Chapter 18, Problem 1QP

a.

Summary Introduction

To discuss: Whether the given statement is classified under true of false.

Explanation of Solution

The reasons supporting the statement to be false are as follows:

Financial planning is the process of investing in assets according to the risk and its returns.

Therefore, the given statement is classified as “False”.

b.

Summary Introduction

To discuss: Whether the given statement is classified under true of false.

Explanation of Solution

The reasons supporting the statement to be false are as follows:

Financial planning is concerned with the possible risks and possible outcomes of their investment choices.

Therefore, the given statement is classified as “False”.

c.

Summary Introduction

To discuss: Whether the given statement is classified under true of false.

Explanation of Solution

The reasons supporting the statement to be true are as follows:

Financial planning is essential for both decisions related to finance and investments and they should be taken as a collective decision by management.

Therefore, the given statement is classified as “true”.

d.

Summary Introduction

To discuss: Whether the given statement is classified under true of false.

Explanation of Solution

The reasons supporting the statement to be false are as follows:

Typical horizon for financial planning is above three years.

Therefore, the given statement is classified as “false”.

e.

Summary Introduction

To discuss: Whether the given statement is classified under true of false.

Explanation of Solution

The reasons supporting the statement to be true are as follows:

Individual investment decision plans are not included in the financial plans because investments are added in their categories.

Therefore, the given statement is classified as “true”.

f.

Summary Introduction

To discuss: Whether the given statement is classified under true of false.

Explanation of Solution

The reasons supporting the statement to be true are as follows:

Financial planning requires accurate and consistent forecasts of its income and expenditures.

Therefore, the given statement is classified as “true”.

g.

Summary Introduction

To discuss: Whether the given statement is classified under true of false.

Explanation of Solution

The reasons supporting the statement to be false are as follows:

Financial models need not have unnecessary details as it may lead to confusions.

Therefore, the given statement is classified as “false”.