Ch 3 Sections Questions

Money that an individual spends is referred to as ________.

• cash outflow

• cash inflow

• investment

• liquidity

When creating a plan for financing, you would likely ask yourself what expenses you anticipate and what regular debt payments you need to make.

• investing

• financing

• protecting your assets

• managing your income

Deciding how much money to keep in a checking account and in a savings account is part of a(n) ________ plan.

• liquidity management

• recordkeeping

• retirement

• investment

When you consider how much and what type of insurance you need, you are deciding how to ________.

• protect your assets and income

• protect your liquidity

• manage your liquidity

• invest

Cash inflows include all of the following except _________.

• rent paid

• allowance

• salary

• dividends received

Which of the following suggestions for financial goal setting would you be LEAST likely to find on a reputable financial planning website?

• Set general rather than specific goals.

• Put your goals in writing.

• Be realistic in both your long-term and short-term goals.

• Have a plan of action to accomplish your goals.

As your financial goals become more involved, you will need a more _______ financial plan.

• specific

• standard

• complex

• creative

• general

A(n) _______ expense is an expense that remains the same from time period to time period, often month to month.

• outflow

• variable

• fixed

• inflow

Which of the following is the best way to evaluate your options for accomplishing your financial goals?

• Listing and comparing the pros and cons of each option.

• Identifying the option that presents the smallest degree of risk.

• Asking your friends how they plan to achieve their financial goals.

• Trying each option for a limited trial period.

A financial plan with a higher level of risk is likely to also have ________ than a financial plan with a lower level of risk.

• fewer drawbacks

• a higher potential payoff

• a lower potential payoff

• a more certain potential payoff