PFP - Test#1

Rodney has $1000 in cash received as a graduation gift. He wants to invest these funds in a GIC that will pay him 4% per year compounded annually. He wants to use the money in 5 years as a down-payment on a new car. How much will Rodney have in 5 years for his down-payment?

• 800.00
• 1500.00
• 1000.00
• 1216.65

Michelle is attending college and has a part time job. Once she finishes college, she would like to relocate to Toronto. She wants to build her savings so she has a "nest egg" to start her off. She can set aside $50/ month for savings in an account that will pay her 3% interest compounded annually. How much will Michelle's nest egg be in 5 years?

• $2500.00
• $3229.05

• $3232.00
• $1500.00

Stacey would like to have $1,000,000 available to her when she retires. If she contributes $300 per month in an account that pays 4% interest compounded quarterly, how much will Stacey have when she retires in 30 years?

• 207723.41

• $157456.51

• $1,212,000

• 69,000

An emergency fund is required in financial planning to

• maintain adequate liquidity

• eliminate the need for insurance
• reduce savings for future investments
• increase debt during emergencies

true or false

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

• true
• false

true or false

Money management decisions include deciding how much money to contribute to long term retirement savings.

• true
• false

Which of the following financial planning steps should occur during the "prime earning" life stage?

•  Paying off all debts

• Reducing expenses without investing.
• Saving only for short-term goals.
• Creating a will and power of attorney

In the early career life stage of financial planning, which of the following is the most important to address?

• Establishing a budget and managing debt.
• Paying off student loans and short-term debts.

• Maximizing credit card rewards.
• Investing in stocks without research.

A personal cash flow statement is

• A summary of investment returns.
• A document for tracking savings accounts.
• an accurate recording of recent actual income, fixed expenses, and savings.

• A report on stock market performance.

Which of the following actions will decrease your net worth?

• Fitness club dues paid monthly

• Increasing savings in a bank account
• Investing in high-yield stocks
• Buying real estate with a mortgage