Deck 17: Personal Financial Planning and Legal and Regulatory Environment

Question 1

The two most critical elements of one's finances are personal net worth and personal cash flow.

Answer 1

True

Question 2

Nearly everyone should include retirement planning as a long-term objective.

Answer 2

True

Question 3

A budget shows what you are doing with your money currently.

Answer 3

False

Question 4

Borrowing money to buy an asset that appreciates in value by more than the cost of the debt is a terrific way to invest.

Question 5

Investing for 35 years instead of 45 years does not amount to a huge difference in your retirement wealth.

Question 6

All of the following are steps in the development and implementation of an effective financial plan EXCEPT

A) keep your financial plan consistent.
B) evaluate your financial health.
C) create and adhere to a budget.
D) set short-term and long-term goals.
E) evaluate and purchase insurance.

Question 7

Tracey keeps an ongoing spreadsheet to keep track of her income, expenses, and overall financial condition. What two items are the most critical elements of her finances that she should track?

A) her personal debts and bills
B) her personal credit score and salary
C) her personal net worth and cash flow
D) her personal income and taxes
E) her personal interest rate and account balance

Question 8

Personal net worth is best defined as the total value of

A) all personal assets.
B) a person's various forms of debt.
C) a person's income plus expenses.
D) all personal assets less the total value of unpaid debts or liabilities.
E) all personal assets divided by the total value of unpaid debts or liabilities.

Question 9

Margo is a college student who has student loans and a car loan. She currently works a part-time job at a clothing store, but most of this income goes toward her rent. Based on this scenario, Margo most likely has a(n) ________ net worth.

A) positive
B) negative
C) standard
D) normal
E) abnormal

Question 10

Sandy is a 50-year-old woman who has a negative net worth. All of the following are possible causes for this situation EXCEPT

A) divorce.
B) illness.
C) difficulty in securing credit.
D) excessive risk-taking.
E) disability.

Question 11

Amir has a savings and checking account with an average balance of $32,000, a 401(k) account with his company, a house, and a car. These are examples of

A) balances.
B) liabilities.
C) benefits.
D) inventories.
E) assets.

Question 12

Anya recently bought a house and took out a $250,000 mortgage. She also used her credit card to buy furniture for her house, and she is on a payment plan to pay for these purchases. These are examples of

A) assets.
B) liabilities.
C) balances.
D) benefits.
E) credits.

Question 13

Any time you receive money or pay for something, the dollar amount that is moving from one person to another is a(n)

A) asset stream.
B) liability chain.
C) cash flow.
D) balancing action.
E) accounts payable.

Question 14

Tonya is a single mother who works as a server at a restaurant. Her paychecks, tips, and child support payments are examples of

A) cash inflows.
B) cash outflows.
C) liabilities.
D) expenses.
E) budgeted assets.

Question 15

Wendell owns a house. All of the following are cash outflows he might have for his house EXCEPT

A) mortgage payments.
B) utility payments.
C) furniture purchases.
D) rent from a tenant.
E) home insurance payments.

Question 16

It is important that you have enough ________ to cover your cash outflows.

A) investments
B) cash inflows
C) possessions
D) equity
E) liability

Question 17

Tamika went on a shopping spree and bought clothing, shoes, and furniture with her credit card. When should she add these purchases to her cash flow statement?

A) She should record each purchase right after she makes it.
B) She should record all the purchases at the same time, at the end of the week she makes them.
C) She should record all the purchases at the same time, at the end of the month she makes them.
D) She should record the purchases as soon as she receives the bill but before she pays it.
E) She should record the purchases after she pays the bill for them.

Question 18

Which action results in living beyond your means, thus making your balance sheet more and more "upside down" over time?

A) purchasing on credit and only paying minimum balances
B) purchasing on credit and paying your balances in full each month
C) purchasing items with credit that increase in value over time
D) purchasing all items using credit
E) using credit to purchase small expenditures

Question 19

Carl doesn't spend a lot money on big-ticket items. However, he is surprised to find that he is spending more money than he thinks he is every month. All of the following are little expenditures that he might not notice that can add up to a lot EXCEPT

A) buying coffee every morning.
B) going out for drinks with his friends.
C) grabbing lunch at fast food restaurants.
D) paying rent every month.
E) buying snacks at the vending machine at work.

Question 20

Just as a business develops its vision and strategic plan, individuals should have a

A) complex career path.
B) varied educational background.
C) wide set of skills.
D) realistic idea of debt.
E) clear set of financial goals.

Question 21

Trevor is saving up to buy a drum set. The drum set costs $800, and he plans to put aside $50 each week. If he sticks to his plan, he will be able to buy the drum set in four months. This is an example of a(n) ________ goal.

A) subjective
B) essential
C) eventual
D) long-term
E) short-term

Question 22

________ goals are those that can be achieved in two years or less.

A) Short-term
B) Long-term
C) Instant
D) Substantial
E) Purchase-based

Question 23

What is a good example of a short-term goal that many people have?

A) loosening up on household spending patterns
B) expanding outstanding credit
C) reducing outstanding credit
D) planning for retirement
E) having an estate plan

Question 24

________ goals are those that require substantial time to achieve.

A) Long-term
B) Short-term
C) Complex
D) Career
E) Immediate

Question 25

Blake and Samantha are a young couple who are planning to have children. As a result, they consider college savings to be a priority, and every month they set aside $100 for this purpose. This is an example of a(n) ________ goal.

A) short-term
B) long-term
C) immediate
D) purchase-based
E) debt-management

Question 26

Kathy has been married to Don for forty years. They have three children and seven grandchildren. All of the following are long-term goals Kathy would most likely have EXCEPT

A) planning for her retirement.
B) protecting her family from the financial hazards of her unexpected death, illness, or disability.
C) reducing her outstanding credit.
D) ensuring that she has adequate insurance.
E) establishing an estate plan.

Question 27

A cash flow table is different than a budget in that a cash flow table

A) can be for any period of time, while a budget must be in monthly intervals.
B) forecasts expenses and income over a set period of time, while a budget outlines what you are currently earning and spending.
C) most commonly uses monthly or annual intervals, while a budget most commonly uses daily or weekly intervals.
D) only focuses on income, while a budget only focuses on expenses.
E) tells you what you are currently doing with your money, while a budget shows what you plan to do with your money in the future.

Question 28

Ju Li is putting together a plan that forecasts how much she will earn and spend over the next year. This is called a(n)

A) cash flow table.
B) schedule.
C) agenda.
D) budget.
E) widget.

Question 29

Which process explains how to create a budget?

A) Begin by adding all your nondiscretionary and discretionary expenditures and then divide that number by your monthly income.
B) Begin with your monthly income and then subtract your nondiscretionary expenditures, followed by your discretionary expenditures, until your remaining available cash flow is zero.
C) Begin by adding your monthly income to your savings amount and then subtract your nondiscretionary and discretionary expenditures until your remaining available cash flow is zero.
D) Begin with your monthly income amount and then subtract your discretionary expenditures until your remaining available cash flow is zero.
E) Add your monthly income amount, nondiscretionary expenditures, and discretionary expenditures together and then divide the total by your savings amount.

Question 30

In the process of creating his budget, Thomas must consider his nondiscretionary expenditures before his discretionary expenditures. What would most likely be one of his nondiscretionary expenditures?

A) season tickets for his local sports team
B) an engagement ring for his girlfriend
C) his mortgage payments
D) a new suit to wear to his brother's wedding
E) cable TV service

Question 31

In regard to budgeting, if you want to achieve your financial goals, it is essential that you

A) place a high priority on saving and investing.
B) depend on luck and inheritance.
C) use credit to make most or all purchases.
D) maintain a cash flow of zero.
E) prioritize discretionary expenditures over nondiscretionary expenditures.

Question 32

Noreen has created a budget to track her income and expenses throughout the year. Why is it important for her to identify budget items and track their variance from budget forecasts?

A) Doing so can help her determine if she has extra money to spend on additional, big-ticket items.
B) Doing so can help her adjust for inflation over time.
C) As long as she knows how much she is under- or overspending, she can manage the variance without negatively impacting her personal finances.
D) Doing so will help her make better budgeting decisions in the future.
E) If certain budgeted expenses routinely turn out to be under or over her previous estimates, then it is important to revise her budget estimate or develop a strategy to reduce that expense.

Question 33

Wes works at an office where everyone spends a lot of money on breakfast, lunch, and coffee every day. How can Wes ensure that he sticks to his weekly budget?

A) He can limit himself to credit card payments and pay the minimum balances.
B) He can withdraw a certain amount of cash each week and only spend that amount.
C) He can spend what he needs to on food while at work and not spend any money when he isn't at work.
D) He can use his credit card for food expenses while at work and closely monitor his cash spending on other items.
E) He can use a combination of cash, credit, and checks to ensure that he keeps his budget balanced.

Question 34

One of the cornerstones of your financial plan should be to keep

A) cash usage to a minimum because it is less secure than other payment methods.
B) cash usage to a minimum and make more purchases online using credit.
C) check and debit usage to a minimum to avoid making your banking information more readily available to identity thieves.
D) credit usage to a minimum and to work at reducing outstanding debt.
E) credit usage consistent with other forms of payment to maintain a balanced budget.

Question 35

Which scenario is an example of a beneficial use of credit?

A) David uses his credit card to pay for furniture for his new home, and he pays the minimum monthly balance each month, taking several years to pay for the furniture plus interest.
B) Lily uses her credit card to pay rent on her apartment and pays as much of it off each month as she can afford. Although she pays more than the minimum payment, she isn't paying it in full, so even after she moves out, she will still be making payments on the apartment.
C) Olivia uses her credit card to buy a new car, so she can pay for it over the course of several years. Even after the car depreciates in value, she can still continue to pay it off.
D) Paula buys a condo for $200,000 and lives in it for 10 years, paying monthly mortgage payments that are slightly less than the average monthly rent in the area. After 10 years, she is able to sell the condo for $300,000 because the building has appreciated in value.
E) Justin takes an 8 percent fixed-rate mortgage to purchase his first home. He has trouble making the monthly payments, so he eventually sells the house for enough money to pay back the mortgage without making a profit or suffering a loss.

Question 36

What happens when you pay minimum payments on credit purchases?

A) It can take many years to pay back the original debt, but you will never have to pay more than the original amount borrowed.
B) The credit card company eventually sends the bill to a collections agency that will help you finish paying off the original debt.
C) It will take many years to pay back the original debt, and in the meantime, the interest paid will far exceed the original amount borrowed.
D) The credit card company will eventually forgive the purchase and allow you to stop making payments.
E) Eventually, you will have to sell the item and use the proceeds to pay it off.

Question 37

Which aspect of credit cards allows the credit card companies to make money?

A) finance charges
B) credit lines
C) billing cycles
D) grace periods
E) perks

Question 38

What statement is TRUE regarding credit card finance charges?

A) Most credit cards regularly charge 5 percent annual interest.
B) Credit card companies only charge what it costs them to obtain financing.
C) Credit card rates remain consistent whether you pay on time or not.
D) Credit card companies often offer lower interest rates to customers who can't pay on time.
E) Interest is usually calculated on the average daily balance.

Question 39

Reynaldo has been a credit card user for several years. He always pays his monthly balance in full on time. All of the following are things he can expect from his credit card company EXCEPT

A) no credit line.
B) a high credit limit.
C) no extra late fees or penalties.
D) free perks.
E) a lower interest rate.

Question 40

Which statement is TRUE regarding using a credit card to withdraw money from ATMs?

A) Very few credit cards can be used to obtain cash from ATMs.
B) It contributes to your increasing credit card balance and may result in extra expenditures.
C) There are no fees associated with these withdrawals.
D) The interest you pay on withdrawals is lower if you withdraw a small amount of cash.
E) All the costs associated with these withdrawals are explicitly stated.

Question 41

Serena has a student loan to help her pay for tuition, room and board, and books. All of the following would likely be TRUE of her loan EXCEPT

A) it offers a lower interest rate than other types of loans.
B) it allows her to defer repayment until after graduation.
C) the money being borrowed is paying for an asset that is expected to increase in value.
D) she will have to pay high monthly payments after graduation.
E) after graduation, she can defer repayment until she can afford to pay off the loan.

Question 42

The rate of student debt is increasing at a rate that is ________ inflation.

A) higher than
B) lower than
C) equal to
D) similar to
E) almost the same as

Question 43

Which statement best describes the function of the Bipartisan Student Loan Certainty Act?

A) It bases the interest rate on federal student loans on the average starting salaries related to each student's college major.
B) It uses credit card interest rates as the basis for setting the interest rate on federal student loans.
C) It bases the interest rate on federal student loans according to market rate fluctuations.
D) It allows students to apply for a lower interest rate if they can prove financial need.
E) It allows students to waive the interest rate if they graduate with honors.

Question 44

Vanessa has a student loan that she is paying off, and she pays the same amount every month. Although her payment amount is high, she will pay off her loan more quickly with fewer interest payments because she is following the ________ repayment plan.

A) accelerated
B) high-interest
C) efficient
D) standard
E) income-driven

Question 45

Ian recently graduated from college with student loan debt. His interest rates are high and he must submit annual verification and paperwork related to his employment. Which repayment plan is Ian using in this scenario?

A) standard repayment
B) accelerated repayment
C) income-driven repayment
D) gradual repayment
E) interest-driven repayment

Question 46

When deciding on a savings plan, financial planners often recommend paying

A) yourself first.
B) yourself last.
C) off debt first.
D) your bills first.
E) off debt last.

Question 47

Carlos is trying to find a few extra dollars per month in his budget for savings and investments. All of the following are things he can do to accomplish this goal EXCEPT

A) pack his lunch a few days per week instead of buying it.
B) buy a coffee machine and make coffee at home instead of buying it from a coffee shop.
C) take public transportation to work instead of driving.
D) take a few dollars off his bill payments.
E) eat at home one more night per week.

Question 48

Caleb has just graduated from college. He is used to living on a small budget, so when he gets his first salaried position, he is able to set aside a good chunk of money for savings and investments. Which statement is TRUE regarding how he can use compounded returns to accumulate wealth?

A) He will accumulate more wealth if he starts investing early.
B) He will accumulate a similar level of wealth whether he invests for 35 or 45 years.
C) He will accumulate more wealth if he puts the minimum amount, rather than the maximum amount, into an IRA.
D) In order to see the best wealth accumulation, he must invest at least half his salary.
E) He will accumulate more wealth if he starts investing early and then discontinues his investment than he will see if he continuously invests.

Question 49

Maggie is trying to decide if she wants to buy a house. When considering houses, she must evaluate where they are located and their selling features to determine how easy it will be to convert her investment to cash in the future without loss of value. Which type of investment risks does this scenario best describe?

A) return risk
B) inflation risk
C) price risk
D) liquidity risk
E) default risk

Question 50

Lucas wants to open his own health food store. He asks his friends, Laurie and Nick, to invest in his business to help him pay the start-up costs. He promises that he will pay them back in full from his profits in the first year. When considering whether or not to make this investment, Laurie and Nick consider how likely they are to receive the promised cash flows. What investment risk does this scenario best describe?

A) default risk
B) liquidity risk
C) return risk
D) price risk
E) inflation risk

Question 51

Doreen is deciding whether she should invest in stocks. Before investing, she should consider how her investment will fluctuate in value in the short run and the long run. What investment risk does this scenario best describe?

A) default risk
B) inflation risk
C) price risk
D) return risk
E) liquidity risk

Question 52

What investment risk pertains to whether changes in the purchasing power of the dollar over time may or may not erode the value of future cash flows that an investment will generate?

A) inflation risk
B) liquidity risk
C) price risk
D) default risk
E) economic risk

Question 53

In general, the ________ an investment, the higher the return it will generate to you.

A) more calculated
B) more deliberate
C) more conservative
D) safer
E) riskier

Question 54

Given the differences in risk exposure across investments, you should

A) only invest in one item at a time.
B) consider the role your investment time horizon plays when choosing an investment vehicle.
C) make the majority of your investments during the bear market.
D) avoid making any investments during the bull market.
E) always choose high risk investments to ensure that you get the highest possible return.

Question 55

Amber borrowed $10,000 on a student loan, so she can pay tuition in six months. What would most likely happen if she invested this money in a bear market?

A) She would double her tuition funds.
B) She would maintain access to her principal plus promised interest.
C) She would lose all of her tuition funds.
D) She would reduce her tuition funds by 20 percent or more.
E) She would lose at least half of her tuition funds.

Question 56

Nate has recently graduated from college and started his first full-time job. Although his retirement is many decades away, he wants to start investing in it early. Which investment option would he most likely choose if he wants to take more risk for the greatest possible return?

A) stocks
B) a bank certificate of deposit
C) corporate bonds
D) debt securities
E) an IRA

Question 57

Which statement is TRUE of a certificate of deposit?

A) It is a good investment if you need immediate access to cash, but do not need liquidity.
B) It is an investment in which a person promises to leave his or her money in the bank for six months or more.
C) It is the easiest place to put your money.
D) It will give you a slightly lower rate of return than a savings account.
E) Although relatively low-risk, it is not FDIC-insured.

Question 58

A corporation regularly borrows money from investors and promises to pay regular interest and to repay the principal at the end of the loan period. Thus, these investments provide higher return to investors, but they also expose them to price volatility, liquidity, and default risk. What type of investment does this describe?

A) debt securities
B) certificates of deposit
C) mutual funds
D) stocks
E) bonds

Question 59

Which statement is TRUE regarding stocks?

A) Stocks are the best choice for a novice investor with a small amount of money to invest.
B) All other investment choices tend to outperform stocks.
C) Stockholders are exposed to all the risks that impact the business environment.
D) The proceeds from stock sales finance government projects, such as roads, airports, and bridges.
E) Stocks are a firm's promise to pay regular interest and to repay the principal at the end of a loan period.

Question 60

Molly is a novice investor with a small amount of money to invest. She consults with a professional investor who informs her that her best choice is to invest in a pool of funds from many investors that will be allocated to various investments. What investment option does this scenario best describe?

A) mutual funds
B) pension funds
C) stocks
D) bonds
E) certificates of deposit

Question 61

All of the following are TRUE about purchasing a home EXCEPT

A) with a small up-front investment and relatively low borrowing costs, modest appreciation in the home's value can generate a large return on investment.
B) the return on the investment benefits from the tax deductibility of home mortgage interest and capital gains tax relief at the point of sale.
C) it gives you a place to live, which saves any additional rental costs you would incur if you invested your money elsewhere.
D) it is one of the largest purchases you will ever make and one of the best investments you can make.
E) owning a home is the best choice for everyone.

Question 62

Which statement is TRUE regarding mortgage interest rates?

A) Mortgage interest rates are the constant payments you make over time to repay the lender the original money you borrowed.
B) Mortgage interest rates are always locked in for the full term of the loan.
C) Mortgage interest rates in the past decade have ranged from 5 to 10 percent per year, depending on the terms and creditworthiness of the borrower.
D) Mortgage interest rates always vary with market rates of interest.
E) In low-interest-rate economic circumstances, it makes sense to set the rates to vary with market rates of interest.

Question 63

Joanna is preparing to buy her first home by applying for a mortgage. All of the following are items lenders will look at to determine Joanna's ability and willingness to repay the loan EXCEPT

A) the value of her current possessions.
B) her work history.
C) the ratio of her total mortgage payment to her gross monthly income.
D) the ratio of her credit payments to her gross monthly income.
E) her credit report.

Question 64

Beth is a recent college graduate who has just entered the job market. She is trying to determine the right amount to invest in her retirement. Which factor of investing in retirement plans might convince her to invest a relatively higher amount?

A) She will pay taxes on the earnings that go toward retirement plan assets to avoid having to pay them when she retires.
B) She can make contributions to qualified retirement plans before tax.
C) She can withdraw money from her retirement plan at any age without withdrawal penalties.
D) Her earnings on retirement plan assets will never be taxed.
E) When she withdraws her retirement funds, she will pay a lower tax rate than she would have paid at the time of investment.

Question 65

If your employer offers a defined?contribution plan, this means that your employer promises

A) a bonus for every year you work before retirement.
B) to contribute to the retirement plans of employees' families.
C) to offer matching contributions.
D) a specific benefit at retirement.
E) to put a certain amount of money into the plan in your name every pay period.

Question 66

Michelle works for a company that offers a defined?contribution plan. What is a simple rule Michelle should follow regarding this plan?

A) If her employer offers to match her contributions, she should contribute as much as necessary to get the maximum match, if she can afford to.
B) Even though her employer offers her the opportunity to participate in a retirement plan, she should choose her own plan, independent of the company.
C) If her plan allows her to select her investment allocation, she should be extremely conservative in her choices.
D) If her plan allows her to select her investment allocation, she should deflect this responsibility to the company's financial advisors.
E) If her employer offers to match her contributions, she should contribute the maximum match amount, regardless of what she can afford.

Question 67

What is the difference between Roth IRAs and traditional IRAs?

A) Traditional IRAs charge a higher percentage for withdrawing funds before the retirement age than Roth IRAs.
B) Roth IRAs charge a higher percentage for withdrawing funds before the retirement age than traditional IRAs.
C) Roth IRA withdrawals are taxable, while traditional IRA withdrawals are tax-free.
D) Roth IRA contributions are taxable, while traditional IRA contributions are deductible.
E) Roth IRA contributions are deductible, while traditional IRA contributions are taxable.

Question 68

Choose the FALSE statement regarding Social Security.

A) It is a public pension plan sponsored by the federal government and paid for by payroll taxes equally split between employers and employees.
B) In addition to funding the retirement portion of the plan, it also pays for Medicare insurance, disability insurance, and survivors benefits for the families of those who die prematurely.
C) There are currently 17 workers for each retiree receiving benefits.
D) The current Social Security system will likely be revised to help it balance.
E) It has traditionally been a pay-as-you-go program, with current payroll taxes going out to pay current retiree benefits.

Question 69

Aaron owns a car that he drives to work every day. Which statement is most likely TRUE regarding Aaron's experience with automobile insurance?

A) Since he owns his car, he is required to purchase auto physical damage insurance.
B) In most states, the minimum auto insurance limits are high enough to cover typical claim levels.
C) His auto physical damage insurance coverage will never be subject to a deductible.
D) He is required by law to carry a minimum amount of auto liability insurance that will pay claims against him, as well as his medical costs, if he is in a car accident.
E) Good financial planning requires him to pay for the minimum amount of auto insurance to avoid paying for insurance he will rarely use.

Question 70

Nora owns a house and has homeowners insurance. All of the following are things the insurance company will do for Nora EXCEPT

A) pay the claim if someone sues her for an injury that occurs on her property.
B) replace any items she loses in a house fire, without her having to pay any additional money.
C) defend her against claims that the insurer thinks are unjustified.
D) pay the depreciated value for any property she loses in a house fire.
E) pay the costs to repair her house if it is damaged in a fire.

Question 71

Which statement is TRUE regarding insurance needs for people who rent apartments?

A) People who rent apartments need renters insurance to cover them for liability on their premises and for damage to their personal property.
B) People who rent apartments do not need any insurance associated with their apartment.
C) People who rent apartments are covered under their landlords' insurance.
D) People who rent apartments are required to purchase renters insurance, which is expensive but well worth the cost.
E) People who rent apartments are required to pay a portion of their landlords' insurance.

Question 72

Dawn's company provides her with a life insurance policy. Which statement is FALSE?

A) Her premium may include an investment component.
B) Its primary purpose is to provide protection for others.
C) Her premium will depend on the face amount of the policy, her age and health, her habits, and the type of policy.
D) It will pay a benefit to her designated beneficiary if she dies during the coverage period.
E) Its benefits are considered null and void in the event that she dies during the coverage period.

Question 73

Which statement is accurate when comparing term life insurance and permanent life insurance?

A) Both include investment components in their premiums.
B) In term insurance, the buyer can direct the investment choice; while in permanent insurance, the buyer cannot do this.
C) In term insurance, premiums are fairly low for young people; while in permanent insurance, people pay more for the policy when they are younger.
D) Both charge people more when they are older, since the death risk increases with age.
E) Both simply require buyers to pay the actual cost of providing death protection as their premiums.

Question 74

Pat has always worked for companies that provided her with health insurance. However, she has recently lost her job, so she needs to buy an individual insurance policy. What statement can she expect to be TRUE of this policy?

A) It will be subject to exclusions, high coinsurance, and deductibles.
B) It will not be subject to any exclusions, coinsurance, or deductibles.
C) It will be less expensive than her company-provided policy.
D) It will be less expensive if she is willing to take a lower deductible.
E) It will be more expensive if she wants a higher deductible.

Question 75

Ashley's company provides her with three health insurance plan options. In the first option, the insurer simply pays for whatever covered medical costs she incurs, subject to the deductible and coinsurance. The second option is an HMO and the third option is a PPO. Which statement accurately describes Ashley's options?

A) All three options are managed care arrangements.
B) All three options are fee-for-service arrangements.
C) The first and second options are fee-for-service arrangements, and the third option is a managed care arrangement.
D) The first option is a fee-for-service arrangement, and the second and third options are managed care arrangements.
E) The first option is a managed care arrangement, and the second and third options are fee-for-service arrangements.

Question 76

All of the following are essential components of an estate plan EXCEPT

A) instructions for liability resolution.
B) a plan for guardianship for your children.
C) your will.
D) minimization of taxes on your estate.
E) protection of estate assets.

Question 77

All of the following scenarios necessitate having a will EXCEPT

A) Sarah has been married to Devin for 20 years, and they have three children together who are aged 10, 11, and 14.
B) Francis owns two houses, four cars, a boat, and several commercial buildings that he rents out to tenants.
C) Miranda is a single college student who doesn't have any significant assets or obligations.
D) In the event that Walt dies, he wants to give his house to his wife, his car to his 16-year-old son, and his horses to his 24-year-old daughter.
E) Mandy is a single mother with two young children, and in the event that she dies, she would want her sister to take care of her children.

Question 78

Briefly discuss the eight steps involved in financial planning.

Question 79

Why is managing credit wisely one of the cornerstones of a financial plan?

Question 80

How do gender differences create special financial planning concerns?