Principles of Financial Planning Answers

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1
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Emma lives on a tight budget. She saves money and also makes intelligent choices when spending it. Which statements describe Emma’s financial skills? Select three options.

A
Emma is more prepared to meet her basic needs.
B
Emma is better prepared to avoid financial setbacks.
C
Emma is better able to avoid accumulating assets.
D
Emma is more prepared to face emergencies.
E
Emma is better able to avoid decision-making with her finances.
2
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What do financial planning skills ultimately enable an individual to do?

A
to prepare for the future
B
to process their own tax returns
C
to stop spending
D
to become wealthier without saving money
3

There are four steps in solving one’s personal financial challenges:1. considering opportunity costs2. assessing risks and returns 3. setting short- and long-term goals4. assessing needs and wantsWhich of these is the correct order of these steps?

A
2, 1, 3, 4
B
1, 2, 3, 4
C
4, 1, 2, 3
D
4, 2, 3, 1
4

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
5

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

A
food
B
shoes
C
video games
D
utility bills
6

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.
7

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

A
Needs
B
Wants
C
Risks
D
Assets
8

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
9

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.
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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