Question 1

When you buy a home,the monthly payments for the home may remain relatively fixed,but your payments for taxes and utilities are likely to increase.

Accepted Answer

A) True 
 B)False

Question 2

If you are in the 25 percent tax bracket and your home mortgage interest is $1000 per month,then your after-tax mortgage interest cost is $750 per month.

Accepted Answer

A) True 
 B)False

Question 3

Financial planners encourage individuals to borrow only to cover immediate expenses.

Accepted Answer

A) True 
 B)False

Question 4

Buying a duplex and living in one side,while renting the other side,generally turns out to be more trouble than it is worth,since you have to satisfy not only your own needs,but also the needs of the renters.

Accepted Answer

A) True 
 B)False

Question 5

Once Ira and Penny achieved a more solid financial foundation,they began to consider the purchase of a home.From a financial standpoint,a sound strategy for them to consider would be to:

Accepted Answer

A)  buy a large house in a modest neighborhood.
B)  buy a house in one of the best areas of town,even if they can afford only a relatively small house.
C)  buy a house that will minimize their total real estate taxes.
D)  make sure that their house payments are less than the rent they were paying on their old apartment.E) B) and C)
F) B) and D)

Question 6

One disadvantage of term life insurance is that:

Accepted Answer

A)  when renewed it usually is at a higher premium.
B)  the risk of lost income from the death of the insured is shifted to the insurance company.
C)  it is pure insurance protection for a given time period.
D)  it is generally not available to young people.E) B) and C)
F) All of the above

Question 7

Bernie owns a sports trading-card business.He can participate in a Keogh plan to save for his retirement.

Accepted Answer

A) True 
 B)False

Question 8

With respect to personal financial planning,the first thing to do with any extra money you have is to start a savings plan.

Accepted Answer

A) True 
 B)False

Question 9

Earnings of Keogh plans are not taxed until the funds are withdrawn from the retirement account.

Accepted Answer

A) True 
 B)False

Question 10

If you have minor children,the first step in estate planning is to select their guardian.

Accepted Answer

A) True 
 B)False

Question 11

If your personal liabilities exceed your assets,your are on the road to financial security.

Accepted Answer

A) True 
 B)False

Question 12

A contract that calls for regular payments to an individual for life or for a fixed period of time is called an) :

Accepted Answer

A)  annuity.
B)  fixed dividend plan.
C)  mutual fund.
D)  level premium agreement.E) A) and B)
F) None of the above

Question 13

Shorty is worried that his health may soon deteriorate to the point where he will no longer be able to take care of his own finances.One way he could ease his mind would be to:

Accepted Answer

A)  name an executor to his will.
B)  prepare a durable power of attorney.
C)  transfer title to all of his real estate and financial assets to a relative he trusts.
D)  invest all of his financial assets into a Keogh plan.E) B) and D)
F) A) and B)

Question 14

A retirement plan where employers often match part of an employee's contribution is known as a:

Accepted Answer

A)  simple IRA.
B)  Roth IRA.
C)  Keogh plan.
D)  401k) plan.E) A) and B)
F) B) and C)

Question 15

Real estate people agree that the key to getting the optimum return on the purchase of a home is:

Accepted Answer

A)  construction quality.
B)  location.
C)  tax advantages.
D)  design features.E) A) and B)
F) B) and D)

Question 16

If you use a credit card to make purchases,you should make a strong effort to pay off the balance in full each month.

Accepted Answer

A) True 
 B)False

Question 17

If you find yourself regularly running out of cash,your only real option is to focus your attention on finding ways to increase your income.

Accepted Answer

A) True 
 B)False

Question 18

An umbrella policy is an inexpensive policy that provides financial protection only in the event of clearly defined major catastrophes such as hurricanes or earthquakes-events which are referred to in the insurance industry as "rainy days."

Accepted Answer

A) True 
 B)False

Question 19

Large corporations with at least 500 employees can offer their employees a simple 401k)retirement plan that allows for greater contribution maximums.

Accepted Answer

A) True 
 B)False

Question 20

Wendy wants to obtain life insurance at the lowest possible cost,but is leery of term insurance because she has heard the premiums tend to go up every few years.One way for her to avoid this concern would be to purchase multiyear level-premium insurance.

Accepted Answer

A) True 
 B)False

Exam 25: Managing Personal Finances

When you buy a home,the monthly payments for the home may remain relatively fixed,but your payments for taxes and utilities are likely to increase.

Correct AnswerverifiedShow Answer

A retirement plan where employers often match part of an employee's contribution is known as a:

Correct AnswerverifiedShow Answer

Financial planners encourage individuals to borrow only to cover immediate expenses.

Correct AnswerverifiedShow Answer

With respect to personal financial planning,the first thing to do with any extra money you have is to start a savings plan.

Correct AnswerverifiedShow Answer

Earnings of Keogh plans are not taxed until the funds are withdrawn from the retirement account.

Correct AnswerverifiedShow Answer

An umbrella policy is an inexpensive policy that provides financial protection only in the event of clearly defined major catastrophes such as hurricanes or earthquakes-events which are referred to in the insurance industry as "rainy days."

Correct AnswerverifiedShow Answer

A contract that calls for regular payments to an individual for life or for a fixed period of time is called an) :

Correct AnswerverifiedShow Answer

If you use a credit card to make purchases,you should make a strong effort to pay off the balance in full each month.

Correct AnswerverifiedShow Answer

Bernie owns a sports trading-card business.He can participate in a Keogh plan to save for his retirement.

Correct AnswerverifiedShow Answer

Real estate people agree that the key to getting the optimum return on the purchase of a home is:

Correct AnswerverifiedShow Answer

If your personal liabilities exceed your assets,your are on the road to financial security.

Correct AnswerverifiedShow Answer

If you have minor children,the first step in estate planning is to select their guardian.

Correct AnswerverifiedShow Answer

If you are in the 25 percent tax bracket and your home mortgage interest is $1000 per month,then your after-tax mortgage interest cost is $750 per month.

Correct AnswerverifiedShow Answer

Wendy wants to obtain life insurance at the lowest possible cost,but is leery of term insurance because she has heard the premiums tend to go up every few years.One way for her to avoid this concern would be to purchase multiyear level-premium insurance.

Correct AnswerverifiedShow Answer

Once Ira and Penny achieved a more solid financial foundation,they began to consider the purchase of a home.From a financial standpoint,a sound strategy for them to consider would be to:

Correct AnswerverifiedShow Answer

Shorty is worried that his health may soon deteriorate to the point where he will no longer be able to take care of his own finances.One way he could ease his mind would be to:

Correct AnswerverifiedShow Answer

Buying a duplex and living in one side,while renting the other side,generally turns out to be more trouble than it is worth,since you have to satisfy not only your own needs,but also the needs of the renters.

Correct AnswerverifiedShow Answer

Large corporations with at least 500 employees can offer their employees a simple 401k)retirement plan that allows for greater contribution maximums.

Correct AnswerverifiedShow Answer

If you find yourself regularly running out of cash,your only real option is to focus your attention on finding ways to increase your income.

Correct AnswerverifiedShow Answer

One disadvantage of term life insurance is that:

Correct AnswerverifiedShow Answer

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