University of Arkansas ECON 101 PFP Chapter 6 Exam Review Test Answered 100% Correctly!

1. Which of the following best describes cash flow planning? A. The scheduling of current and future cash needs to achieve household goals. B. The recognition that cash flows can only be generated though strategic planning. C. A financial planning scheduling strategy that links financial reviews to cash flows. D. All of the above describe cash flow planning. E. None of the above describes cash flow planning. 2. Which of the following is not a goal of cash flow planning? A. Reducing tax liability. B. Planning for retirement. C. Paying off credit card debt. D. Eliminating risk. E. All of the above are goals of cash flow planning. 3. Establishing how people differ in the way they spend their money is: A. Of crucial importance to financial planners. B. Generally not of concern to advisors. C. The first step of the financial planning process. D. The second step of the financial planning process. E. The third step of the financial planning process. 4. What is the pure life cycle motive? A. To take advantage of investment opportunities that can make achievement of our financial goals easier. B.To provide monies for the down payment or full purchase of longer-lived assets such as durable goods or educational expenditures. C. To provide monies to even out differences in earnings over time. D.To provide a fund to cover future uncertainties such as fluctuating income, sickness, inflationary effects on expenditures, etc. E. To sacrifice today so that your future lifestyle can improve. 5. What is the precautionary motive? A. To take advantage of investment opportunities that can make achievement of our financial goals easier. B.To provide monies for the down payment or full purchase of longer-lived assets such as durable goods or educational expenditures. C. To provide monies to even out differences in earnings over time. D.To provide a fund to cover future uncertainties such as fluctuating income, sickness, inflationary effects on expenditures, etc. E. To sacrifice today so that your future lifestyle can improve. 6. The ability to accumulate investments with no intention of converting them into purchases in the future is the: A. Bequest motive. B. Independence motive. C. Precautionary motive. D. The investment motive. E. None of the above. This study source was downloaded by from CourseH on :10:55 GMT -06:00 7. What is th