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Exam 25: Managing Personal Finances

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Question 71

Multiple Choice

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Personal financial planners often encourage their clients to write down every single penny they spend each day.The main purpose of this is to:

A) focus attention on the spending levels for each item.
B) eliminate the need for accountants.
C) do a better job of tax planning.
D) accumulate data needed to prepare a personal balance sheet.

E) None of the above
F) A) and D)

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Question 72

Multiple Choice

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The greatest return over a period of several years is likely to be earned by investing in a:

A) small home in a great location.
B) savings account in a bank.
C) large home in a deteriorating neighborhood.
D) moderate size home in a rural setting.

E) C) and D)
F) None of the above

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Question 73

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The new simple IRA plans allow employees of ________ companies to contribute larger amounts than the traditional IR A.

A contrarian would advise you to buy stock when stock prices are falling and most other people are selling.

Hilda has contributed to a Roth IRA for the last several years.She is now in her late sixties and has just retired.She plans to withdraw $3,000 this year from her Roth IR A.If she is in the 25 percent tax bracket,how much tax will she have to pay on her withdrawal?

LaTasha is attending her local community college so she can get a good job.She knows that financial planning begins first with making money.

_________ is a form of life insurance that provides both a savings plan and pure insurance coverage.

Term life insurance is a combination insurance plan and savings plan.

The total cost of purchasing a stereo or television with cash is ________ the cost when using credit cards to finance the same assets.

What advice might a personal financial advisor offer a recent college graduate desiring to become financially secure?

A homeowner's insurance policy that includes a provision for __________ would provide the homeowner with enough cash to replace the items lost.

Approximately what percent of the population is successful in saving enough money for retirement to live comfortably?

The best way to save money is to:

Guaranteed replacement cost insurance coverage provides the insured with the depreciated cost of assets.

Romeo and Juliet are experiencing marriage difficulties regarding money.One technique to help them control and forecast their future financial situation,as well as allow them to achieve their financial goals,would be to prepare an) :

Your personal budget is the same thing as your personal income statement.

During the first few years of a home mortgage,almost all the payments go for interest on the loan.This high interest is a reason it is better for young people to rent rather than buy.

Term life insurance offers pure insurance with no savings feature.

Many insurance providers offer __________ policies that give a discount to families who buy several types of insurance coverage from them.

Listing all of your personal assets is the first step in preparing your own income statement.