Question 1

A common purpose of a rider added to a homeowner's policy is to:

Accepted Answer

A)   provide coverage for items that the standard policy does not cover.
B)   limit the insurance company's liability for certain types of losses.
C)   waive the provision that requires the owners to get a health exam.
D)   allow the policy holder to obtain health, disability, and auto insurance under their homeowner's plan.E) A) and B)
F) A) and C)

Question 2

One benefit of a simple IRA is that it allows:

Accepted Answer

A)   employees of small companies to save more than a regular IRA.
B)   employees to invest in the corporate bonds of their employers.
C)   business owners to use employee retirement funds to help finance their small business.
D)   employees to withdraw funds from the IRA prior to retirement without penalty.E) B) and C)
F) A) and D)

Question 3

The earnings of a traditional individual retirement account (IRA)  are:

Accepted Answer

A)   taxed at the time they are earned.
B)   not taxed.
C)   taxed when the funds are withdrawn.
D)   subject to the double taxation of all dividends.E) None of the above
F) B) and C)

Question 4

A Roth IRA allows workers who qualify to get an up-front deduction for any money they invest in the plan.

Accepted Answer

A) True 
 B)False

Question 5

A contract that calls for regular payments to an individual for life or for a fixed period of time is called a(n) :

Accepted Answer

A)   annuity.
B)   fixed dividend plan.
C)   mutual fund.
D)   level premium agreement.E) None of the above
F) A) and C)

Question 6

A financial planner would encourage you to borrow money:

Accepted Answer

A)   only to buy assets that are likely to generate income or increase in value.
B)   to pay your day-to-day expenses and then to invest your income.
C)   only when facing bankruptcy.
D)   in order to reduce your debt level.E) C) and D)
F) A) and B)

Question 7

Lucy has prepared her personal balance sheet and found that her total assets are $54,000 and her total liabilities (largely college loans)  are $48,000. This indicates that Lucy's:

Accepted Answer

A)   net income is only $6,000.
B)   net worth is $6,000.
C)   cash flow will not be sufficient to repay her college loans.
D)   balance sheet is out of balance.E) All of the above
F) None of the above

Question 8

Buying a _______ is often an attractive strategy for young couples, since they can live in one unit and rent the other half to supplement their income, while taking tax deductions on interest and real estate taxes.

Accepted Answer

A)   semiprivate housing unit
B)   ranch apartment
C)   biplex
D)   duplexE) None of the above
F) All of the above

Question 9

When you buy a home, the monthly payments for the home may remain relatively fixed, but your payments for taxes and utilities are likely to increase.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

What are the advantages of investing in a home?

Accepted Answer

One of the better investments persons ca...

Question 12

Funds invested in savings accounts and certificates of deposit (CDs) have traditionally outperformed stocks as a means of generating long-term financial gains.

Accepted Answer

A) True 
 B)False

Question 13

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 IRA. If she is in the 25 percent tax bracket, how much tax will she have to pay on her withdrawal?

Accepted Answer

A)   $ 750
B)   $1,000
C)   $2,250
D)   She will not owe any taxes on this withdrawal.E) A) and B)
F) A) and C)

Question 14

John is considering starting his degree in business this semester at State University. John will likely find that:

Accepted Answer

A)   his time would be better spent pursuing a career after high school.
B)   he will have more fun and excitement than his friends that don't attend college.
C)   his choice of a business major will virtually guarantee him a comfortable retirement income if he sticks with it.
D)   he will likely earn about $1.6 million more during his lifetime than his friends with only a high school degree.E) A) and B)
F) None of the above

Question 15

Whole life insurance premiums provide the insured with both pure insurance and a savings plan.

Accepted Answer

A) True 
 B)False

Question 16

Describe the major steps involved in estate planning.

Accepted Answer

For people with young children, the firs...

Question 17

The only way to accumulate enough money to do all of the things you want to do late in life is to:

Accepted Answer

A)   take an inventory of your financial assets.
B)   make more than you spend.
C)   avoid bankruptcy.
D)   satisfy the demands of your creditors.E) B) and D)
F) B) and C)

Question 18

Term life insurance offers pure insurance with no savings feature.

Accepted Answer

A) True 
 B)False

Question 19

As an employee of New Hampshire Industries, Kathleen has an opportunity to invest pre-tax income in an employer-sponsored retirement plan. Her employer will contribute 50 cents for every dollar that Kathleen contributes to this fund. This is an example of a(n) :

Accepted Answer

A)   individual retirement account (IR
A)   plan.
B)   401(k)  plan.
C)   Keogh plan.
D)   restricted private investment (RPI)  plan.E) A) and D)
F) C) and D)

Question 20

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.

Accepted Answer

A) True 
 B)False

Exam 25: Extension: Managing Personal Finances

The only way to accumulate enough money to do all of the things you want to do late in life is to:

Correct AnswerverifiedShow Answer

Funds invested in savings accounts and certificates of deposit (CDs) have traditionally outperformed stocks as a means of generating long-term financial gains.

Correct AnswerverifiedShow Answer

Describe the major steps involved in estate planning.

Correct AnswerverifiedFor people with young children, the firs...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

One benefit of a simple IRA is that it allows:

Correct AnswerverifiedShow Answer

Whole life insurance premiums provide the insured with both pure insurance and a savings plan.

Correct AnswerverifiedShow Answer

When you buy a home, the monthly payments for the home may remain relatively fixed, but your payments for taxes and utilities are likely to increase.

Correct AnswerverifiedShow Answer

A contract that calls for regular payments to an individual for life or for a fixed period of time is called a(n) :

Correct AnswerverifiedShow Answer

A common purpose of a rider added to a homeowner's policy is to:

Correct AnswerverifiedShow Answer

A financial planner would encourage you to borrow money:

Correct AnswerverifiedShow Answer

As an employee of New Hampshire Industries, Kathleen has an opportunity to invest pre-tax income in an employer-sponsored retirement plan. Her employer will contribute 50 cents for every dollar that Kathleen contributes to this fund. This is an example of a(n) :

Correct AnswerverifiedShow Answer

Buying a _______ is often an attractive strategy for young couples, since they can live in one unit and rent the other half to supplement their income, while taking tax deductions on interest and real estate taxes.

Correct AnswerverifiedShow Answer

Lucy has prepared her personal balance sheet and found that her total assets are $54,000 and her total liabilities (largely college loans) are $48,000. This indicates that Lucy's:

Correct AnswerverifiedShow Answer

A Roth IRA allows workers who qualify to get an up-front deduction for any money they invest in the plan.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

John is considering starting his degree in business this semester at State University. John will likely find that:

Correct AnswerverifiedShow Answer

What are the advantages of investing in a home?

Correct AnswerverifiedOne of the better investments persons ca...View AnswerShow Answer

Term life insurance offers pure insurance with no savings feature.

Correct AnswerverifiedShow Answer

The earnings of a traditional individual retirement account (IRA) are:

Correct AnswerverifiedShow Answer

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 IRA. If she is in the 25 percent tax bracket, how much tax will she have to pay on her withdrawal?

Correct AnswerverifiedShow Answer

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For people with young children, the firs...
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One of the better investments persons ca...
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