1. Over your lifetime, the financial planning process needs to consider the normal changes in income patterns. Income normallyA. increases constantly over time.B. increases peaks, and then declines.C. peaks early, but then increases again.D. declines constantly over time.2. In your financial plan you also must consider debts. This part of your overall financial plan is calledA. asset acquisition planning.B. savings and investment planning.C. liability and insurance planning.D. employee benefit planning.3. You have set out to determine your consumption patterns. Which factor will have a significant effects on your future consumption?A. Your current consumption levelB. The level of interest rates C. The price of goldD. The S&P 500 Index4. To have a good financial plan, you must consider economic business cycles. The part of the cycle in which the economy begins to grow after an extended period of depression isknown as a(n)A. depressionB. recession.C. expansion.D. recovery.5. Because of changing life circumstances, financial plans must beA. rigid.B. limited. C. redundantD. amendable.6. The ratio of liquid assets divided by current debts is the ratio.A. solvency B. debt service C. net worthD. liquidity7. Which of the following is the balance sheet equation?A. Net worth = Current assets + Current liabilitiesB. Net worth = Total assets + Total liabilitiesC. Current assets + Other assets = Current liabilities + Other liabilitiesD. Total assets = Total liabilities + Net worth8. Part of your financial plan should include a short-term financial forecast of income and expenditures known as yourA. financial statement. B. budget. C. financial plan.D. financial goals.9. The income and expenditures statement is a measure of financial performance. After tracking income and expenses, the net result should be reflected in the cash position.What happens to the cash position if expenses exceed income?A. A cash deficit results. B. A cash surplus results. C. Liabilities exceed cash.D. A liability deficit results.10. The approximate present value of $1,000,000 20 years from now, with a discount rate of8%, isA. $100,000. B. $215,000.C. $350,000.D. $2,500,000.11. Unchanging amounts of money, installed over an unchanging period of time, for a set totaltime period, make up a(n)A. present value. B. future value. C. annuity.D. compounding cash flow.12. Which of the following words best describes the U.S. federal income tax structure?A. Flat B. Progressive C. RegressiveD. Proportional13. A variety of tax rates, tax credits, and tax deductions apply to your tax situation. When youre evaluating additional income or deductions for tax planning, the tax rate that you must focus on is the tax rate.A. average B. effective C. marginalD. total14. Tax planning is an important part of financial planning. Which of the following is an acceptable and effective tax planning technique?A. Delaying estimated payments to preserve cash flowB. Eliminating sources of incomeC. Inventing false taxable deductionsD. Shifting income to other family members15. The approximate future value of $1,000 per year for 20 years, with an interest rate of 8%, isA. $18,000. B. $46,000. C. $88,000.D. $100,000.16. Defining your financial goals must be done in terms ofA. automobiles. B. the stock market.C. your profession.D. money.17. Martha is 80. Her most important financial plan should concern herA. career. B. taxes. C. estate.D. insurance.18. Typically, people with the lowest incomes tend to beA. educated.B. childless. C. young.D. middle aged.19. Of the following, the most common budgeting period for individuals and couples is aA. month. B. quarter. C. decade.D. century.20. Your total assets equal $20,000, and your total liabilities equal $15,000.Your solvency ratioisA. 15%. B. 25%. C. 75%.D. 133%.