Copyright 2023 Pearson Education, Inc.

1 Copyright © 2023 Pearson Education, Inc.

Personal Finance: Turning Money Into Wealth, 9e (Keown)

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: Analytical Thinking

2) One purpose of financial planning is to help you legally reduce the amount of taxes you have to pay on your earnings.

Answer: TRUE

Diff: 1

Topic: Financial Planning

AACSB: Analytical Thinking

3) 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: Analytical Thinking

4) Annual public school tuition and fees are three times more expensive than private school tuition and fees.

Answer: FALSE

Diff: 2

Topic: Financial Challenges

AACSB: Analytical Thinking

5) Being financially secure involves balancing what you earn with

• your investments.
• what you spend.
• your retirement plans.
• your current level of debt.

Answer: B

Diff: 1

Topic: Financial Planning

AACSB: Analytical Thinking

Personal Finance Turning Money Into Wealth 9e Arthur Keown (Test Bank All Chapters, 100% Original Verified, A+ Grade) 1 / 4

2 Copyright © 2023 Pearson Education, Inc.6) Financial planning might not help you earn more, but it can help you use the money you do earn to achieve your

• life's purpose.
• dreams.
• financial goals.
• desired lifestyle.

Answer: C

Diff: 1

Topic: Financial Goals

AACSB: Analytical Thinking

7) Which statement is true about managing personal finances?

• The ability to manage finances is a skill with which you are born.
• Personal finance courses are commonly offered in high school.
• Financial difficulties can be a major cause of marital problems.
• Personal financial management is not a skill worth learning.

Answer: C

Diff: 2

Topic: Finance Company

AACSB: Analytical Thinking

8) In order for your financial plan to be realistic and attainable it needs to be based upon your

• budget.
• income level.
• number of tax deductions, exemption, exclusions, and credits.
• balance sheet.
• none of the above.

Answer: B

Diff: 2

Topic: Financial Planning

AACSB: Analytical Thinking

9) Personal financial planning can help you to

• deal with unplanned health issues.
• minimize your tax payments to Uncle Sam.
• minimize your chances of personal bankruptcy.
• have enough money for a comfortable retirement.
• all of the above.

Answer: E

Diff: 2

Topic: Financial Planning

AACSB: Analytical Thinking 2 / 4

3 Copyright © 2023 Pearson Education, Inc.10) What elements are found in an effective financial plan?

• Flexibility to allow for changes in your situation
• Sufficient liquidity to meet unexpected needs
• Insurance protection from catastrophic events
• Helps you legally reduce the amount of taxes you owe
• All of the above

Answer: E

Diff: 1

Topic: Financial Planning

AACSB: Analytical Thinking

11) 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: Analytical Thinking

12) How will a financial plan help you save for retirement?Answer: A strong financial plan will help you forecast the costs of retirement and develop a plan that will allow you to live a comfortable life after you retire.

Diff: 2

Topic: Financial Planning

AACSB: Reflective Thinking

1.2 The Personal Financial Planning Process 1) Today, most Americans over the age of 65 have adequate savings and income available to them during retirement.

Answer: FALSE

Diff: 1

Topic: Financial Planning Life Cycle

AACSB: Analytical Thinking

2) The amount of current income that you earn today isn't relevant to setting your long-term goals for the future.

Answer: FALSE

Diff: 1

Topic: Financial Planning

AACSB: Reflective Thinking 3 / 4

4 Copyright © 2023 Pearson Education, Inc.3) A financial plan is only concerned with your future earnings and expenses. An examination of your current financial situation is not so important.

Answer: FALSE

Diff: 1

Topic: The Financial Planning Process

AACSB: Analytical Thinking

4) While each person's financial plan is different, some common factors guide all sound financial

plans: flexibility, liquidity, protection, and minimization of taxes.

Answer: TRUE

Diff: 2

Topic: The Financial Planning Process

AACSB: Analytical Thinking

5)Financial planning is an ongoing process. As your financial situation and position in life change, the plan changes.

Answer: TRUE

Diff: 1

Topic: The Financial Planning Process

AACSB: Analytical Thinking

6) Which of the following is one of the five basic steps in personal financial planning?

• Evaluate your personal health.
• Define your career goals.
• Develop a plan of action.
• Let an accountant review your plan.

Answer: C

Diff: 2

Topic: The Financial Planning Process

AACSB: Analytical Thinking

7) Which basic step to personal financial planning should be considered when examining your current financial situation?

• Step 1
• Step 2
• Step 3
• Step 4

Answer: A

Diff: 1

Topic: The Financial Planning Process

AACSB: Analytical Thinking

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