Principles of Financial Planning Answers

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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.
2
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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?
3

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

A
food
B
shoes
C
video games
D
utility bills
4

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

A
number of dependents
B
money
C
career
D
property
E
investment
5

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.
6

Which results are more likely for someone without personal finance skills? Select three options.

A
larger long-term credit or loan costs
B
less preparation for emergencies
C
fewer utility expenses
D
simple long-term investment strategies
E
increased long-term challenges
7

To assess the risk and return involved in a purchase decision, which practical questions should a potential buyer ask? Select three options.

A
What can go wrong?
B
What are my friends buying?
C
How will it affect my social status?
D
What is the likely return?
E
Is the risk worth the return?
8

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
9

How do short-term financial goals differ from long-term financial goals?

A
Short-term goals involve more planning than long-term goals.
B
Short-term goals are more affordable than long-term goals.
C
Short-term goals cost more than long-term goals in the long run.
D
Short-term goals are more immediate than long-term goals.
10

_____ are items such as utilities, rent, and food—items that one can’t do without.

A
Needs
B
Wants
C
Risks
D
Assets

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