Question 1

The total cost of purchasing a stereo or television 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 2

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 3

Multiyear level-premium insurance is a form of term insurance with fixed premiums for the life of the policy.

Accepted Answer

A) True 
 B)False

Question 4

Annette and Ron just got married.They 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 5

Social Security is the term used to describe the Old Age,Survivors,and Disability Insurance Program.

Accepted Answer

A) True 
 B)False

Question 6

Financial planning begins with:

Accepted Answer

A)  spending money wisely. 
B)  earning money. 
C)  insuring your assets against an unexpected loss. 
D)  saving money. 
A)  spending money wisely. 
B)  earning money. 
C)  insuring your assets against an unexpected loss. 
D)  saving money.

Question 7

How does term insurance differ from whole life insurance? Describe the newer types of life insurance that have been offered in recent years.

Accepted Answer

Term life insurance offers pure insuranc

Question 8

Investors who desire a very stable and predictable income from their investments (such as people who are nearing retirement)would be reluctant to invest heavily in the stock market.

Accepted Answer

A) True 
 B)False

Question 9

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 10

In order to accumulate capital,young adults are likely to have to:

Accepted Answer

A)  accept a lifestyle that sacrifices some amenities. 
B)  live beyond their means. 
C)  rely on credit cards for basic purchases in order to conserve on cash. 
D)  borrow funds from a bank. 
A)  accept a lifestyle that sacrifices some amenities. 
B)  live beyond their means. 
C)  rely on credit cards for basic purchases in order to conserve on cash. 
D)  borrow funds from a bank.

Question 11

________ insurance provides protection from losses of furniture,appliances,and clothes.

Accepted Answer

A)  Term 
B)  Health 
C)  Disability 
D)  Homeowner's 
A)  Term 
B)  Health 
C)  Disability 
D)  Homeowner's

Question 12

About half of the U.S.population accumulates enough money to afford a comfortable retirement.

Accepted Answer

A) True 
 B)False

Question 13

A person in the 25 percent tax bracket who invests $1,000 in a traditional IRA immediately postpones $250 in taxes.

Accepted Answer

A) True 
 B)False

Question 14

One strategy to lower the cost of automobile insurance is to purchase a policy with a:

Accepted Answer

A)  low deductible. 
B)  high deductible. 
C)  liability coverage rider. 
D)  health coverage rider. 
A)  low deductible. 
B)  high deductible. 
C)  liability coverage rider. 
D)  health coverage rider.

Question 15

The three factors that have the greatest influence on how the value of your home increases over time are: (1)size (square feet), (2)age,and (3)design features.

Accepted Answer

A) True 
 B)False

Question 16

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 17

Don is young and newly married.He and his wife plan to have children in the near future and Don wants to get a significant amount of life insurance coverage at as low a cost as possible.He would be well advised to purchase a term insurance policy.

Accepted Answer

A) True 
 B)False

Question 18

Hernando and Margarita have decided to take out an umbrella policy from an insurance company.The main reason they would probably want to do this would be to:

Accepted Answer

A)  protect against major disasters,which are known as "rainy days." 
B)  ensure that any children they have will be guaranteed the right to buy insurance at some future date. 
C)  save money by having one company provide a variety of different types of coverage. 
D)  take out one life insurance policy that covers both of them. 
A)  protect against major disasters,which are known as "rainy days." 
B)  ensure that any children they have will be guaranteed the right to buy insurance at some future date. 
C)  save money by having one company provide a variety of different types of coverage. 
D)  take out one life insurance policy that covers both of them.

Question 19

One danger of a credit card is that consumers often buy items they wouldn't normally buy if they had to pay cash.

Accepted Answer

A) True 
 B)False

Question 20

According to Newsweek magazine,a young couple with a new baby should have life insurance coverage equal to:

Accepted Answer

A)  $500,000. 
B)  three times their annual income. 
C)  five times their annual income. 
D)  seven times their annual income plus $100,000 to cover the cost of college. 
A)  $500,000. 
B)  three times their annual income. 
C)  five times their annual income. 
D)  seven times their annual income plus $100,000 to cover the cost of college.

Exam 22: Appendix B: Managing Risk

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

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.

Multiyear level-premium insurance is a form of term insurance with fixed premiums for the life of the policy.

Annette and Ron just got married.They received some very expensive wedding gifts including some beautiful silverware and jewelry.Their homeowner's policy:

Social Security is the term used to describe the Old Age,Survivors,and Disability Insurance Program.

Financial planning begins with:

How does term insurance differ from whole life insurance? Describe the newer types of life insurance that have been offered in recent years.

Investors who desire a very stable and predictable income from their investments (such as people who are nearing retirement)would be reluctant to invest heavily in the stock market.

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

In order to accumulate capital,young adults are likely to have to:

________ insurance provides protection from losses of furniture,appliances,and clothes.

About half of the U.S.population accumulates enough money to afford a comfortable retirement.

A person in the 25 percent tax bracket who invests $1,000 in a traditional IRA immediately postpones $250 in taxes.

One strategy to lower the cost of automobile insurance is to purchase a policy with a:

The three factors that have the greatest influence on how the value of your home increases over time are: (1)size (square feet), (2)age,and (3)design features.

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

Don is young and newly married.He and his wife plan to have children in the near future and Don wants to get a significant amount of life insurance coverage at as low a cost as possible.He would be well advised to purchase a term insurance policy.

Hernando and Margarita have decided to take out an umbrella policy from an insurance company.The main reason they would probably want to do this would be to:

One danger of a credit card is that consumers often buy items they wouldn't normally buy if they had to pay cash.

According to Newsweek magazine,a young couple with a new baby should have life insurance coverage equal to:

Taking Risks and Making Profits Within the Dynamic Business Environment

Understanding How Economics 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

Adapting Organizations to Todays Markets

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Employee-Management Issues and Relationships

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 A: Using Technology to Manage Information

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