PFIN (8th Edition, Randall Billingsley & Lawrence Gitman) – Complete Test Bank Chapters 1–15 | All Chapters Covered

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TEST BANK FOR
PFIN 8th Edition by Randall Billingsley, Lawrence Gitman, Michael Joehnk
Chapter 1-15 Answers are at the end of Each Chapter
TE
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
S
b. False
TS
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
O
b. False

4. Setting long- and short-term career goals helps in career planning.
LU
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
TI
b. False

6. You should discuss your financial goals and attitudes toward money with your partner.
a. True
O
b. False

7. Accumulating wealth for later years is called estate planning.
N
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

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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.
TE
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
S
12. Career plans should not be changed after long- and short-term career goals are set.
TS
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
O
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.
LU
a. True
b. False

15. The most effective way to achieve financial objectives is through personal financial planning.
a. True
b. False
TI
16. Tangible (physical) assets are earning assets that are held for the returns they promise.
a. True
b. False
O
17. Two people with significantly different incomes can have equal average propensities to consume because of
differences in their standard of living.
N
a. True
b. False

18. The need for financial planning declines as your income increases.
a. True
b. False

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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
TE
b. False

21. Fee-only financial planners earn commissions for the products they sell.
a. True
b. False
S
22. Marital status affects the income level of individuals.
a. True
TS
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
O
24. For employees of large firms, managing employee benefits is an important part of financial planning.
a. True
LU
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
TI
26. The federal government delegates its regulation of economic activity function to businesses and consumers.
a. True
b. False
O
27. The support of philanthropic organizations is a material item that contributes to our quality of life.
a. True
N
b. False

28. The average propensity to consume is commonly viewed as a key determinant of standard of living.
a. True
b. False


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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
TE
b. False

31. Living costs are constant throughout the country.
a. True
b. False
S
32. Standard of living is defined as the necessities, comforts, and luxuries desired by an individual or a family.
a. True
b. False
TS
33. The decisions you make in career planning are independent of the decisions you make in financial planning.
a. True
b. False
O
34. Most people tend to be more liberal about their expenditures during a recession or crisis.
a. True
b. False
LU
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.
TI
c. no incomes.
d. erratic incomes.
e. decreasing incomes.
O
36. Which of the following would NOT be considered an asset?
a. Savings account
b. Land
N
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?

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