Personal Financial Planning

If John's total assets have increased from $10 000 to $15 000 and his liabilities from $5000 to $8000, by how much has John's net worth increased?

• $4000

• $3000

• $5000

• $2000

If you have total assets of $10 000 and your net worth is $4000, how much liabilities do you have?

• $4000

• $6000

• $10 000

• $14 000

Sharon had a net worth at the beginning of the year of $22 000. At the beginning of the year she received $1000 that she invested and earned 3 percent interest for the year. During the year she also saved $50 each week from her pay cheque in a no-interest chequing account. How much is her net worth at the end of the year?

• $25 000

• $25 630

• $25 600

• $23 030

John earns $3000 monthly income and he decides to set aside 10 percent as savings. In his savings, John wants to reserve 20 percent in his emergency fund. What amount would John accumulate in his emergency fund annually?

• $600

• $300

• $360

• $720

Opportunity cost represents

• short- versus long-term financial decisions.

• what you give up as a result of making a decision.

• the financial cost of any opportunity.

• the non-financial cost of any opportunity.

The correct order of the key components of a financial plan is

• budgeting, insurance, financing, investing.

• financing, insurance, budgeting, investing.

• budgeting, financing, insurance, investing.

• investing, financing, insurance, budgeting.

An understanding of personal finance is necessary to judge the quality of advice that a financial adviser may give.

• True

• False

Financial advisers are in demand because most people lack understanding or are not interested in making their own financial decisions.

• True

• False

The first step in budgeting is to evaluate your current financial position by determining your total assets and total liabilities.

• True

• False

The value of what you own minus the value of what you owe is called your "net assets."

• True

• False