Test Bank For Personal Finance, 2nd Edition by Vickie L. Bajtelsmit

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Test Bank For Personal Finance, 2nd Edition by Vickie L. Bajtelsmit-Personal finance is a specialized area of study that focuses A) exclusively on investments and retirement planning. B) on financia... l management, household budgets, and investments. C) exclusively on investment management and household budgets. D) on individual and household financial decisions, such as budgeting, saving, spending, tax planning, insurance, and investments. Answer: D Solution: Personal finance is a specialized area of study that focuses on individual and household financial decisions, such as budgeting, saving, spending, tax-planning, insurance, and investments. Format: Multiple Choice Title: Test Bank 1.1 Personal Financial Planning Section: Why Study Personal Financial Planning? Learning Objective: 1.1 Describe the personal financial planning process, and explain how the elements of a comprehensive financial plan fit together. Difficulty: Easy Bloomcode: Knowledge AACSB: Knowledge Expected Time to Complete: 1 minute 2. Critical to the success of building a comprehensive financial plan is that you approach its creation in a logical order. The steps to success, in the correct order, are as follows: A) Secure basic needs, build and protect wealth, and establish a firm foundation. B) Secure basic needs, establish a firm foundation, and build and protect wealth. C) Build and protect wealth, establish a firm foundation, and secure basic needs. D) Establish a firm foundation, secure basic needs, and build and protect wealth. Answer: D Solution: Critical to the success of building a comprehensive financial plan is that you approach its creation in a logical order. The steps to success are: establish a firm foundation, secure basic needs, and build and protect wealth. Format: Multiple Choice Title: Test Bank 1.1 Steps to a Comprehensive Financial Plan Section: Elements of a Comprehensive Financial Plan Learning Objective: 1.1 Describe the personal financial planning process, and explain how the elements of a comprehensive financial plan fit together. Difficulty: Medium Bloomcode: Comprehension AACSB: Comprehension Expected Time to Complete: 2 minutes 3. The financial planning process includes five steps. Four of the steps are listed next:  Analyze your current financial status.  Implement your financial plan.  Monitor your progress and revise your plan as needed.  Organize your financial information and set short-term and long-term goals. What is the missing step? A) Identify and evaluate alternative strategies for meeting your goals. B) Understand the personal financial planning process. C) Acquire the necessary decision-making skills and tools. D) Build wealth and protection against emergencies. Answer: A Solution: The five steps in the financial planning process are as follows: 1. Organize your financial information and set short-term and long-term goals. 2. Analyze your current financial status. 3. Identify and evaluate alternative strategies for achieving your goals. 4. Implement your financial plan. 5. Monitor your progress and revise your plan as needed. Format: Multiple Choice Title: Test Bank 1.1 The Five Steps in the Financial Planning Process Section: The Personal Financial Planning Process Learning Objective: 1.1 Describe the personal financial planning process, and explain how the elements of a comprehensive financial plan fit together. Difficulty: Medium Bloomcode: Comprehension AACSB: Comprehension Expected Time to Complete: 2 minutes 4. An effective financial plan must be adaptable to changing circumstances. Which would not be a reason to take you back to Step 1 of the financial planning process? A) Changes in economic conditions B) Birth of a child C) Purchase of life insurance D) Marriage Answer: C Solution: Many changes will occur over the course of your life. Not only will changes in your personal circumstances (a new job, marriage, and children) affect your financial planning objectives and strategies but also may changes in economic conditions necessitate a revision of your comprehensive financial plan. Thus, revising your plan takes you continually back to the beginning of the process again. Life insurance is a result of changing a financial plan. Format: Multiple Choice Title: Test Bank 1.1 Section: The Personal Financial Planning Process Learning Objective: 1.1 Describe the personal financial planning process, and explain how the elements of a comprehensive financial plan fit together. Difficulty: Medium Bloomcode: Application AACSB: Reflective Thinking Expected Time to Complete: 1 minute 5. Personal financial planning does not include which of the following? A) Buying insurance B) Deciding which make and model of car to buy C) Budgeting D) Assessing attitude toward risk Answer: B Solution: Personal financial planning includes budgeting, savings, buying insurance, and assessing attitudes toward risk. While determining the cheapest form of financing and the opportunity cost associated with purchasing a car is part of financial planning, the qualitative factors involved in the make and model of a vehicle is not. Format: Multiple Choice Title: Test Bank 1.1 Personal Financial Planning Section: Why Study Personal Financial Planning? Learning Objective: 1.1 Describe the personal financial planning process, and explain how the elements of a comprehensive financial plan fit together. Difficulty: Medium Bloomcode: Comprehension AACSB: Comprehension Expected Time to Complete: 1 minute 6. Which is not a necessary activity in securing your basic needs? A) Making purchase and credit decisions B) Managing cash for liquidity and emergencies C) Selecting financial institutions for checking and savings accounts D) Investing to achieve long-term goals Answer: D Solution: Securing your basic needs is the second element of a comprehensive financial plan. Making purchase and credit decisions, managing cash for liquidity and emergencies, and selecting financial institutions for checking and savings accounts are all activities necessary to completing this part of your plan, not longterm investments. Format: Multiple Choice Title: Test Bank 1.1 Secure Your Basic Needs Section: Elements of a Comprehensive Financial Plan Learning Objective: 1.1 Describe the personal financial planning process, and explain how the elements of a comprehensive financial plan fit together. Difficulty: Medium [Show More]

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