Question 1

Which of the following is the best advice about the use of credit cards?

Accepted Answer

A)  Except for very small purchases, credit cards should always be used instead of cash. 
B)  The best approach to credit cards is never even to apply for one. 
C)  Credit cards are an important part of a personal financial system, but pay the balance in full during the period when no interest is charged. 
D)  Credit cards are most useful when making large purchases (over $500), because they allow you to spread out the payments to fit into your budget. 
A)  Except for very small purchases, credit cards should always be used instead of cash. 
B)  The best approach to credit cards is never even to apply for one. 
C)  Credit cards are an important part of a personal financial system, but pay the balance in full during the period when no interest is charged. 
D)  Credit cards are most useful when making large purchases (over $500), because they allow you to spread out the payments to fit into your budget.

Question 2

The number of workers paying into Social Security per retired individual receiving benefits is decreasing.

Accepted Answer

A) True 
 B)False

Question 3

For someone with a family that includes young children, the first step in estate planning should be to

Accepted Answer

A)  establish a will. 
B)  set up a trust fund for each child. 
C)  select a guardian for the children. 
D)  give each child his or her own savings account. 
A)  establish a will. 
B)  set up a trust fund for each child. 
C)  select a guardian for the children. 
D)  give each child his or her own savings account.

Question 4

The best strategy to follow in using credit cards is to pay only the minimum amount required each month.

Accepted Answer

A) True 
 B)False

Question 5

What advice might a personal financial advisor offer a recent college graduate desiring to become financially secure?

Accepted Answer

The first step is to recognize that succ

Question 6

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 7

Which of the following would be included as an asset in the preparation of a personal balance sheet?

Accepted Answer

A)  credit-card debt 
B)  home mortgage 
C)  your salary from a part-time job 
D)  your computer 
A)  credit-card debt 
B)  home mortgage 
C)  your salary from a part-time job 
D)  your computer

Question 8

In saving for retirement, Penny could take advantage of the unique tax shelter offered only to small-business owners in a

Accepted Answer

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

Question 9

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. 
A)  keep track of all your expenses. 
B)  prepare a budget. 
C)  take inventory of your assets. 
D)  start a savings program.

Question 10

Only large corporations with at least 500 employees can offer their employees a simple 401(k) retirement plan that allows for greater contribution maximums.

Accepted Answer

A) True 
 B)False

Question 11

Nancy has been following the stock market, and has noticed that it has been declining for the last several weeks. While many of her friends and family have sold stock, Nancy looks at this situation as a good opportunity to buy. Nancy's views are consistent with the ________ approach to investing in the stock market.

Accepted Answer

A)  contrarian 
B)  revisionist 
C)  arbitrarian 
D)  negativist 
A)  contrarian 
B)  revisionist 
C)  arbitrarian 
D)  negativist

Question 12

More than half of all debtors seeking help at the National Foundation for Credit were between the ages of 18 and 32.

Accepted Answer

A) True 
 B)False

Question 13

An umbrella policy is an inexpensive policy that provides financial protection only in the event of clearly defined major catastrophes such as hurricanes or earthquakes-events which are referred to in the insurance industry as "rainy days."

Accepted Answer

A) True 
 B)False

Question 14

Funds deposited into an IRA cannot be withdrawn until you retire.

Accepted Answer

A) True 
 B)False

Question 15

The death benefits of a variable life insurance policy vary depending upon the performance of the investment.

Accepted Answer

A) True 
 B)False

Question 16

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

Question 17

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. 
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.

Question 18

Budgets are

Accepted Answer

A)  useful for businesses, but too restrictive to be used by individuals or households. 
B)  a financial plan of projected revenues and expenses. 
C)  just another name for cash flow statements. 
D)  only helpful to people who earn more than $50,000 per year. 
A)  useful for businesses, but too restrictive to be used by individuals or households. 
B)  a financial plan of projected revenues and expenses. 
C)  just another name for cash flow statements. 
D)  only helpful to people who earn more than $50,000 per year.

Question 19

Patrick is in the habit of using his credit card for expenditures made on business trips. The most likely reason he does this is to

Accepted Answer

A)  lower his business expenses. 
B)  take a deduction on the interest he pays on his credit card balance. 
C)  pad his expense account. 
D)  keep track of his purchases. 
A)  lower his business expenses. 
B)  take a deduction on the interest he pays on his credit card balance. 
C)  pad his expense account. 
D)  keep track of his purchases.

Question 20

Which of the following is true of credit cards?

Accepted Answer

A)  They are a cheaper way to finance your education. 
B)  They are an efficient way to keep track of purchases. 
C)  They are an effective way of controlling the amount of debt the consumer incurs. 
D)  They are less convenient than carrying cash or writing a check. 
A)  They are a cheaper way to finance your education. 
B)  They are an efficient way to keep track of purchases. 
C)  They are an effective way of controlling the amount of debt the consumer incurs. 
D)  They are less convenient than carrying cash or writing a check.

Exam 24: Appendix: Managing Personal Finances

Which of the following is the best advice about the use of credit cards?

The number of workers paying into Social Security per retired individual receiving benefits is decreasing.

For someone with a family that includes young children, the first step in estate planning should be to

The best strategy to follow in using credit cards is to pay only the minimum amount required each month.

What advice might a personal financial advisor offer a recent college graduate desiring to become financially secure?

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

Which of the following would be included as an asset in the preparation of a personal balance sheet?

In saving for retirement, Penny could take advantage of the unique tax shelter offered only to small-business owners in a

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

Only large corporations with at least 500 employees can offer their employees a simple 401(k) retirement plan that allows for greater contribution maximums.

More than half of all debtors seeking help at the National Foundation for Credit were between the ages of 18 and 32.

An umbrella policy is an inexpensive policy that provides financial protection only in the event of clearly defined major catastrophes such as hurricanes or earthquakes-events which are referred to in the insurance industry as "rainy days."

Funds deposited into an IRA cannot be withdrawn until you retire.

The death benefits of a variable life insurance policy vary depending upon the performance of the investment.

Claire 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?

Investing in a home is generally considered a

Budgets are

Patrick is in the habit of using his credit card for expenditures made on business trips. The most likely reason he does this is to

Which of the following is true of credit cards?

Taking Risks and Making Profits Within the Dynamic Business Environment

Understanding Economics and How It Affects Business

Doing Business in Global Markets

Demanding Ethical and Socially Responsible Behavior

How to Form a Business

Entrepreneurship and Starting a Small Business

Management and Leadership

Structuring Organizations for Todays Challenges

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Employeemanagement Issues

Marketing: Helping Buyers Buy

Developing and Pricing Goods and Services

Distributing Products

Using Effective Promotions

Understanding Accounting and Financial Information

Financial Management

Using Securities Markets for Financing and Investing Opportunities

Money, Financial Institutions, and the Federal Reserve

Appendix: Working Within the Legal Environment

Appendix: Using Technology to Manage Information

Appendix: Managing Risk

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