Question 1

Henri wants to get better control of his personal finances. He should begin by setting up a personal balance sheet and a personal income statement.

Accepted Answer

A) True 
 B)False  True

Question 2

Many financial experts advise that you set up a contingency fund equal to about ________ of your earnings and keep these funds in highly liquid accounts.

Accepted Answer

A)  two months 
B)  six months 
C)  one year 
D)  three years 
A)  two months 
B)  six months 
C)  one year 
D)  three years B

Question 3

Accumulating money through savings allows you to participate in the growth of a capitalist society.

Accepted Answer

A) True 
 B)False  True

Question 4

________ 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 5

In order to qualify as a tax shelter, IRA saving plans must be invested in mutual funds.

Accepted Answer

A) True 
 B)False

Question 6

Bonnie and Clyde are newly married college graduates. Both have jobs with bright futures. One strategy that they could use to accumulate capital for investment purposes, would be to:

Accepted Answer

A)  borrow heavily to buy a house. 
B)  use their credit cards to acquire assets while prices are relatively low. 
C)  live on just one of their incomes and save the other. 
D)  quit their jobs and go back to college for a graduate degree. 
A)  borrow heavily to buy a house. 
B)  use their credit cards to acquire assets while prices are relatively low. 
C)  live on just one of their incomes and save the other. 
D)  quit their jobs and go back to college for a graduate degree.

Question 7

Many insurance providers offer __________ policies that give a discount to families who buy several types of insurance coverage from them.

Accepted Answer

A)  umbrella 
B)  universal 
C)  multi-use 
D)  rider-enhanced 
A)  umbrella 
B)  universal 
C)  multi-use 
D)  rider-enhanced

Question 8

People who have health insurance seldom need disability insurance.

Accepted Answer

A) True 
 B)False

Question 9

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 10

When young people decide to buy a house, the best approach is to buy a house in an inexpensive part of town so they can get a larger house for less money.

Accepted Answer

A) True 
 B)False

Question 11

A good manager of personal finances, like a good businessperson, uses borrowed funds whenever possible.

Accepted Answer

A) True 
 B)False

Question 12

Once you have evaluated your current financial situation and know your sources of income and expenses, you have reached the point where you can establish a personal budget.

Accepted Answer

A) True 
 B)False

Question 13

The benefit of opening an IRA while you're young is the compounding of the money invested tax-free over your working lifetime.

Accepted Answer

A) True 
 B)False

Question 14

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 they should be used with care and discipline to avoid their high financial costs. 
D)  Credit cards are most useful when making large purchases (over $500), because they allow you to spread out the payments so they fit in 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 they should be used with care and discipline to avoid their high financial costs. 
D)  Credit cards are most useful when making large purchases (over $500), because they allow you to spread out the payments so they fit in your budget.

Question 15

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 16

_________ is a form of life insurance that provides both a savings plan and pure insurance coverage.

Accepted Answer

A)  Term life insurance 
B)  Growth-centered life insurance 
C)  Whole life insurance 
D)  Multiyear level-premium insurance 
A)  Term life insurance 
B)  Growth-centered life insurance 
C)  Whole life insurance 
D)  Multiyear level-premium insurance

Question 17

One strategy used to lower car insurance premiums is to choose a policy with a large deductible.

Accepted Answer

A) True 
 B)False

Question 18

About 35% of U.S. households do not have a retirement account.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is least likely to result from the problems facing the Social Security system?

Accepted Answer

A)  an increase in the age at which full Social Security benefits are received 
B)  cuts in benefits 
C)  reductions in Social Security taxes 
D)  reductions in cost-of-living adjustments 
A)  an increase in the age at which full Social Security benefits are received 
B)  cuts in benefits 
C)  reductions in Social Security taxes 
D)  reductions in cost-of-living adjustments

Question 20

Keogh plans are intended to help small business owners save for retirement.

Accepted Answer

A) True 
 B)False

Exam 25: Extension: Managing Personal Finances

Henri wants to get better control of his personal finances. He should begin by setting up a personal balance sheet and a personal income statement.

Many financial experts advise that you set up a contingency fund equal to about ________ of your earnings and keep these funds in highly liquid accounts.

Accumulating money through savings allows you to participate in the growth of a capitalist society.

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

In order to qualify as a tax shelter, IRA saving plans must be invested in mutual funds.

Bonnie and Clyde are newly married college graduates. Both have jobs with bright futures. One strategy that they could use to accumulate capital for investment purposes, would be to:

Many insurance providers offer __________ policies that give a discount to families who buy several types of insurance coverage from them.

People who have health insurance seldom need disability insurance.

From a financial viewpoint, it is best to buy a:

When young people decide to buy a house, the best approach is to buy a house in an inexpensive part of town so they can get a larger house for less money.

A good manager of personal finances, like a good businessperson, uses borrowed funds whenever possible.

Once you have evaluated your current financial situation and know your sources of income and expenses, you have reached the point where you can establish a personal budget.

The benefit of opening an IRA while you're young is the compounding of the money invested tax-free over your working lifetime.

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

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.

_________ is a form of life insurance that provides both a savings plan and pure insurance coverage.

One strategy used to lower car insurance premiums is to choose a policy with a large deductible.

About 35% of U.S. households do not have a retirement account.

Which of the following is least likely to result from the problems facing the Social Security system?

Keogh plans are intended to help small business owners save for retirement.

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 Union and 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

Managing the Marketing Mix: Product, Price, Place and Promotion

Extension: Working Within the Legal Environment

Extension: Using Technology to Manage Information

Extension: Managing Risk

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