Principles of Financial Planning Answers

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1
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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
2
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Personal finance skills have the most significant impact on an individual’s

A
career
B
education
C
quality of life
D
neighborhood safety
3

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

A
Needs
B
Wants
C
Risks
D
Assets
4

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.
5

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

A
number of dependents
B
money
C
career
D
property
E
investment
6

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
7

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.
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

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.
10

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

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