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Exam 22: Appendix B: Managing Risk

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Question 81

Multiple Choice

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

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Question 82

Multiple Choice

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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:

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 C)
F) A) and B)

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Question 83

True/False

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The tax shelter offered by home ownership increases the overall cost of owning your home.

Miko is in need of advice regarding investments,taxes,and insurance for herself and her family.She would be well advised to seek the advice of an insurance salesperson.

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.

Henri wants to get better control of his personal finances.He should begin by setting up a personal balance sheet and a personal income statement.

Identify and discuss the six steps that individuals can take to gain control of their personal finances.

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

From a financial viewpoint,it is best to buy a:

The reason you would prepare a durable power of attorney is to make sure that someone was named to take over your finances if you become incapacitated.

A major source of revenue on your personal income statement is your salary or wages from your job.

The factor likely to have the greatest impact on how fast the value of a home appreciates over time is the:

Over the long-run,investing in __________ has proven to be a good strategy for obtaining a high rate of return.

Financial planners regularly suggest that you borrow money to pay for large purchases.

Roberto has just opened a 401(k)retirement plan.The money he invests in this plan will reduce Roberto's present taxable income.

In order to accumulate enough wealth to get started toward achieving their goals many people have to make significant sacrifices in their standard of living for several years.

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

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

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

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