Page | 1
Personal Financial Planning Final Exam
Questions with Detailed Verified
Answers
Question: The final step of the financial planning process is what Alex referred
to as a "post mortem" or "autopsy". This is the stage where you:
Ans: Review your progress and revise your plans to reach your goals
Question: To calculate your net worth, subtract your total liabilities from your
total assets.
Ans: True
Question: You want your money to double within the next 8 years. Using the
Rule of 72, what approximate annual rate of return do you need to earn each
year for your money to double in 8 years?
Ans: 9%
Question: Alex says that there are 3 main reasons you would like to have
money in your hands today rather than waiting to hopefully receive money in
the future. What causes money to have this "time value"?
Ans: Risk, Inflation, Opportunity Cost
, Page | 2
Question: Rasheed can afford a monthly car payment of $600 for 4 years at
an annual interest rate of 6 percent. Which of the following is closest to the
amount he will be able to borrow for a new car? Remember, loans are END of
period.
Ans: $25,548
Question: Maiko lost her job and she was forced to sell a rental property
because she did not have other funds (liquid, emergency, etc) available to
meet her financial obligations. What financial principle best applies to this
situation?
Ans: Stuff happens, the importance of liquidity.
Question: Kai invested $4,500 in her investment account today. Her account
earns an average rate of return of 7% compounded 4 time(s) per year. She is in
the 15% marginal tax bracket. How much will she have in her account after 20
years after she accounts for income taxes? (Beginning of Period)
Ans: $14,663
Question: You want to invest $4,000/year into an account that earns 8%
compounded annually. How much will you have in your account in 30 years?
(Beginning of Period)
Ans: $489,383
, Page | 3
Question: One of the easiest methods of determining if an asset is a tangible
asset is to by answering which of the following questions with "yes"?
Ans: Do I use it in everyday life?
Question: What piece of advice might you give to someone for whom the act
of saving is an afterthought?
Ans: Pay yourself first.
Question: How should a brokerage account that contains stocks and mutual
funds be listed on your balance sheet?
Ans: Non-Retirement Investment Asset
Question: While each person's financial plan is different, the following factors
should be incorporated into all sound financial plans: flexibility, liquidity,
protection, and maximizing what is left of your earnings after you pay your
taxes.
Ans: True
Question: What percent of your gross income does Doc White recommend
that you try to save and/or invest each pay period?
Ans: 5-10%
, Page | 4
Question: Millie invested $3,000 in her retirement account today. Her
account earns an average rate of return of 6% compounded annually. How
much will she have in her account after 5 years? (Beginning of Period)
Ans: $4,015
Question: Frances invested $4,000 in her retirement account today. Her
account earns an average rate of return of 5% compounded 6 time(s) per year.
How much will she have in her account after 5 years? (Beginning of Period)
Ans: $5,131
Question: Most students graduate from college with an average of $35,000 in
student loans. Assume the interest rate on student loans is 7% and the loan
will be paid back over a 10-year period. Calculate the monthly payment on a
$35,000 student loan at 7% for 10 years. (End of period)
Ans: $350-$450
Question: Doc White preaches about having an accurate monthly budget.
What are the main uses of a monthly budget?
Ans: All the above. (Estimating the maximum monthly car loan payment you
will be able to afford, determining how much money you will be able to save
and invest each month, and figuring out how to reduce your spending without
hurting your lifestyle too much)
Personal Financial Planning Final Exam
Questions with Detailed Verified
Answers
Question: The final step of the financial planning process is what Alex referred
to as a "post mortem" or "autopsy". This is the stage where you:
Ans: Review your progress and revise your plans to reach your goals
Question: To calculate your net worth, subtract your total liabilities from your
total assets.
Ans: True
Question: You want your money to double within the next 8 years. Using the
Rule of 72, what approximate annual rate of return do you need to earn each
year for your money to double in 8 years?
Ans: 9%
Question: Alex says that there are 3 main reasons you would like to have
money in your hands today rather than waiting to hopefully receive money in
the future. What causes money to have this "time value"?
Ans: Risk, Inflation, Opportunity Cost
, Page | 2
Question: Rasheed can afford a monthly car payment of $600 for 4 years at
an annual interest rate of 6 percent. Which of the following is closest to the
amount he will be able to borrow for a new car? Remember, loans are END of
period.
Ans: $25,548
Question: Maiko lost her job and she was forced to sell a rental property
because she did not have other funds (liquid, emergency, etc) available to
meet her financial obligations. What financial principle best applies to this
situation?
Ans: Stuff happens, the importance of liquidity.
Question: Kai invested $4,500 in her investment account today. Her account
earns an average rate of return of 7% compounded 4 time(s) per year. She is in
the 15% marginal tax bracket. How much will she have in her account after 20
years after she accounts for income taxes? (Beginning of Period)
Ans: $14,663
Question: You want to invest $4,000/year into an account that earns 8%
compounded annually. How much will you have in your account in 30 years?
(Beginning of Period)
Ans: $489,383
, Page | 3
Question: One of the easiest methods of determining if an asset is a tangible
asset is to by answering which of the following questions with "yes"?
Ans: Do I use it in everyday life?
Question: What piece of advice might you give to someone for whom the act
of saving is an afterthought?
Ans: Pay yourself first.
Question: How should a brokerage account that contains stocks and mutual
funds be listed on your balance sheet?
Ans: Non-Retirement Investment Asset
Question: While each person's financial plan is different, the following factors
should be incorporated into all sound financial plans: flexibility, liquidity,
protection, and maximizing what is left of your earnings after you pay your
taxes.
Ans: True
Question: What percent of your gross income does Doc White recommend
that you try to save and/or invest each pay period?
Ans: 5-10%
, Page | 4
Question: Millie invested $3,000 in her retirement account today. Her
account earns an average rate of return of 6% compounded annually. How
much will she have in her account after 5 years? (Beginning of Period)
Ans: $4,015
Question: Frances invested $4,000 in her retirement account today. Her
account earns an average rate of return of 5% compounded 6 time(s) per year.
How much will she have in her account after 5 years? (Beginning of Period)
Ans: $5,131
Question: Most students graduate from college with an average of $35,000 in
student loans. Assume the interest rate on student loans is 7% and the loan
will be paid back over a 10-year period. Calculate the monthly payment on a
$35,000 student loan at 7% for 10 years. (End of period)
Ans: $350-$450
Question: Doc White preaches about having an accurate monthly budget.
What are the main uses of a monthly budget?
Ans: All the above. (Estimating the maximum monthly car loan payment you
will be able to afford, determining how much money you will be able to save
and invest each month, and figuring out how to reduce your spending without
hurting your lifestyle too much)
