Chapter 1 The Financial Planning Process
1.1 Facing Financial Challenges
1) Once a sound financial plan is in place, there should be no need to ever change it.
Answer: FALSE
Diff: 1
Topic: The Financial Planning Process
AACSB: 3. Analytical skills
2) When comparing two different investment opportunities the investor should always
choose the investment that minimizes the total amount of taxes paid.
Answer: FALSE
Diff: 2
Topic: Minimization of Taxes
AACSB: 3. Analytical skills
3) Being financially secure involves balancing what you earn with
A) your investments.
B) what you spend.
C) your retirement plans.
D) your current level of debt.
Answer: B
Diff: 1
,Topic: Financial Planning
AACSB: 3. Analytical skills
4) In order for your financial plan to be realistic and attainable it needs to be based upon
your
A) budget.
B) income level.
C) number of tax deductions, exemption, exclusions, and credits.
D) balance sheet.
E) none of the above
Answer: B
Diff: 2
Topic: Financial Planning
AACSB: 3. Analytical skills
,5) Personal financial planning can help you to
A) deal with unplanned health issues.
B) minimize your tax payments to Uncle Sam.
C) minimize your chances of personal bankruptcy.
D) have enough money for a comfortable retirement.
E) all of the above.
Answer: E
Diff: 2
Topic: Financial Planning
AACSB: 3. Analytical skills
6) What are common factors found in an effective financial plan?
A) Effective financial plans should be flexible to allow for changes in your situation
B) Effective financial plans should provide sufficient liquidity to meet unexpected needs
C) Effective financial plans should provide insurance protection from catastrophic events
D) Effective financial plans should help you minimize paying taxes
E) All of the above are necessary in an effective financial plan
Answer: E
Diff: 1
Topic: Financial Planning
AACSB: 3. Analytical skills
7) This course/text will assist you in accomplishing six financial objectives. What are
they?
Answer:
1. Manage the unplanned.
, 2. Accumulate wealth for special expenses.
3. Realistically save for retirement.
4. Cover your assets.
5. Invest intelligently.
6. Minimize your payments to Uncle Sam.
Diff: 2
Topic: Financial Planning
AACSB: 3. Analytical skills