Unit 1 Review Quiz 2

A plan for ________ is needed to determine how much you could afford to borrow, the length of the loan, and to select a loan that charges competitive interest rates.

• buying

• financing

• spending

• saving

An example of an opportunity cost is the cost of tuition while attending college instead of the hourly rate you could earn from being employed.

• True

• False

Insurance planning is designed to protect your wealth in which of the following ways?

• Protecting the assets that you own

• Limiting your exposure to potential liabilities

• Protecting your income

• All of these

If your income exceeds the amount you spend, you should ________ your investments or ________ loans.

• reduce; repay existing

• reduce; obtain more

• increase; repay existing

• increase; obtain more

A budget

• requires thinking and planning.

• is available in various software programs.

• helps you account for all your income and expenses.

• All of these

A personal financial plan specifies financial goals and describes spending, financing, and investment plans.

• True

• False

Which of the following is not a type of decision to manage your liquidity?

• Deciding how much money to keep in savings

• Choosing between credit cards

• Determining how much money to save versus how much to spend

• Building and maintaining a monthly/year budget with allocations to expenses and investments

The major source of cash outflow for most people is the income they receive from employers.

• True

• False

In addition to the text, Web sites and financial magazines are good sources for additional help in financial planning.

• True

• False

The simple objective of financial planning is to make the best use of your resources to achieve your financial goals.

• True

• False