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 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.E) A) and C)
F) A) and B)

Question 2

For a young person,one of the worst places to invest money for the long-term is:

Accepted Answer

A)   a duplex.
B)   a bank savings account.
C)   a home.
D)   the stock market.E) A) and D)
F) C) and D)

Question 3

One of the keys to financial success is never to apply for a credit card.

Accepted Answer

A) True 
 B)False

Question 4

________ insurance provides protection from the cost of medical care for illnesses and injuries.

Accepted Answer

A)   Term
B)   Health
C)   Renters
D)   Homeowner'sE) All of the above
F) A) and D)

Question 5

Hilda 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.E) None of the above
F) All of the above

Question 6

Even though they are in debt,most of today's college graduates are capital-rich.

Accepted Answer

A) True 
 B)False

Question 7

Once you have set up a budget and handled your ordinary expenses,the first thing to do with any extra money you have is to:

Accepted Answer

A)   start a savings plan.
B)   pay off your debts.
C)   start your own business.
D)   spend it on the things you would like but that aren't included in your budget.E) B) and D)
F) B) and C)

Question 8

Withdrawals from a traditional IRA prior to the age of 59½ are:

Accepted Answer

A)   tax deferred until you reach 65 years of age.
B)   tax-free.
C)   normally subject to a penalty and taxes on the income that is withdrawn from the IRA.
D)   subject to a possible denial after review by the Internal Revenue Service.E) B) and C)
F) A) and B)

Question 9

Which of the following is a form of whole life insurance that provides a death benefit that varies with the performance of the investments of the insurance company?

Accepted Answer

A)   flexible whole life insurance
B)   variable life insurance
C)   adjustable benefit insurance
D)   multiyear level-premium insuranceE) A) and B)
F) B) and D)

Question 10

The person who is named in your will to assemble the assets in your estate,handle taxes,and distribute the assets is called your proxy.

Accepted Answer

A) True 
 B)False

Question 11

One problem with the Social Security system is that the number of people retiring and living longer is declining dramatically.

Accepted Answer

A) True 
 B)False

Question 12

About _______ of all U.S.households own stock in corporations.

Accepted Answer

A)   16 percent
B)   30 percent
C)   half
D)   three-fourthsE) A) and D)
F) A) and C)

Question 13

John is considering starting his degree in business this semester at State University.John will likely find that:

Accepted Answer

A)   his time would be better spent pursing a career after high school.
B)   he will have more fun and excitement than his friends that don't attend college.
C)   his choice of a business major will virtually guarantee him a comfortable retirement income if he sticks with it.
D)   he will likely earn about $1.6 million more during his lifetime than his friends with only a high school degree.E) C) and D)
F) A) and B)

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

The best financial planners are actually insurance salespeople.

Accepted Answer

A) True 
 B)False

Question 17

Personal financial planners often encourage their clients to write down every single penny they spend each day.The main purpose of this is to:

Accepted Answer

A)   focus attention on the spending levels for each item.
B)   eliminate the need for accountants.
C)   do a better job of tax planning.
D)   accumulate data needed to prepare a personal balance sheet.E) A) and B)
F) B) and C)

Question 18

The only way to accumulate enough money to do all of the things you want to do late in life is to:

Accepted Answer

A)   take an inventory of your financial assets.
B)   make more than you spend.
C)   avoid bankruptcy.
D)   satisfy the demands of your creditors.E) A) and B)
F) C) and D)

Question 19

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

Question 20

James is in the 30% tax bracket.What is the after-tax cost of a $3,000 contribution to his traditional IRA account?

Accepted Answer

A)   $900
B)   $1,440
C)   $2,100
D)   zeroE) B) and D)
F) B) and C)

Exam 22: Appendix B: Managing Risk

The person who is named in your will to assemble the assets in your estate,handle taxes,and distribute the assets is called your proxy.

Correct AnswerverifiedShow Answer

John is considering starting his degree in business this semester at State University.John will likely find that:

Correct AnswerverifiedShow Answer

One problem with the Social Security system is that the number of people retiring and living longer is declining dramatically.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Withdrawals from a traditional IRA prior to the age of 59½ are:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

About _______ of all U.S.households own stock in corporations.

Correct AnswerverifiedShow Answer

Once you have set up a budget and handled your ordinary expenses,the first thing to do with any extra money you have is to:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Even though they are in debt,most of today's college graduates are capital-rich.

Correct AnswerverifiedShow Answer

Personal financial planners often encourage their clients to write down every single penny they spend each day.The main purpose of this is to:

Correct AnswerverifiedShow Answer

Hilda 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?

Correct AnswerverifiedShow Answer

The best financial planners are actually insurance salespeople.

Correct AnswerverifiedShow Answer

________ insurance provides protection from the cost of medical care for illnesses and injuries.

Correct AnswerverifiedShow Answer

James is in the 30% tax bracket.What is the after-tax cost of a $3,000 contribution to his traditional IRA account?

Correct AnswerverifiedShow Answer

Which of the following is a form of whole life insurance that provides a death benefit that varies with the performance of the investments of the insurance company?

Correct AnswerverifiedShow Answer

The only way to accumulate enough money to do all of the things you want to do late in life is to:

Correct AnswerverifiedShow Answer

One of the keys to financial success is never to apply for a credit card.

Correct AnswerverifiedShow Answer

For a young person,one of the worst places to invest money for the long-term is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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