Complete: 1 minute
2
,5) Personal financial planning does not include which of the following?
A) Buying insurance
B) Deciding which make and model of car to buy
C) Budgeting
D) Assessing attitude toward risk
Answer: B
Explanation: Personal financial planning includes budgeting, savings, buying insurance, and
assessing attitudes toward risk. While determining the cheapest form of financing and the
opportunity cost associated with purchasing a car is part of financial planning, the qualitative
factors involved in the make and model of a vehicle is not.
Diff: 2 Var: 1
Section: 1.1 What Is Personal Financial Planning?
Learning Objective: 1.1 Describe the personal financial planning process, and explain how the
elements of a comprehensive financial plan fit together.
Bloomcode: Comprehension
AACSB: Comprehension
Expected Time to Complete: 1 minute
6) Which is not a necessary activity in securing your basic needs?
A) Making purchase and credit decisions
B) Managing cash for liquidity and emergencies
C) Selecting financial institutions for checking and savings accounts
D) Investing to achieve long-term goals
Answer: D
Explanation: Securing your basic needs is the second element of a comprehensive financial
plan. Making purchase and credit decisions, managing cash for liquidity and emergencies, and
selecting financial institutions for checking and savings accounts are all activities necessary to
completing this part of your plan, not long-term investments.
Diff: 2 Var: 1
Section: 1.1 What Is Personal Financial Planning?
Learning Objective: 1.1 Describe the personal financial planning process, and explain how the
elements of a comprehensive financial plan fit together.
Bloomcode: Comprehension
AACSB: Comprehension
Expected Time to Complete: 1 minute
3
,7) Which is not a necessary activity in establishing a firm foundation?
A) Protecting income and wealth from losses
B) Acquiring necessary decision-making skills and tools
C) Understanding the personal financial planning process
D) Setting short-term and long-term goals
Answer: A
Explanation: Establishing a firm foundation is the first element of a comprehensive financial
plan. Acquiring necessary decision-making skills and tools, understanding the personal financial
planning process, and setting short-term and long-term goals are all activities necessary to
completing this part of your plan, not insurance protection.
Diff: 2 Var: 1
Section: 1.1 What Is Personal Financial Planning?
Learning Objective: 1.1 Describe the personal financial planning process, and explain how the
elements of a comprehensive financial plan fit together.
Bloomcode: Comprehension
AACSB: Reflective Thinking
Expected Time to Complete: 1 minute
8) Which is not a necessary activity in building and protecting wealth?
A) Writing a will
B) Investing to achieve long-term goals
C) Buying property and liability insurance
D) Managing cash for liquidity and emergencies
Answer: D
Explanation: Writing a will, investing to achieve long-term goals, protecting income and
wealth from losses, and buying property and liability insurance are all activities necessary to
completing this part of your plan, not cash/liquidity management.
Diff: 2 Var: 1
Section: 1.1 What Is Personal Financial Planning?
Learning Objective: 1.1 Describe the personal financial planning process, and explain how the
elements of a comprehensive financial plan fit together.
Bloomcode: Comprehension
AACSB: Reflective Thinking
Expected Time to Complete: 1 minute
4
,9) As you build your financial plan, you'll need to consider the unique characteristics of your
household that may influence spending and saving. Which of these factors is not unique to your
household?
A) Life cycle stage
B) Family makeup
C) Inflation and interest rates
D) Values and attitudes
Answer: C
Explanation: Factors unique to your household are your life cycle stage, family makeup, and
values and attitudes. While economic factors, such as inflation and interest rates, are important
considerations for everyone who is developing and implementing financial plans.
Diff: 2 Var: 1
Section: 1.2 Factors That Influence Financial Planning Decisions
Learning Objective: 1.2 Describe how individual characteristics and economic factors
influence personal financial planning.
Bloomcode: Comprehension
AACSB: Comprehension
Expected Time to Complete: 1 minute
10) If your ________ are larger than your ________, your wealth is negative.
A) expenses; debts
B) debts; assets
C) assets; debts
D) assets; income
Answer: B
Explanation: If your debts are larger than your assets, your wealth is negative.
Diff: 2 Var: 1
Section: 1.2 Factors That Influence Financial Planning Decisions
Learning Objective: 1.2 Describe how individual characteristics and economic factors
influence personal financial planning.
Bloomcode: Comprehension
AACSB: Reflective Thinking
Expected Time to Complete: 1 minute
5
,11) A person's fundamental beliefs concerning what is important in life are referred to as
A) judgments.
B) values.
C) attitudes.
D) opinions.
Answer: B
Explanation: Values are fundamental beliefs about what is important in life.
Diff: 1 Var: 1
Section: 1.2 Factors That Influence Financial Planning Decisions
Learning Objective: 1.2 Describe how individual characteristics and economic factors
influence personal financial planning.
Bloomcode: Knowledge
AACSB: Knowledge
Expected Time to Complete: 1 minute
12) When the consumer price index (CPI) increases,
A) you can buy goods and services cheaper.
B) the prices of goods and services are more expensive.
C) the value of the dollar is high.
D) you will earn less on your investments.
Answer: B
Explanation: In the United States, inflation is typically measured by the change in the CPI,
which is a representative basket of more than 400 goods and services used by urban households,
including food, housing, consumer goods, gasoline, and clothing. When the consumer price
index (CPI) increases, the prices of goods and services become more expensive.
Diff: 2 Var: 1
Section: 1.2 Factors That Influence Financial Planning Decisions
Learning Objective: 1.2 Describe how individual characteristics and economic factors
influence personal financial planning.
Bloomcode: Application
AACSB: Analytic
Expected Time to Complete: 1 minute
6
,13) As inflation ________, the spending power of money ________.
A) increases; increases
B) decreases; decreases
C) increases; decreases
D) decreases; remains the same
Answer: C
Explanation: Inflation refers to an increase in prices. As prices of goods and services go up, the
spending power of your money goes down; thus, a dollar will not purchase as much as it
previously did.
Diff: 2 Var: 1
Section: 1.2 Factors That Influence Financial Planning Decisions
Learning Objective: 1.2 Describe how individual characteristics and economic factors
influence personal financial planning.
Bloomcode: Application
AACSB: Analytic
Expected Time to Complete: 1 minute
14) Your salary was $32,000 in 2019. It increased to $35,000 in 2020. What was the percentage
increase in your salary from 2019 to 2020?
A) 8.57%
B) 9.14%
C) 9.38%
D) 33.5%
Answer: C
Explanation: Percent change =
Percent change = = 0.0938, or 9.38%
Diff: 2 Var: 1
Section: 1.2 Factors That Influence Financial Planning Decisions
Learning Objective: 1.2 Describe how individual characteristics and economic factors
influence personal financial planning.
Bloomcode: Analysis
AACSB: Analytic
Expected Time to Complete: 2 minutes
7
, 15) Your salary was $28,000 in 2018 and $30,000 in 2019. In 2020, your salary was $34,000.
What was the percentage increase in your salary from 2018 to 2020?
A) 7.14%
B) 11.76%
C) 14.29%
D) 21.43%
Answer: D
Explanation: Percent change =
Percent change = = 0.2143, or 21.43%
Diff: 2 Var: 1
Section: 1.2 Factors That Influence Financial Planning Decisions
Learning Objective: 1.2 Describe how individual characteristics and economic factors
influence personal financial planning.
Bloomcode: Analysis
AACSB: Analytic
Expected Time to Complete: 2 minutes
16) Your salary increased from $20,000 to $30,000 in five years. What is the percentage
increase?
A) 33%
B) 50%
C) 100%
D) 150%
Answer: B
Explanation: Percent change =
Percent change = = 0.50, or 50%
Diff: 2 Var: 1
Section: 1.2 Factors That Influence Financial Planning Decisions
Learning Objective: 1.2 Describe how individual characteristics and economic factors
influence personal financial planning.
Bloomcode: Analysis
AACSB: Analytic
Expected Time to Complete: 2 minutes
8
