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Exam 24: Appendix: Managing Personal Finances

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Question 131

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The tax-sheltered program to encourage self-employed people to accumulate retirement funds is called a(n)

A) 401(k) plan.
B) IRA plan.
C) COLA plan.
D) Keogh plan.

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

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Question 132

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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

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

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Question 133

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Which of the following is a form of term insurance that guarantees fixed premiums for the life of the policy?

Your chances of becoming disabled at an early age are ________ than your chance of dying from an accident.

In order to get in the habit of saving, personal financial advisors suggest that you save first and wait to pay off any debts until you've accumulated at least $10,000 in cash, savings accounts, CDs, and other liquid assets.

Alvin's credit card charges him 18% interest on his unpaid balance. His bank is offering him 1% interest on a savings account. The first thing Alvin should do with any extra money he may have is to

A(n) ________ is the person named in a will to assemble and value the assets of the deceased, handle tax matters, and distribute the assets.

According to contrarians, the big decline in the stock market during the Great Recession was

The biggest advantage of the Roth IRA is that

Arlene has just made out a will. The will names her brother Aaron as the executor. This means that Aaron will have the authority to take over Arlene's finances if she becomes incapacitated.

For individuals, budgets are usually more trouble than they are worth.

Keogh plans are most useful for stockholders of major corporations who earn most of their income from dividends rather than wages or salaries.

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

A good manager of personal finances, like a good businessperson, uses borrowed funds whenever possible.

Managing the finances of a household is similar to managing the finances of a small business.