MM Ch 1 Quiz Review

The best definition of personal financial planning is

• a process of mapping decisions for spending, borrowing, and saving

  and investing in order to achieve financial goals.

• an investment schedule established by a financial advisor to help a

  person pay a debt.

• an investment schedule established by a financial advisor to help a

  person pay a debt.

• an investment schedule established by a financial advisor to help a

  person pay a debt.

Which is a true statement about Americans saving for retirement?

• Most Americans save more money than they need for retirement.

• No need to save for retirement since Social Securitywill cover our expenses

• Fewer than half of Americans have a retirement account.

• The average American saves 9% of annual income for retirement.

Adults with which of the following levels of education make, on average, the highest annual income?

• Associate's degree

• Master's degree

• Bachelor's degree

• High School diploma

Money in an emergency fund should be used to pay for

• items that suddenly go on sale.

• necessary expenses when a person loses a job or is unable to work

  because of illness or injury.

• large expenses such as a house or college education.

• long-term investments such as stocks.

The following statement about financial advice on the Internet is true.

• If the information has been posted to the Internet, it is reliable

  information.

• If the information comes from a company that is selling financial

  products, it is sound, objective information.

• There are a number of valuable sources of information on the Internet

  that can be used for financial planning.

• The Internet protects individuals against the loss of money by not

  allowing unethical financial advisors to post their information.

True/False - A liquid asset is something owned that can be rapidly converted to

cash without a risk of significant loss.

• True

• False

True/False - Teenagers who start investing now and continue to save responsibly can reasonably hope to save one million dollars or more by the time they retire.

• True

• False

Tyra has to decide whether to work an extra shift at her job at the movie theater or take the evening off and go to a concert with her friends. To make her decision, Tyra adds up what she could make by working the extra shift and what she will spend at the concert. Tyra is calculating her ________.

• assets

• credit

• opportunity cost

• financial goals

True/False - Calculating the opportunity cost of a purchase helps you consider the cost of not doing something else with your money.

• True

• False

Which of the following is an example of a long-term financial goal?

• Saving money for a spring break vacation

• Opening a savings account at your local bank

• Saving money for trade school tuition

• Saving money to buy a house