TEST BANK
x x
Personal Financial Planning, 13th Edition,
x x x x x
by Gitman, Joehnk, and Billingsley.
xx x x x
All chapters covered.
x x
,Chapter x1—Understanding xthe xFinancial xPlanning xProcess
TRUE/FALSE
1. Standard xof xliving xis xdefined xas xthe xnecessities, xcomforts, xand xluxuries xdesired xby xan xindividual xor
group. x ANS: x x T PTS: x x x 1
x DIF: Easy OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest xRates
KEY: x x Bloom's: xKnowledge
2. Your xaverage xpropensity xto xconsume xis xthe xpercentage xof xeach xdollar xof xincome, xon xthe
xaverage, xthat xis x spent xfor xcurrent xneeds xrather xthan xsavings.
ANS: x x T PTS: x x x 1 DIF: Easy OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xKnowledge
3. A xgood xfinancial xplan xcompleted xwhen xone xis xin xtheir x30s xwill xtypically xlast xa
xlifetime. x ANS: x x F PTS: x x x 1 DIF: Challenging OBJ: x x x LO: x1-2
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xSynthesis
4. Financial xplanning xis xa xcontinuing, xlife-long xprocess.
ANS: x x T PTS: x x x 1 DIF: Easy OBJ: x x x LO: x1-2
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xComprehension
5. Financial xplanning xcan ximprove xyour xstandard xof xliving.
ANS: x x T PTS: x x x 1 DIF: Easy OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xComprehension
6. Current xconsumption xis xinversely xrelated xto xsaving xfor xthe xfuture.
ANS: x x T PTS: x x x 1 DIF: Challenging OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xAnalysis
7. About x20% xof xAmericans xsay xretirement xplanning xis xtheir xmost xpressing xfinancial xconcern.
, ANS: x x F PTS: x x x 1 DIF: Moderate OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xKnowledge
8. The xmost xeffective xway xto xachieve xfinancial xobjectives xis xthrough xfinancial
x planning. x ANS: x x T PTS: x x x 1 DIF:
Moderate OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xComprehension
9. Defining xfinancial xgoals xis xan ximportant xfirst xstep xin xpersonal xfinancial xplanning
process. x ANS: x x T PTS: x x x 1
x DIF: Easy OBJ: x x x LO: x1-2
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest xRates
KEY: x x Bloom's: xComprehension
10. Two xpersons xwith xequal xaverage xpropensities xto xconsume xwill xnot xnecessarily xhave xequal
xstandards xof x living xbecause xof xdifferences xin xincome.
ANS: x x T PTS: x x x 1 DIF: Challenging OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xEvaluation
11. The xneed xfor xfinancial xplanning xdeclines xas xyour xincome xincreases.
ANS: x x F PTS: x x x 1 DIF: Moderate OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xSynthesis
12. Current xconsumption xeffects xfuture xconsumption.
ANS: x x T PTS: x x x 1 DIF: Challenging OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xAnalysis
13. A xperson xwho xhas x$2,000 xmonthly xincome xand xspends x$1,800 xmonthly xhas xan xaverage
xpropensity xto x consume xof x90%.
ANS: x x T PTS: x x x 1 DIF: Challenging OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xEvaluation
14. A xperson xmaking x$35,000 xand xspending x$30,800 xhas xan xaverage xpropensity xto xconsume
of x80%. x ANS: x x FPTS: x x x 1
x DIF: Challenging OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest xRates
KEY: x x Bloom's: xEvaluation
15. Most xfamilies xfind xit xdifficult xto xdiscuss xmoney xmatters.
ANS: x x T PTS: x x x 1 DIF: Easy OBJ: x x x LO: x1-2
, NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xKnowledge
16. Average xpropensity xto xconsume xrefers xto xhow xmuch xof xyour xmoney xyou xplan xto xsave xin xyour
xfinancial x plan.
ANS: x x F PTS: x x x 1 DIF: Challenging OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xComprehension
17. Tangible xassets xare xearning xassets xthat xare xheld xfor xthe xreturns xthey xpromise.
ANS: x x F PTS: x x x 1 DIF: Challenging OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xComprehension
18. Financial xassets xare xpaper xassets, xsuch xas xsavings xaccounts xand xsecurities.
ANS: x x T PTS: x x x 1 DIF: Moderate OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xComprehension
19. Mutual xfunds xare xexamples xof xfinancial xassets.
ANS: x x T PTS: x x x 1 DIF: Easy OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xApplication
20. Spending xfor xyour xchild's xprivate-school xeducation xis xan xexample xof xdeferred
x consumption. x ANS: x x F PTS: x x x 1 DIF: Challenging
OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xApplication
21. Wealth xcan xbe xdefined xas xthe xtotal xvalue xof xall xthe xthings xyou xown.
ANS: x x T PTS: x x x 1 DIF: Easy OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xKnowledge
22. Wealth xis xthe xkey xconsideration xis xestablishing xfinancial xgoals xas xit xis xthe xmeasure xof xvalue xin
xfinancial x transactions.
ANS: x x F PTS: x x x 1 DIF: Challenging OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xComprehension
23. Financial xassets xinclude xinvestments xsuch xas xstocks xand xbonds.
ANS: x x T PTS: x x x 1 DIF: Easy OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest xRates
x x
Personal Financial Planning, 13th Edition,
x x x x x
by Gitman, Joehnk, and Billingsley.
xx x x x
All chapters covered.
x x
,Chapter x1—Understanding xthe xFinancial xPlanning xProcess
TRUE/FALSE
1. Standard xof xliving xis xdefined xas xthe xnecessities, xcomforts, xand xluxuries xdesired xby xan xindividual xor
group. x ANS: x x T PTS: x x x 1
x DIF: Easy OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest xRates
KEY: x x Bloom's: xKnowledge
2. Your xaverage xpropensity xto xconsume xis xthe xpercentage xof xeach xdollar xof xincome, xon xthe
xaverage, xthat xis x spent xfor xcurrent xneeds xrather xthan xsavings.
ANS: x x T PTS: x x x 1 DIF: Easy OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xKnowledge
3. A xgood xfinancial xplan xcompleted xwhen xone xis xin xtheir x30s xwill xtypically xlast xa
xlifetime. x ANS: x x F PTS: x x x 1 DIF: Challenging OBJ: x x x LO: x1-2
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xSynthesis
4. Financial xplanning xis xa xcontinuing, xlife-long xprocess.
ANS: x x T PTS: x x x 1 DIF: Easy OBJ: x x x LO: x1-2
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xComprehension
5. Financial xplanning xcan ximprove xyour xstandard xof xliving.
ANS: x x T PTS: x x x 1 DIF: Easy OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xComprehension
6. Current xconsumption xis xinversely xrelated xto xsaving xfor xthe xfuture.
ANS: x x T PTS: x x x 1 DIF: Challenging OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xAnalysis
7. About x20% xof xAmericans xsay xretirement xplanning xis xtheir xmost xpressing xfinancial xconcern.
, ANS: x x F PTS: x x x 1 DIF: Moderate OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xKnowledge
8. The xmost xeffective xway xto xachieve xfinancial xobjectives xis xthrough xfinancial
x planning. x ANS: x x T PTS: x x x 1 DIF:
Moderate OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xComprehension
9. Defining xfinancial xgoals xis xan ximportant xfirst xstep xin xpersonal xfinancial xplanning
process. x ANS: x x T PTS: x x x 1
x DIF: Easy OBJ: x x x LO: x1-2
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest xRates
KEY: x x Bloom's: xComprehension
10. Two xpersons xwith xequal xaverage xpropensities xto xconsume xwill xnot xnecessarily xhave xequal
xstandards xof x living xbecause xof xdifferences xin xincome.
ANS: x x T PTS: x x x 1 DIF: Challenging OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xEvaluation
11. The xneed xfor xfinancial xplanning xdeclines xas xyour xincome xincreases.
ANS: x x F PTS: x x x 1 DIF: Moderate OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xSynthesis
12. Current xconsumption xeffects xfuture xconsumption.
ANS: x x T PTS: x x x 1 DIF: Challenging OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xAnalysis
13. A xperson xwho xhas x$2,000 xmonthly xincome xand xspends x$1,800 xmonthly xhas xan xaverage
xpropensity xto x consume xof x90%.
ANS: x x T PTS: x x x 1 DIF: Challenging OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xEvaluation
14. A xperson xmaking x$35,000 xand xspending x$30,800 xhas xan xaverage xpropensity xto xconsume
of x80%. x ANS: x x FPTS: x x x 1
x DIF: Challenging OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest xRates
KEY: x x Bloom's: xEvaluation
15. Most xfamilies xfind xit xdifficult xto xdiscuss xmoney xmatters.
ANS: x x T PTS: x x x 1 DIF: Easy OBJ: x x x LO: x1-2
, NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xKnowledge
16. Average xpropensity xto xconsume xrefers xto xhow xmuch xof xyour xmoney xyou xplan xto xsave xin xyour
xfinancial x plan.
ANS: x x F PTS: x x x 1 DIF: Challenging OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xComprehension
17. Tangible xassets xare xearning xassets xthat xare xheld xfor xthe xreturns xthey xpromise.
ANS: x x F PTS: x x x 1 DIF: Challenging OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xComprehension
18. Financial xassets xare xpaper xassets, xsuch xas xsavings xaccounts xand xsecurities.
ANS: x x T PTS: x x x 1 DIF: Moderate OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xComprehension
19. Mutual xfunds xare xexamples xof xfinancial xassets.
ANS: x x T PTS: x x x 1 DIF: Easy OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xApplication
20. Spending xfor xyour xchild's xprivate-school xeducation xis xan xexample xof xdeferred
x consumption. x ANS: x x F PTS: x x x 1 DIF: Challenging
OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xApplication
21. Wealth xcan xbe xdefined xas xthe xtotal xvalue xof xall xthe xthings xyou xown.
ANS: x x T PTS: x x x 1 DIF: Easy OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xKnowledge
22. Wealth xis xthe xkey xconsideration xis xestablishing xfinancial xgoals xas xit xis xthe xmeasure xof xvalue xin
xfinancial x transactions.
ANS: x x F PTS: x x x 1 DIF: Challenging OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest
xRates x KEY: x x Bloom's: xComprehension
23. Financial xassets xinclude xinvestments xsuch xas xstocks xand xbonds.
ANS: x x T PTS: x x x 1 DIF: Easy OBJ: x x x LO: x1-1
NAT: x x BUSPROG: xReflective xthinking STA: x x DISC: xFinancial xMarkets xand xInterest xRates
