Question 1

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

Accepted Answer

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) C) and D)
F) A) and B)

Question 2

About 35% of U.S. households do not have a retirement account.

Accepted Answer

A) True 
 B)False

Question 3

Term life insurance offers pure insurance with no savings feature.

Accepted Answer

A) True 
 B)False

Question 4

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) None of the above
F) All of the above

Question 5

Fixed annuities have become much more popular than variable annuities.

Accepted Answer

A) True 
 B)False

Question 6

House payments tend to rise at a faster rate than do rent payments on a similar sized house.

Accepted Answer

A) True 
 B)False

Question 7

A benefit of using credit cards is that they

Accepted Answer

A)   have lower interest rates than other forms of credit.
B)   provide a record that makes it possible to keep track of purchases easily.
C)   help consumers be more disciplined when it comes to spending decisions.
D)   allow the consumer to spread out payments and reduce overall costs.E) B) and C)
F) A) and D)

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Preparing and living with a personal budget is

Accepted Answer

A)   not necessary if you have sufficient income.
B)   similar to activities needed to handle the finances of a small business.
C)   often more trouble than the benefits justify.
D)   an excellent technique to prepare for a career in accounting.E) All of the above
F) B) and C)

Question 10

Dmitry emigrated to the United States from a formerly communist country. He is looking to you for advice on how to succeed in a capitalist system. He would be well advised to

Accepted Answer

A)   find a job and live frugally in order to save money to invest.
B)   rely heavily on government assistance programs to maintain a relatively comfortable life style.
C)   get a credit card, even if it has a very low credit limit, and use it to establish a good credit rating.
D)   follow the buy now, pay later rule of personal finance.E) All of the above
F) A) and D)

Question 11

About ________ of all U.S. households own stock in corporations.

Accepted Answer

A)   16 percent
B)   30 percent
C)   half
D)   three-fourthsE) None of the above
F) B) and C)

Question 12

Your computer and car should both be listed on the asset side of your personal balance sheet.

Accepted Answer

A) True 
 B)False

Question 13

Everything else constant, the higher the deductible on your car insurance policy, the higher the premium for your car insurance.

Accepted Answer

A) True 
 B)False

Question 14

Withdrawals from a traditional IRA prior to the age of 59½ are

Accepted Answer

A)   tax deferred until you reach 65 years of age.
B)   tax-free.
C)   normally subject to a penalty and taxes on the income that is withdrawn from the IRA.
D)   subject to a possible denial after review by the Internal Revenue Service.E) B) and C)
F) A) and C)

Question 15

After marriage, one great financial strategy is to live on one income and to save the other.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is a form of whole life insurance that provides a death benefit that varies with the performance of the investments of the insurance company?

Accepted Answer

A)   flexible whole life insurance
B)   variable life insurance
C)   adjustable benefit insurance
D)   multiyear level-premium insuranceE) A) and B)
F) A) and C)

Question 17

Interest paid on a home loan is deductible from taxable income.

Accepted Answer

A) True 
 B)False

Question 18

Although he has a good health insurance policy, Shaun is concerned that a serious accident or lengthy illness would still be devastating to his family because of the lost income and other expenses not covered by his policy. Shaun would probably be interested in obtaining

Accepted Answer

A)   disability insurance.
B)   a premium waiver provision.
C)   health extension coverage.
D)   a rider on his homeowner's policy.E) None of the above
F) A) and B)

Question 19

A comparison of variable life insurance to a standard whole life plan would reveal that

Accepted Answer

A)   they are essentially identical.
B)   variable life offers only pure insurance but does so at a very low cost, while a standard whole life plan costs more but offers both insurance and a savings plan.
C)   both a standard whole life and variable life insurance offer both life insurance and savings, but variable life invests the savings more aggressively than whole life.
D)   variable life is only available to people who want at least $1 million in coverage-and are willing to pay for it.E) A) and B)
F) C) and D)

Question 20

Once they've accumulated enough money, buying a low-priced home is often a good investment for young adults.

Accepted Answer

A) True 
 B)False

Exam 24: Appendix: Managing Personal Finances

Although he has a good health insurance policy, Shaun is concerned that a serious accident or lengthy illness would still be devastating to his family because of the lost income and other expenses not covered by his policy. Shaun would probably be interested in obtaining

Correct AnswerverifiedShow Answer

A benefit of using credit cards is that they

Correct AnswerverifiedShow Answer

Everything else constant, the higher the deductible on your car insurance policy, the higher the premium for your car insurance.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Interest paid on a home loan is deductible from taxable income.

Correct AnswerverifiedShow Answer

Withdrawals from a traditional IRA prior to the age of 59½ are

Correct AnswerverifiedShow Answer

Which of the following is a form of whole life insurance that provides a death benefit that varies with the performance of the investments of the insurance company?

Correct AnswerverifiedShow Answer

House payments tend to rise at a faster rate than do rent payments on a similar sized house.

Correct AnswerverifiedShow Answer

Once they've accumulated enough money, buying a low-priced home is often a good investment for young adults.

Correct AnswerverifiedShow Answer

Fixed annuities have become much more popular than variable annuities.

Correct AnswerverifiedShow Answer

After marriage, one great financial strategy is to live on one income and to save the other.

Correct AnswerverifiedShow Answer

Term life insurance offers pure insurance with no savings feature.

Correct AnswerverifiedShow Answer

A comparison of variable life insurance to a standard whole life plan would reveal that

Correct AnswerverifiedShow Answer

About ________ of all U.S. households own stock in corporations.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Dmitry emigrated to the United States from a formerly communist country. He is looking to you for advice on how to succeed in a capitalist system. He would be well advised to

Correct AnswerverifiedShow Answer

Preparing and living with a personal budget is

Correct AnswerverifiedShow Answer

About 35% of U.S. households do not have a retirement account.

Correct AnswerverifiedShow Answer

The goal of accumulating capital is to allow an individual to

Correct AnswerverifiedShow Answer

Your computer and car should both be listed on the asset side of your personal balance sheet.

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