Question 1

Bob has decided to contribute $2,800 to a Roth IRA.He is currently in the 25% tax bracket.How will his contribution affect his income tax for the current year?

Accepted Answer

A)   It will reduce the amount of taxes he owes in the current tax year by $700.
B)   It will increase the amount of taxes he owes in the current year by $700.
C)   It will reduce the amount of taxes he owes in the current year by $2,100.
D)   It will have no effect on the amount of taxes he owes this year.E) None of the above
F) B) and C)

Question 2

The federal government discourages home ownership through high tax rates.

Accepted Answer

A) True 
 B)False

Question 3

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 4

Most people find it relatively easy to live frugally.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is an advantage of home ownership?

Accepted Answer

A)   Home ownership is a good way to control the costs of utilities,maintenance,and insurance.
B)   Mortgage interest and real estate taxes are tax deductible.
C)   Money invested in a house is a highly liquid investment.
D)   Home ownership provides a guaranteed rate of return that is more stable than the return earned by investing in the stock market.E) B) and C)
F) A) and D)

Question 8

The first step you would take to get control of your personal finances is to:

Accepted Answer

A)   keep track of all your expenses.
B)   prepare a budget.
C)   take inventory of your assets.
D)   start a savings program.E) B) and D)
F) None of the above

Question 9

In order to qualify as a tax shelter,IRA saving plans must be invested in mutual funds.

Accepted Answer

A) True 
 B)False

Question 10

IRA funds are not available for withdrawal until you are 59 ½ years old.

Accepted Answer

A) True 
 B)False

Question 11

Unlike whole life policies,a universal life insurance policy typically invests part of the premium in very aggressive,high-risk assets.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

An individual retirement account (IRA)is a tax-deferred investment plan designed to encourage workers to save for retirement.

Accepted Answer

A) True 
 B)False

Question 14

Hannah is excited about getting her first credit card.However,she should be aware of the fact that:

Accepted Answer

A)   credit cards are no longer accepted in many places as a valid source of credit.
B)   credit cards require that at least 25% of the balance be paid each month.
C)   there will be a finance charge even if Hannah pays her entire credit card balance in full and on time.
D)   the convenience of credit cards can lead to excessive debts.E) C) and D)
F) None of the above

Question 15

Most financial experts will tell you to save about 1 month of earnings for contingency purposes.

Accepted Answer

A) True 
 B)False

Question 16

On your personal balance sheet,your assets should include anything of value that you own.

Accepted Answer

A) True 
 B)False

Question 17

Mortgage interest payments and property taxes are:

Accepted Answer

A)   tax deductible for homeowners.
B)   expenses that make home ownership less attractive than renting.
C)   both likely to increase each year at a faster rate than your income.
D)   both likely to decline the longer you own the home.E) A) and B)
F) A) and C)

Question 18

More than half of all debtors seeking help at the National Consumer Counseling Service were between the ages of 18 and 32.

Accepted Answer

A) True 
 B)False

Question 19

One disadvantage of having credit cards for personal use is that:

Accepted Answer

A)   they offer no protection if they are stolen.
B)   they are less convenient than other forms of credit.
C)   many companies have a policy that prevents employees from having both personal credit cards and credit cards for business use.
D)   they can make it easy to pile up a large amount of debt quickly.E) B) and C)
F) A) and D)

Question 20

Before getting married,a couple should discuss and agree upon a financial strategy.

Accepted Answer

A) True 
 B)False

Exam 22: Appendix B: Managing Risk

The federal government discourages home ownership through high tax rates.

Correct AnswerverifiedShow Answer

Mortgage interest payments and property taxes are:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

On your personal balance sheet,your assets should include anything of value that you own.

Correct AnswerverifiedShow Answer

More than half of all debtors seeking help at the National Consumer Counseling Service were between the ages of 18 and 32.

Correct AnswerverifiedShow Answer

Most financial experts will tell you to save about 1 month of earnings for contingency purposes.

Correct AnswerverifiedShow Answer

One disadvantage of having credit cards for personal use is that:

Correct AnswerverifiedShow Answer

In order to qualify as a tax shelter,IRA saving plans must be invested in mutual funds.

Correct AnswerverifiedShow Answer

Hannah is excited about getting her first credit card.However,she should be aware of the fact that:

Correct AnswerverifiedShow Answer

Before getting married,a couple should discuss and agree upon a financial strategy.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Bob has decided to contribute $2,800 to a Roth IRA.He is currently in the 25% tax bracket.How will his contribution affect his income tax for the current year?

Correct AnswerverifiedShow Answer

Which of the following is an advantage of home ownership?

Correct AnswerverifiedShow Answer

An individual retirement account (IRA)is a tax-deferred investment plan designed to encourage workers to save for retirement.

Correct AnswerverifiedShow Answer

Unlike whole life policies,a universal life insurance policy typically invests part of the premium in very aggressive,high-risk assets.

Correct AnswerverifiedShow Answer

IRA funds are not available for withdrawal until you are 59 ½ years old.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The first step you would take to get control of your personal finances is to:

Correct AnswerverifiedShow Answer

Most people find it relatively easy to live frugally.

Correct AnswerverifiedShow Answer

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