PFA-Budgeting-12-1-2025

Open Ended

How do you think money management can influence your overall financial plan and future goals?

Multiple Choice

Why is effective money management important for personal finance?

• It helps you achieve financial goals and avoid debt

• It guarantees you will become wealthy

• It eliminates all financial risks

• It allows you to spend without planning

Multiple Choice

Which of the following is a characteristic of a Money Market Deposit Account (MMDA)?

• It has a fixed maturity date

• It pays interest and allows a limited number of checks each month

• It is more liquid than a checking account

• It does not require a minimum balance

Multiple Select

Which of the following statements about Treasury bills (T-bills) are correct?

• They have maturities of one year or less

• They are purchased at a premium

• They result in capital gains when sold at a higher price

• Their prices can be found online and in financial news publications

Open Ended

Explain how Money Market Funds (MMFs) differ from Treasury bills in terms of investment structure and returns.

Fill in the Blanks

The Star Fund has an average maturity of

days.

Multiple Choice

What is the primary purpose of a sweep account in asset management?

• To provide loans to account holders

• To automatically invest unused balances into money market investments

• To consolidate multiple accounts into one statement

• To pay higher interest rates on checking accounts

Multiple Select

Which money market investments are described as having relatively high interest rates according to the comparison table?

• Savings account

• Certificate of deposit (CD)

• Treasury bill

• Asset management account

Multiple Choice

Which money market instrument offers the highest liquidity according to Exhibit 6.3?

• Three-Month CD

• Three-Month T-bill

• Savings Account

• Checking Account

Multiple Choice

Go to www.bankrate.com and click on 'CD Rates.' What information will you obtain from this activity?

• Current stock prices

• Updated interest rates on CDs

• Loan approval status

• Credit card offers

Multiple Select

Which of the following are considered risks associated with money market investments?

• Credit risk

• Interest rate risk

• Liquidity risk

• Inflation risk

Open Ended

Describe the difference in job opportunities and income security between a strong economy and a weak economy, as shown in Exhibit 6.4.

Open Ended

Explain how weak economic conditions can impact liquidity needs and investment decisions.

Fill in the Blanks

Estimates of future savings that you will accumulate over time from a CD or savings account at different interest rates can be found at www.bankrate.com/

Multiple Choice

Which of the following is NOT one of the three steps to effective money management mentioned in the slide?

• Anticipate bills and have sufficient liquidity to pay them

• Estimate additional funds you might need soon and invest funds to cover them in very liquid assets

• Use remaining funds to generate higher returns based on your risk tolerance

• Spend all available funds immediately to avoid holding cash

Fill in the Blanks

To find out which types of investments are insured and which are not, you should visit the website

and use its search engine to look for 'deposit insurance.'

Open Ended

Describe the difference in allocation of funds for someone who needs much liquidity versus someone who needs little liquidity, as shown in Exhibit 6.5.

Multiple Select

Which of the following are key money management decisions for your financial plan?

• Ensuring you can pay anticipated bills on time

• Maintaining adequate liquidity for unanticipated expenses

• Investing remaining funds among money market investments

• Ignoring liquidity needs

Multiple Choice

Based on Stephanie Spratt’s financial plan, what is the recommended amount to leave extra in the checking account to cover varying monthly expenses?

• $200

• $400

• $600

• $1,000

Open Ended

Explain how anticipated and unanticipated expenses affect your approach to money management and liquidity planning.

Open Ended

Explain how the choice between a money market fund and a certificate of deposit reflects different priorities in financial planning.

Multiple Choice

What is the main reason for maintaining funds in a money market fund (MMF) as described in the financial plan?

• To earn higher interest than certificates of deposit

• To ensure liquidity for unanticipated expenses

• To invest in long-term assets

• To avoid paying taxes

Multiple Choice

Which of the following is NOT typically considered a money market investment?

• Treasury bills

• Certificates of deposit

• Corporate bonds

• Money market mutual funds

Open Ended

Reflecting on Chapter 6, what is one key concept about money management that you found most useful, and how might you apply it to your own financial planning?