Question 1

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 2

The total cost of purchasing a sound system or HDTV with cash is ________ the cost when using credit cards to finance the same assets.

Accepted Answer

A)  the same as 
B)  greater than 
C)  less than 
D)  less stable than 
A)  the same as 
B)  greater than 
C)  less than 
D)  less stable than

Question 3

IRA funds are not available for withdrawal until you are 59½ years old.

Accepted Answer

A) True 
 B)False

Question 4

In the future, the Social Security system is likely to

Accepted Answer

A)  raise taxes and reduce benefits. 
B)  increase cost-of-living adjustments. 
C)  establish a younger retirement age. 
D)  adequately provide for all the retirement income the typical retiree needs to live comfortably. 
A)  raise taxes and reduce benefits. 
B)  increase cost-of-living adjustments. 
C)  establish a younger retirement age. 
D)  adequately provide for all the retirement income the typical retiree needs to live comfortably.

Question 5

Which of the following is a benefit of buying a home rather than renting?

Accepted Answer

A)  Real estate taxes and utilities will be fixed. 
B)  It reduces the need to carry insurance. 
C)  Paying for a home is a good way to force yourself to save. 
D)  The entire purchase price of the home can be deducted from taxable income, but this deduction must be spread over at least 15 years. 
A)  Real estate taxes and utilities will be fixed. 
B)  It reduces the need to carry insurance. 
C)  Paying for a home is a good way to force yourself to save. 
D)  The entire purchase price of the home can be deducted from taxable income, but this deduction must be spread over at least 15 years.

Question 6

From a financial viewpoint, it is best to buy a

Accepted Answer

A)  large home in a good neighborhood. 
B)  very large home in a neighborhood where homes are relatively inexpensive. 
C)  medium-sized home in a neighborhood where homes are the least expensive. 
D)  small home in an excellent neighborhood. 
A)  large home in a good neighborhood. 
B)  very large home in a neighborhood where homes are relatively inexpensive. 
C)  medium-sized home in a neighborhood where homes are the least expensive. 
D)  small home in an excellent neighborhood.

Question 7

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

Accepted Answer

Step 1. Take inventory of your financial

Question 8

Withdrawals from an IRA prior to age 59½ generally are subject to taxes and a penalty.

Accepted Answer

A) True 
 B)False

Question 9

If you have minor children, the first step in estate planning is to select their guardian.

Accepted Answer

A) True 
 B)False

Question 10

During a recent drop in the stock market, Damon took the opportunity to buy a wide variety of stocks even though many of his friends and relatives were selling. His investment strategy appears to be consistent with contrarian views.

Accepted Answer

A) True 
 B)False

Question 11

Quinn 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 debt. 
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 debt.

Question 12

People who have health insurance seldom need disability insurance.

Accepted Answer

A) True 
 B)False

Question 13

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. 
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.

Question 14

By using the financial planner's advice, Penny and Ira were able to find ways to cut back on their spending and began to live more modestly. They began to have a few hundred dollars left over each month after handling their normal expenses. Which of the following is the first thing they should do with their extra money?

Accepted Answer

A)  buy one nice household item that they will both enjoy as a reward for their thriftiness 
B)  pay off their debts, starting with the ones that have the highest finance costs 
C)  start a savings account at a local bank 
D)  buy bonds in a major corporation 
A)  buy one nice household item that they will both enjoy as a reward for their thriftiness 
B)  pay off their debts, starting with the ones that have the highest finance costs 
C)  start a savings account at a local bank 
D)  buy bonds in a major corporation

Question 15

An advantage of both traditional and Roth IRAs is that both the income invested and the earnings from these investments are never taxed.

Accepted Answer

A) True 
 B)False

Question 16

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. 
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.

Question 17

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. 
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.

Question 18

Disability insurance provides a relatively low-cost way of protecting against lost income due to an accident or illness that prevents you from working for an extended period of time.

Accepted Answer

A) True 
 B)False

Question 19

Henry and Mila are newlyweds and received some very expensive wedding gifts, including some beautiful silverware and jewelry. Their homeowner's policy

Accepted Answer

A)  automatically covers these items. 
B)  does not automatically cover such items and they must take out a separate policy specifically for those types of items. 
C)  does not automatically cover these items, but a rider can be used to add this coverage. 
D)  automatically covers these items from theft, but not from damage due to fire, explosion, or vandalism. 
A)  automatically covers these items. 
B)  does not automatically cover such items and they must take out a separate policy specifically for those types of items. 
C)  does not automatically cover these items, but a rider can be used to add this coverage. 
D)  automatically covers these items from theft, but not from damage due to fire, explosion, or vandalism.

Question 20

From an investment viewpoint, it is a good idea to buy a large home in an area of town where homes are less expensive.

Accepted Answer

A) True 
 B)False

Exam 24: Appendix: Managing Personal Finances

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

The total cost of purchasing a sound system or HDTV with cash is ________ the cost when using credit cards to finance the same assets.

IRA funds are not available for withdrawal until you are 59½ years old.

In the future, the Social Security system is likely to

Which of the following is a benefit of buying a home rather than renting?

From a financial viewpoint, it is best to buy a

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

Withdrawals from an IRA prior to age 59½ generally are subject to taxes and a penalty.

If you have minor children, the first step in estate planning is to select their guardian.

During a recent drop in the stock market, Damon took the opportunity to buy a wide variety of stocks even though many of his friends and relatives were selling. His investment strategy appears to be consistent with contrarian views.

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

People who have health insurance seldom need disability insurance.

Mortgage interest payments and property taxes are

An advantage of both traditional and Roth IRAs is that both the income invested and the earnings from these investments are never taxed.

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

Which of the following is an advantage of home ownership?

Disability insurance provides a relatively low-cost way of protecting against lost income due to an accident or illness that prevents you from working for an extended period of time.

Henry and Mila are newlyweds and received some very expensive wedding gifts, including some beautiful silverware and jewelry. Their homeowner's policy

From an investment viewpoint, it is a good idea to buy a large home in an area of town where homes are less expensive.

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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