Test Bank for Personal Financial Planning, 13th Edition, by J. Gitman, Michael D. Joehnk, and R Billingsley.

TEST BANK
Personal Financial Planning, 13th Edition,
by Gitman, Joehnk, and Billingsley.
All chapters covered.

,Chapter1—UnderstandingtheFinancialPlanningProcess
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TRUE/FALSE

1. Standard of living is defined as the necessities, comforts, and luxuries desired by an individual or group. AN
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S: T FTF PTS: 1
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NAT: BUSPROG: Reflective thinking FTF T FT FT STA: DISC: Financial Markets and Interest Rates
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KEY: Bloom's: Knowledge FTF T FT




2. Your average propensity to consume is the percentage of each dollar of income, on the average, that is spen
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t for current needs rather than savings.
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ANS: T PTS: 1 FT F T FTFTF T DIF: Easy OBJ: LO: 1-1 FTFTF T FT




NAT: BUSPROG: Reflective thinking FTF T FT FT




STA: DISC: Financial Markets and Interest Rates
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KEY: Bloom's: Knowledge FTF T FT




3. A good financial plan completed when one is in their 30s will typically last a lifetime. ANS
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:F
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NAT: BUSPROG: Reflective thinking FTF T FT FT




STA: DISC: Financial Markets and Interest Rates
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KEY: Bloom's: Synthesis FTF T FT




4. Financial planning is a continuing, life-long process. FT FT FT FT FT FT




ANS: T PTS: 1 FT F T FTFTF T DIF: Easy OBJ: LO: 1-2 FTFTF T FT




NAT: BUSPROG: Reflective thinking FTF T FT FT




STA: DISC: Financial Markets and Interest Rates
FTF T FT FT FT FT FT F T




KEY: Bloom's: Comprehension FTF T FT




5. Financial planning can improve your standard of living. FT FT FT FT FT FT FT




ANS: T PTS: 1 FT F T FTFTF T DIF: Easy OBJ: LO: 1-1 FTFTF T FT




NAT: BUSPROG: Reflective thinking FTF T FT FT




STA: DISC: Financial Markets and Interest Rates
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KEY: Bloom's: Comprehension FTF T FT




6. Current consumption is inversely related to saving for the future.
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ANS: T PTS: 1 FT F T FTFTF T DIF: Challenging OBJ: LO: 1-1 FTFTF T FT




NAT: BUSPROG: Reflective thinking FTF T FT FT




STA: DISC: Financial Markets and Interest Rates
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KEY: Bloom's: Analysis FTF T FT




7. About 20% of Americans say retirement planning is their most pressing financial concern.
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, ANS: F PTS: 1 FT F T FTFTF T DIF: Moderate OBJ: LO: 1-1 FTFTF T FT




NAT: BUSPROG: Reflective thinking FTF T FT FT




STA: DISC: Financial Markets and Interest Rates
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KEY: Bloom's: Knowledge FTF T FT




8. The most effective way to achieve financial objectives is through financial planning. A
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NS: T PTS: 1
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NAT: BUSPROG: Reflective thinking FTF T FT FT




STA: DISC: Financial Markets and Interest Rates
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KEY: Bloom's: Comprehension FTF T FT




9. Defining financial goals is an important first step in personal financial planning process. AN
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S: T FTF T PTS: 1 FTFTF T DIF: Easy OBJ: LO: 1-2 FTFTF T FT




NAT: BUSPROG: Reflective thinking FTF T FT FT STA: DISC: Financial Markets and Interest Rates
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KEY: Bloom's: Comprehension FTF T FT




10. Two persons with equal average propensities to consume will not necessarily have equal standards of livi
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ng because of differences in income.
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ANS: T PTS: 1 FT F T FTFTF T DIF: Challenging OBJ: LO: 1-1 FTFTF T FT




NAT: BUSPROG: Reflective thinking FTF T FT FT




STA: DISC: Financial Markets and Interest Rates
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KEY: Bloom's: Evaluation FTF T FT




11. The need for financial planning declines as your income increases.
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ANS: F PTS: 1 FT F T FTFTF T DIF: Moderate OBJ: LO: 1-1 FTFTF T FT




NAT: BUSPROG: Reflective thinking FTF T FT FT




STA: DISC: Financial Markets and Interest Rates
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KEY: Bloom's: Synthesis FTF T FT




12. Current consumption effects future consumption. FT FT FT FT




ANS: T PTS: 1 FT F T FTFTF T DIF: Challenging OBJ: LO: 1-1 FTFTF T FT




NAT: BUSPROG: Reflective thinking FTF T FT FT




STA: DISC: Financial Markets and Interest Rates
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KEY: Bloom's: Analysis FTF T FT




13. A person who has $2,000 monthly income and spends $1,800 monthly has an average propensity to cons
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ume of 90%. FT FT




ANS: T PTS: 1 FT F T FTFTF T DIF: Challenging OBJ: LO: 1-1 FTFTF T FT




NAT: BUSPROG: Reflective thinking FTF T FT FT




STA: DISC: Financial Markets and Interest Rates
FTF T FT FT FT FT FT F T




KEY: Bloom's: Evaluation FTF T FT




14. A person making $35,000 and spending $30,800 has an average propensity to consume of 80%. AN
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S: F FTF T PTS: 1 FTFTF T DIF: Challenging OBJ: LO: 1-1 FTFTF T FT




NAT: BUSPROG: Reflective thinking FTF T FT FT STA: DISC: Financial Markets and Interest Rates
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KEY: Bloom's: Evaluation FTF T FT




15. Most families find it difficult to discuss money matters.
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, ANS: T
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