Principles of Financial Planning Answers

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1
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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.
2
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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
3

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
4

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.
5

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

A
food
B
shoes
C
video games
D
utility bills
6

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.
7

What are the main purposes of a budget? Select three options.

A
to record past income and spending
B
to take out a student loan from the bank
C
to plan future income and spending
D
to apply for a mortgage
E
to balance available resources and expenses
8

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?
9

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.
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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