Chapter 01
Personal Financial Planning in Action
True / False Questions
1. Personal financial planning is the process of managing your money to achieve personal economic
satisfaction.
True False
2. A financial plan is an informal report that analyzes past financial decisions.
True False
3. A financial plan can only be created using a money management software package.
True False
4.
Financial Plans are only created by financial planners.
True False
5.
The life situation of a household includes a combination of personal factors such as age, income,
household size, and personal beliefs.
True False
1-1
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
,6.
The financial activities for a young, single person will probably be the same as those for an older
couple with no dependent children at home.
True False
7. Inflation is most harmful to people with incomes expected to increase.
True False
8.
Inflation is a rise in the general level of prices and it, reduces the buying power of the dollar.
True False
9.
When prices are increasing at a rate of 4 percent, the cost of products would double in about 18
years.
True False
10.
As borrowing by consumers and businesses increases, interest rates are likely to decrease.
True False
1-2
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
,11.
Planned spending through budgeting is part of the "spending" component of financial planning
activities.
True False
12. Retirement planning includes thinking about your housing situation, recreational activities, and
possible volunteer or part-time work.
True False
13. Short-term goals are usually achieved within the next year or so.
True False
14. Intermediate goals are usually achieved within the next year or so.
True False
15.
Purchasing an appliance is an example of a consumable-product goal.
True False
16. Purchasing a car is an example of a durable-product goal.
True False
17. Opportunity costs refer to money already spent.
True False
1-3
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
, 18.
Personal opportunity costs refer to resources, such as time, health, and energy, that are given up
when a choice is made.
True False
19.
Interest earned is calculated by multiplying the principal times the time value of money.
True False
20.
Risks associated with many financial decisions are easy to identify and evaluate.
True False
21.
$500 on deposit at 6% for 6 months would earn $20.
True False
22.
There are only 3 methods of calculating time value of money.
True False
1-4
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Personal Financial Planning in Action
True / False Questions
1. Personal financial planning is the process of managing your money to achieve personal economic
satisfaction.
True False
2. A financial plan is an informal report that analyzes past financial decisions.
True False
3. A financial plan can only be created using a money management software package.
True False
4.
Financial Plans are only created by financial planners.
True False
5.
The life situation of a household includes a combination of personal factors such as age, income,
household size, and personal beliefs.
True False
1-1
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
,6.
The financial activities for a young, single person will probably be the same as those for an older
couple with no dependent children at home.
True False
7. Inflation is most harmful to people with incomes expected to increase.
True False
8.
Inflation is a rise in the general level of prices and it, reduces the buying power of the dollar.
True False
9.
When prices are increasing at a rate of 4 percent, the cost of products would double in about 18
years.
True False
10.
As borrowing by consumers and businesses increases, interest rates are likely to decrease.
True False
1-2
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
,11.
Planned spending through budgeting is part of the "spending" component of financial planning
activities.
True False
12. Retirement planning includes thinking about your housing situation, recreational activities, and
possible volunteer or part-time work.
True False
13. Short-term goals are usually achieved within the next year or so.
True False
14. Intermediate goals are usually achieved within the next year or so.
True False
15.
Purchasing an appliance is an example of a consumable-product goal.
True False
16. Purchasing a car is an example of a durable-product goal.
True False
17. Opportunity costs refer to money already spent.
True False
1-3
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
, 18.
Personal opportunity costs refer to resources, such as time, health, and energy, that are given up
when a choice is made.
True False
19.
Interest earned is calculated by multiplying the principal times the time value of money.
True False
20.
Risks associated with many financial decisions are easy to identify and evaluate.
True False
21.
$500 on deposit at 6% for 6 months would earn $20.
True False
22.
There are only 3 methods of calculating time value of money.
True False
1-4
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
