Question 1

Stan and Heidi are married and both have careers in business. If one of the two were to die, there would be a sudden drop in income. To provide protection from this risk the couple should purchase:

Accepted Answer

A)   disability insurance.
B)   life insurance.
C)   health insurance.
D)   car insurance.E) A) and D)
F) B) and C)

Question 2

Trends in the number of workers contributing to the Social Security system and the number of workers drawing benefits from the system suggest that future generations will:

Accepted Answer

A)   have more frequent cost-of-living adjustments.
B)   see significant improvements in the level of benefits.
C)   face a later retirement age in order to qualify for full Social Security benefits.
D)   not be allowed to invest in private pension plans.E) A) and B)
F) A) and C)

Question 3

A homeowner's insurance policy that includes a provision for __________ would provide the homeowner with enough cash to replace the items lost.

Accepted Answer

A)   actual book value protection
B)   cash in lieu of coverage
C)   guaranteed replacement cost
D)   full collateral damage protectionE) All of the above
F) None of the above

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

Question 5

Term life insurance is a combination insurance plan and savings plan.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

The Social Security program was established in:

Accepted Answer

A)   1889.
B)   1935.
C)   1953.
D)   1976.E) B) and C)
F) B) and D)

Question 8

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 9

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.

Accepted Answer

A) True 
 B)False

Question 10

Investing in a home is generally considered a:

Accepted Answer

A)   poor choice when compared to renting.
B)   wise investment.
C)   luxury that should be postponed as long as possible.
D)   good decision, but only if you've saved enough to pay in full with cash.E) A) and B)
F) A) and C)

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

A person using a credit card to make a purchase may end up paying much more than if he or she had paid cash.

Accepted Answer

A) True 
 B)False

Question 13

The best way to save money is to pay yourself first.

Accepted Answer

A) True 
 B)False

Question 14

In preparing an income statement for yourself, the wages from your job would be shown as:

Accepted Answer

A)   your revenue.
B)   an expense.
C)   an asset.
D)   your owner's equity.E) A) and D)
F) A) and C)

Question 15

Guaranteed replacement cost insurance coverage provides the insured with the depreciated cost of assets.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)   Universal life insurance
B)   Planned annuity life insurance
C)   Declining coverage, fixed payment insurance
D)   Multiyear level-premium insuranceE) B) and C)
F) A) and D)

Question 17

Although he has a good health insurance policy, Ken 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. Ken 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) A) and B)
F) A) and C)

Question 18

IRAs, 401(k), and Keogh plans all include incentives to encourage saving for retirement.

Accepted Answer

A) True 
 B)False

Question 19

Credit-card debt represents an asset on a consumer's balance sheet.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 25: Extension: Managing Personal Finances

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Although he has a good health insurance policy, Ken 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. Ken would probably be interested in obtaining:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Term life insurance is a combination insurance plan and savings plan.

Correct AnswerverifiedShow Answer

A person using a credit card to make a purchase may end up paying much more than if he or she had paid cash.

Correct AnswerverifiedShow Answer

A homeowner's insurance policy that includes a provision for __________ would provide the homeowner with enough cash to replace the items lost.

Correct AnswerverifiedShow Answer

The best way to save money is to pay yourself first.

Correct AnswerverifiedShow Answer

Guaranteed replacement cost insurance coverage provides the insured with the depreciated cost of assets.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The goal of accumulating capital is to allow an individual to:

Correct AnswerverifiedShow Answer

Stan and Heidi are married and both have careers in business. If one of the two were to die, there would be a sudden drop in income. To provide protection from this risk the couple should purchase:

Correct AnswerverifiedShow Answer

Credit-card debt represents an asset on a consumer's balance sheet.

Correct AnswerverifiedShow Answer

In preparing an income statement for yourself, the wages from your job would be shown as:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Trends in the number of workers contributing to the Social Security system and the number of workers drawing benefits from the system suggest that future generations will:

Correct AnswerverifiedShow Answer

The Social Security program was established in:

Correct AnswerverifiedShow Answer

Investing in a home is generally considered a:

Correct AnswerverifiedShow Answer

IRAs, 401(k), and Keogh plans all include incentives to encourage saving for retirement.

Correct AnswerverifiedShow Answer

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