Financial Planning Quiz | Financial Planning Online Test for Practice

31. The capital budgeting process is used to evaluate:

1. Short-term investments
2. The purchase of long-term assets
3. Personal expenses
4. Tax deductions

32. What is the role of financial statements in the financial planning process?

1. To show business performance over time
2. To project future profits
3. To outline long-term financial strategies
4. To avoid market fluctuations

33. Which of the following is NOT an example of a liability?

1. Mortgage
2. Car loan
3. Rent payments
4. Investments

34. What does a budget primarily focus on?

1. Future growth
2. Current income and expenditure
3. Historical performance
4. Stock market trends

35. What is the primary risk in financial markets?

1. Inflation
2. Market volatility
3. High taxes
4. Excessive liquidity

36. What is a balanced investment strategy?

1. Investing only in stocks
2. Maintaining a mix of high-risk and low-risk assets
3. Focusing solely on bonds
4. Keeping all funds in savings accounts

37. Which of these is the best description of 'compound interest'?

1. Interest earned only on the initial amount
2. Interest earned on the initial amount and accumulated interest
3. Interest on a fixed income
4. Simple interest calculations

38. What type of financial plan is typically used by a corporation?

1. Personal financial plan
2. Corporate financial plan
3. Government financial plan
4. Tax filing plan

39. What does the term 'liquidity risk' mean?

1. The risk of losing money in the stock market
2. The risk of not being able to sell an asset quickly for cash
3. The risk of lower interest rates
4. The risk of high taxation

40. The 'Rule of 72' is used to estimate:

1. The time it takes for an investment to double
2. The amount of tax savings
3. The return rate of a financial plan
4. The liquidity of an asset

41. Which of these best defines the concept of "capital structure"?

1. The ratio of debt to equity in financing
2. The proportion of assets in a portfolio
3. The level of liquidity in a portfolio
4. The amount of interest paid on loans

42. What is the role of a will in financial planning?

1. To allocate income tax savings
2. To plan for distribution of assets after death
3. To increase business profits
4. To protect against financial market risk

43. What does 'asset management' refer to?

1. Managing liabilities
2. Managing stocks only
3. Managing a portfolio of investments
4. Managing company debt

44. The time value of money concept is based on which principle?

1. Money today is worth more than the same amount in the future
2. Future money is more valuable
3. Financial resources have no value
4. Future costs should be disregarded

45. Which of the following is a short-term financial goal?

1. Buying a house
2. Retirement savings
3. Paying off credit card debt
4. Saving for college education