1
,Chapter 1-10
Chapter 1 Beginning Your Financial Journey: The Interior Finance Point of View
1) Which of the following refers to one's ability to understand and use personal finance
information?
A) Financial risk tolerance.
B) Financial well-being.
C) Financial knowledge.
D) Financial ability.
Answer: C
Explanation: Financial knowledge is the ability to understand personal finance information.
Knowing who you are, where you want to go, and what skills you currently possess are essential
factors shaping your financial journey.
Diff: 1
LO: 1.1, Section 1.1
Bloom: K
AACSB / IMA: none; none
AICPA: FC: none
Min: 1
2) People who believe that what happens to them is based on fate or luck might view their financial
journey as being uncertain. This is an example of
A) financial risk tolerance.
B) financial literacy.
C) feelings of control.
D) financial ability.
Answer: C
Explanation: Feelings of control is the amount of control you feel you have when making
financial decisions. People who believe that what happens to them is based on luck or fate might
view their financial journey as uncertain.
Diff: 1
LO: 1.1, Section 1.1
Bloom: C
AACSB / IMA: none; none
AICPA: FC: none
Min: 1
2
,3) Internal finance includes your
A) financial knowledge.
B) financial risk tolerance.
C) feelings of control.
D) All of the choices are correct.
Answer: D
Explanation: Internal finance is essentially the combination of financial knowledge, financial
risk tolerance, and feelings of control.
Diff: 1
LO: 1.1, Section 1.1
Bloom: K
AACSB / IMA: none; none
AICPA: FC: none
Min: 1
4) Which of the following refers to your confidence and peace of mind regarding your financial
situation?
A) Financial literacy.
B) Financial well-being.
C) Financial knowledge.
D) Financial ability.
Answer: B
Explanation: Financial well-being is your confidence and peace of mind regarding your financial
situation. Your financial well-being will increase as you apply your financial knowledge, develop
skills, and organize your finances to achieve your personal goals.
Diff: 2
LO: 1.1, Section 1.1
Bloom: C
AACSB / IMA: none; none
AICPA: FC: none
Min: 1
5) In addition to financial knowledge, which of the following is important in shaping your view of
the financial world?
A) Financial risk tolerance, only.
B) Feelings of control, only.
C) Financial well-being only.
D) Financial risk tolerance and feelings of control.
Answer: D
Explanation: Our financial decisions can be based on a biased view of the financial world, which
is based on the combination of our financial knowledge, financial risk tolerance, and feelings of
control.
Diff: 2
LO: 1.1, Section 1.1
Bloom: C
AACSB / IMA: none; none
AICPA: FC: none
Min: 1
3
, 6) Which of the following refers to your willingness to engage in financial endeavors that have
uncertain outcomes?
A) Financial literacy.
B) Financial risk tolerance.
C) Financial knowledge.
D) Financial ability.
Answer: B
Explanation: Your financial risk tolerance is your willingness to engage in financial endeavors
that have uncertain outcomes.
Diff: 1
LO: 1.1, Section 1.1
Bloom: K
AACSB / IMA: none; none
AICPA: FC: none
Min: 1
7) Which of the following is measured by adding up how much the United States produces in
goods and services in a year?
A) Gross domestic product.
B) The cost of goods sold.
C) Financial literacy.
D) Financial risk tolerance.
Answer: A
Explanation: Gross domestic product (GDP) is measured by adding up how much a country
produces in goods and services in a year.
Diff: 1
LO: 1.1, Section 1.1
Bloom: K
AACSB / IMA: none; none
AICPA: FC: none
Min: 1
8) How much of GDP consists of consumer spending?
A) 46%.
B) 50%.
C) 60%.
D) 66%.
Answer: D
Explanation: In 2020, the U.S. GDP was $19.80 trillion and nearly two-thirds (66%) of GDP
consists of consumer spending.
Diff: 1
LO: 1.1, Section 1.1
Bloom: K
AACSB / IMA: none; none
AICPA: FC: none
Min: 1
4
,Chapter 1-10
Chapter 1 Beginning Your Financial Journey: The Interior Finance Point of View
1) Which of the following refers to one's ability to understand and use personal finance
information?
A) Financial risk tolerance.
B) Financial well-being.
C) Financial knowledge.
D) Financial ability.
Answer: C
Explanation: Financial knowledge is the ability to understand personal finance information.
Knowing who you are, where you want to go, and what skills you currently possess are essential
factors shaping your financial journey.
Diff: 1
LO: 1.1, Section 1.1
Bloom: K
AACSB / IMA: none; none
AICPA: FC: none
Min: 1
2) People who believe that what happens to them is based on fate or luck might view their financial
journey as being uncertain. This is an example of
A) financial risk tolerance.
B) financial literacy.
C) feelings of control.
D) financial ability.
Answer: C
Explanation: Feelings of control is the amount of control you feel you have when making
financial decisions. People who believe that what happens to them is based on luck or fate might
view their financial journey as uncertain.
Diff: 1
LO: 1.1, Section 1.1
Bloom: C
AACSB / IMA: none; none
AICPA: FC: none
Min: 1
2
,3) Internal finance includes your
A) financial knowledge.
B) financial risk tolerance.
C) feelings of control.
D) All of the choices are correct.
Answer: D
Explanation: Internal finance is essentially the combination of financial knowledge, financial
risk tolerance, and feelings of control.
Diff: 1
LO: 1.1, Section 1.1
Bloom: K
AACSB / IMA: none; none
AICPA: FC: none
Min: 1
4) Which of the following refers to your confidence and peace of mind regarding your financial
situation?
A) Financial literacy.
B) Financial well-being.
C) Financial knowledge.
D) Financial ability.
Answer: B
Explanation: Financial well-being is your confidence and peace of mind regarding your financial
situation. Your financial well-being will increase as you apply your financial knowledge, develop
skills, and organize your finances to achieve your personal goals.
Diff: 2
LO: 1.1, Section 1.1
Bloom: C
AACSB / IMA: none; none
AICPA: FC: none
Min: 1
5) In addition to financial knowledge, which of the following is important in shaping your view of
the financial world?
A) Financial risk tolerance, only.
B) Feelings of control, only.
C) Financial well-being only.
D) Financial risk tolerance and feelings of control.
Answer: D
Explanation: Our financial decisions can be based on a biased view of the financial world, which
is based on the combination of our financial knowledge, financial risk tolerance, and feelings of
control.
Diff: 2
LO: 1.1, Section 1.1
Bloom: C
AACSB / IMA: none; none
AICPA: FC: none
Min: 1
3
, 6) Which of the following refers to your willingness to engage in financial endeavors that have
uncertain outcomes?
A) Financial literacy.
B) Financial risk tolerance.
C) Financial knowledge.
D) Financial ability.
Answer: B
Explanation: Your financial risk tolerance is your willingness to engage in financial endeavors
that have uncertain outcomes.
Diff: 1
LO: 1.1, Section 1.1
Bloom: K
AACSB / IMA: none; none
AICPA: FC: none
Min: 1
7) Which of the following is measured by adding up how much the United States produces in
goods and services in a year?
A) Gross domestic product.
B) The cost of goods sold.
C) Financial literacy.
D) Financial risk tolerance.
Answer: A
Explanation: Gross domestic product (GDP) is measured by adding up how much a country
produces in goods and services in a year.
Diff: 1
LO: 1.1, Section 1.1
Bloom: K
AACSB / IMA: none; none
AICPA: FC: none
Min: 1
8) How much of GDP consists of consumer spending?
A) 46%.
B) 50%.
C) 60%.
D) 66%.
Answer: D
Explanation: In 2020, the U.S. GDP was $19.80 trillion and nearly two-thirds (66%) of GDP
consists of consumer spending.
Diff: 1
LO: 1.1, Section 1.1
Bloom: K
AACSB / IMA: none; none
AICPA: FC: none
Min: 1
4
