TEST BANK FOR Personal Finance, 2nd Edition Vickie
L. Bajtelsmit
Chapter 1-14
Chapter 1
To accompany Personal Finance, 2nd edition, by Vickie Bajtelsmit
Summary: 47 questions. 46 Multiple Choice | 1 Multiple Select
LO 1.1 8 17%
LO 1.2 14 30%
LO 1.3 5 11%
LO 1.4 8 17%
LO 1.5 12 26%
47
Easy 6 13%
Medium 40 85%
Hard 1 2%
47
Knowledge 6 13%
Comprehensive 18 38%
Application 17 36%
Analysis 6 13%
47
Calculations
Percentage Change Calculation #14
Percentage Change Calculation (with distractor) #15
Percentage Change Calculation (multiple yrs.) #16
Annual Percentage Change Calculation #17
, Fee Calculation #34
Opportunity Cost Calculation #40
1. Personal finance is a specialized area of study that focuses
A) exclusively on investments and retirement planning.
B) on financial 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 long-
term 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
L. Bajtelsmit
Chapter 1-14
Chapter 1
To accompany Personal Finance, 2nd edition, by Vickie Bajtelsmit
Summary: 47 questions. 46 Multiple Choice | 1 Multiple Select
LO 1.1 8 17%
LO 1.2 14 30%
LO 1.3 5 11%
LO 1.4 8 17%
LO 1.5 12 26%
47
Easy 6 13%
Medium 40 85%
Hard 1 2%
47
Knowledge 6 13%
Comprehensive 18 38%
Application 17 36%
Analysis 6 13%
47
Calculations
Percentage Change Calculation #14
Percentage Change Calculation (with distractor) #15
Percentage Change Calculation (multiple yrs.) #16
Annual Percentage Change Calculation #17
, Fee Calculation #34
Opportunity Cost Calculation #40
1. Personal finance is a specialized area of study that focuses
A) exclusively on investments and retirement planning.
B) on financial 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 long-
term 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
