Question 1

According to Newsweek magazine,a young couple with a new baby should have life insurance coverage equal to:

Accepted Answer

A)  $500,000.
B)  three times their annual income.
C)  five times their annual income.
D)  seven times their annual income plus $100,000 to cover the cost of college.E) All of the above
F) A) and D)

Question 2

Miko is in need of advice regarding investments,taxes,and insurance for herself and her family.She would be well advised to seek the advice of an insurance salesperson.

Accepted Answer

A) True 
 B)False

Question 3

The number of workers paying into Social Security for each retiree receiving Social Security benefits is:

Accepted Answer

A)  fixed by law.
B)  increasing.
C)  decreasing.
D)  not fixed by law,but has remained relatively constant for several decades.E) A) and B)
F) B) and C)

Question 4

A Roth IRA allows workers who qualify to get an up-front deduction for any money they invest in the plan.

Accepted Answer

A) True 
 B)False

Question 5

Financial planners encourage individuals to begin contributing funds into an IRA as early as possible.The major benefit of early and regular contributions is that:

Accepted Answer

A)  the earnings will be able to grow over a longer time span,which can result in major financial gains.
B)  the financial planners will earn a commission for a longer period of time.
C)  the inflation rate is very low now and will probably rise in the future,thus reducing the real value of future contributions.
D)  the tax rates are likely to be lower in the future,so higher tax savings on contributions will be maximized by making the contributions now.E) B) and D)
F) A) and B)

Question 6

Hillary and Bill are married and have a young child.Both work,but Hillary earns a higher salary than Bill.Insurance experts suggest that:

Accepted Answer

A)  there is no real need for this couple to have life insurance,since they both are employed.
B)  the couple should take out equal amounts of life insurance for both Bill and Hillary.
C)  the couple should take out life insurance on both Hillary and Bill,but coverage on Hillary should be greater than coverage on Bill.
D)  the couple should take out a life insurance policy on their child,but do not need one on themselves.E) A) and B)
F) A) and C)

Question 7

A person using a credit card to make a purchase may end up paying much more than if he or she had paid cash.

Accepted Answer

A) True 
 B)False

Question 8

If you are relatively healthy,there is no real reason to buy health insurance.

Accepted Answer

A) True 
 B)False

Question 9

Lucy has prepared her personal balance sheet and found that her total assets are $54,000 and her total liabilities largely college loans) are $48,000.This indicates that Lucy's:

Accepted Answer

A)  net income is only $6,000.
B)  net worth is $6,000.
C)  cash flow will not be sufficient to repay her college loans.
D)  balance sheet is out of balance.E) B) and D)
F) B) and C)

Question 10

Bonnie and Clyde are newly married college graduates.Both have jobs with bright futures.One strategy that they could use to accumulate capital for investment purposes,would be to:

Accepted Answer

A)  borrow heavily to buy a house.
B)  use their credit cards to acquire assets while prices are relatively low.
C)  live on just one of their incomes and save the other.
D)  quit their jobs and go back to college for a graduate degree.E) None of the above
F) B) and D)

Question 11

Which of the following is an indication that the government has recognized that problems with Social Security funding make it highly unlikely that future Social Security benefits will be sufficient to provide retirees with enough income for a comfortable retirement?

Accepted Answer

A)  The government has provided cost-of-living adjustments to Social Security recipients.
B)  The government has invested the contributions in high-yielding investment securities.
C)  The government has established incentives for workers to save their own money for retirement.
D)  The government has passed legislation to require Social Security to maintain a balanced budget.E) A) and D)
F) A) and C)

Question 12

Multiyear level-premium insurance is a form of term insurance with fixed premiums for the life of the policy.

Accepted Answer

A) True 
 B)False

Question 13

Investments in IRA accounts:

Accepted Answer

A)  are limited to money market funds and government bonds.
B)  can be in stocks,bonds,mutual funds,or even precious metals.
C)  are matched by the employer.
D)  are taxed at the lowest individual tax rate regardless of the actual tax bracket of the investor.E) B) and D)
F) A) and D)

Question 14

Tracking business and personal spending by categories is an important technique to control expenditures.

Accepted Answer

A) True 
 B)False

Question 15

The goal of accumulating capital is to allow an individual to:

Accepted Answer

A)  buy the things that satisfy present wants and needs.
B)  have funds available to invest.
C)  buy now,pay later.
D)  establish a good credit rating.E) B) and C)
F) A) and D)

Question 16

A financial planner would encourage you to borrow money:

Accepted Answer

A)  only to buy assets that are likely to generate income or increase in value.
B)  to pay your day-to-day expenses and then to invest your income.
C)  only when facing bankruptcy.
D)  in order to reduce your debt level.E) A) and C)
F) B) and C)

Question 17

An) __________ is the person named in a will to assemble and value the assets of the deceased,handle tax matters,and distribute the assets.

Accepted Answer

A)  executor
B)  guardian
C)  arbiter
D)  intermediatorE) A) and B)
F) C) and D)

Question 18

Disability insurance provides a relatively low cost way of protecting against lost income due to an accident or illness that prevents you from working for an extended period of time.

Accepted Answer

A) True 
 B)False

Question 19

Most families only need to buy enough life insurance to replace about three years of income.

Accepted Answer

A) True 
 B)False

Question 20

In order to accumulate capital,young adults are likely to have to:

Accepted Answer

A)  accept a lifestyle that sacrifices some amenities.
B)  live beyond their means.
C)  rely on credit cards for basic purchases in order to conserve on cash.
D)  borrow funds from a bank.E) A) and D)
F) All of the above

Exam 25: Managing Personal Finances

The number of workers paying into Social Security for each retiree receiving Social Security benefits is:

Correct AnswerverifiedShow Answer

If you are relatively healthy,there is no real reason to buy health insurance.

Correct AnswerverifiedShow Answer

Which of the following is an indication that the government has recognized that problems with Social Security funding make it highly unlikely that future Social Security benefits will be sufficient to provide retirees with enough income for a comfortable retirement?

Correct AnswerverifiedShow Answer

Multiyear level-premium insurance is a form of term insurance with fixed premiums for the life of the policy.

Correct AnswerverifiedShow Answer

Financial planners encourage individuals to begin contributing funds into an IRA as early as possible.The major benefit of early and regular contributions is that:

Correct AnswerverifiedShow Answer

Miko is in need of advice regarding investments,taxes,and insurance for herself and her family.She would be well advised to seek the advice of an insurance salesperson.

Correct AnswerverifiedShow Answer

Lucy has prepared her personal balance sheet and found that her total assets are $54,000 and her total liabilities largely college loans) are $48,000.This indicates that Lucy's:

Correct AnswerverifiedShow Answer

The goal of accumulating capital is to allow an individual to:

Correct AnswerverifiedShow Answer

In order to accumulate capital,young adults are likely to have to:

Correct AnswerverifiedShow Answer

A person using a credit card to make a purchase may end up paying much more than if he or she had paid cash.

Correct AnswerverifiedShow Answer

An) __________ is the person named in a will to assemble and value the assets of the deceased,handle tax matters,and distribute the assets.

Correct AnswerverifiedShow Answer

Most families only need to buy enough life insurance to replace about three years of income.

Correct AnswerverifiedShow Answer

Hillary and Bill are married and have a young child.Both work,but Hillary earns a higher salary than Bill.Insurance experts suggest that:

Correct AnswerverifiedShow Answer

According to Newsweek magazine,a young couple with a new baby should have life insurance coverage equal to:

Correct AnswerverifiedShow Answer

A Roth IRA allows workers who qualify to get an up-front deduction for any money they invest in the plan.

Correct AnswerverifiedShow Answer

A financial planner would encourage you to borrow money:

Correct AnswerverifiedShow Answer

Tracking business and personal spending by categories is an important technique to control expenditures.

Correct AnswerverifiedShow Answer

Bonnie and Clyde are newly married college graduates.Both have jobs with bright futures.One strategy that they could use to accumulate capital for investment purposes,would be to:

Correct AnswerverifiedShow Answer

Investments in IRA accounts:

Correct AnswerverifiedShow Answer

Disability insurance provides a relatively low cost way of protecting against lost income due to an accident or illness that prevents you from working for an extended period of time.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified