University of Arkansas ECON 101 PFP Chapter 3 Q&A Updated Summer 2023.

What is the first step in the financial planning process? A. Gather data. B. Communicate investment objectives to client. C. Identify household spending. D. Identify household goals and needs. E. None of the above. 2. Behavioral finance can best be defined as: A. How to improve people's decision-making abilities so that they can more easily achieve the goals they set. B. The study of human actions in financial matters. C. How to understand people's decision-making abilities so that they can more easily achieve the goals they set. D. The study of how behavior is shaped by an individual's financial well-being. E. None of the above. 3. Understanding and improving people's decision-making abilities so that they can more easily achieve the goals they set is the objective of: A. Personal financial planning. B. Behavioral finance. C. Behavioral financial planning. D. Finance. E. None of the above. 4. Peer groups are: A.Households in a similar demographic category, against whom the advisor measures a household's financial health. B. Analysts that review a household's wealth from an objective and non-judgmental perspective. C. Analysts that review a household's wealth from a subjective and behavioral perspective. D. Friends and associates with similar backgrounds, against whom we measure ourselves. E. None of the above 5. Life cycle stages include: A. Young, middle aged, and senior. B. Child, adult, and elderly. C. Student, employed, unemployed, retired. D. Infant, child, adolescent, young adult, adult, elderly. E. None of the above. 6. Which of the following is typically not a characteristic of young clients? A. They place great emphasis on their current standard of living. B. Savings are given lower priority. C. Low risk tolerance. D. All of the above are typically characteristics of young clients. E. None of the above is typically a characteristic of young clients. 7. Which of the following is typ