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Principles of Financial Planning Answers

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1
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In American society, which of these is an example of a want?

A
food
B
shoes
C
video games
D
utility bills
2
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How do long-term financial goals differ from short-term financial goals?

A
Long-term goals require more money than short-term goals.
B
Long-term goals are more stable over time than short-term goals.
C
Long-term goals are less attainable than short-term goals.
D
Long-term goals require less preparation than short-term goals.
3

This chart shows Dan’s budget:

Question illustration
A
Yes, Dan spent as much as he earned.
B
No, Dan should lower his savings account contribution.
C
Yes, Dan used his savings to cover extra expenses.
D
No, Dan should reduce his discretionary spending.
4

When studying finance or economics, the cost of a decision is also known as a(n)

A
personal cost.
B
financial cost.
C
long-term cost.
D
opportunity cost.
5

Amanda wants to buy a new car. What questions of financial responsibility should she ask herself before she makes the purchase? Select three options.

A
Do I need this car or should I walk, bike, and take the bus to save money?
B
Is this a reliable vehicle or will I have to make costly repairs?
C
What will my friends think when I buy this car?
D
Will I be able to afford the insurance, gas, maintenance of battery, oil, tires, and also repairs?
E
Will this new car be fast and my favorite color?
6

Which would be most helpful when considering a large expenditure that might require repeating payments? Select three options.

A
careful consideration of short-term goals
B
recording the number of assets you currently own
C
creating a budget to consider future income and spending
D
learning more about different kinds of accounts to manage money
E
learning about opportunity cost
7

In personal finance, one makes decisions based on needs vs. wants. What is considered a need?

A
something one would like to have
B
something ones does not budget for
C
something one can afford
D
something one cannot live without
8

Planning to finance higher education helps people prepare for their financial future because it teaches them about

A
loans and interest.
B
savings accounts.
C
filing taxes.
D
short-term goals.
9

Which of these is the best example of an asset?

A
the electricity in a home
B
the antique diamond necklace someone is wearing
C
the coffee someone drank this morning
D
an old, used airline ticket
10

What is included in an individual’s personal assets? Select three options.

A
number of dependents
B
money
C
career
D
property
E
investment

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