Question 1

Excessive debt is as much a problem of young consumers as it is of other age groups.

Accepted Answer

A) True 
 B)False

Question 2

According to contrarians,the big decline in the stock market during the early 2000s was:

Accepted Answer

A)   a great opportunity to invest in stocks.
B)   proof that the stock market was not as sound an investment as most people thought.
C)   a sign that more government regulation was needed to prevent big losses.
D)   proof that the future of capitalism should rely more on small,unincorporated businesses rather than big corporations.E) All of the above
F) B) and C)

Question 3

A simple IRA,which allows workers to contribute larger amounts than a regular IRA,is available to employees who work for firms with fewer than 100 employees.

Accepted Answer

A) True 
 B)False

Question 4

Pete wants life insurance to provide benefits for his family if he were to die.He also wants part of his premium to go into a savings plan that he will need if he lives to retirement age.His best strategy to achieve insurance and savings with one premium is term insurance.

Accepted Answer

A) True 
 B)False

Question 5

You should never borrow to cover regular expenses,but it makes perfectly good sense to use credit to cover unexpected expenses such as car or home repairs.

Accepted Answer

A) True 
 B)False

Question 6

The biggest advantage of the Roth IRA is that:

Accepted Answer

A)   income contributed to the retirement plan is tax-free.
B)   withdrawals from the retirement plan are tax-free.
C)   taxes on the income contributed to the retirement plan are deferred until the funds are withdrawn.
D)   withdrawals from the retirement plan are tax-deferred until the individual reaches 59½ years of age.E) C) and D)
F) A) and B)

Question 7

Romeo and Juliet are experiencing marriage difficulties regarding money.One technique to help them control and forecast their future financial situation,as well as allow them to achieve their financial goals,would be to prepare a(n) :

Accepted Answer

A)   income statement.
B)   balance sheet.
C)   budget.
D)   asset inventory.E) B) and C)
F) None of the above

Question 8

Credit-card debt represents an asset on a consumer's balance sheet.

Accepted Answer

A) True 
 B)False

Question 9

The increase in the number of retirement plans approved by the federal government likely indicates that:

Accepted Answer

A)   the government budget is approaching a surplus.
B)   most people have faith in the troubled Social Security system.
C)   Social Security cannot be counted on to provide an individual with ample funds for retirement.
D)   as a nation our values have shifted so that we now enjoy the value of saving more and consuming less.E) C) and D)
F) None of the above

Question 10

On average,a person with a college education earns _________ over the course of his or her career.

Accepted Answer

A)   about $300,000 more than a high school graduate
B)   barely enough to justify the additional cost of going to college
C)   more in dividends and interest income than in salaries
D)   about $1.6 million more than a high school graduateE) C) and D)
F) A) and B)

Question 11

Term life insurance is a combination insurance plan and savings plan.

Accepted Answer

A) True 
 B)False

Question 12

Financial planners encourage individuals to begin contributing funds into an IRA as early as possible.The major benefit of early and regular contributions is that:

Accepted Answer

A)   the earnings will be able to grow over a longer time span,which can result in major financial gains.
B)   the financial planners will earn a commission for a longer period of time.
C)   the inflation rate is very low now and will probably rise in the future,thus reducing the real value of future contributions.
D)   the tax rates are likely to be lower in the future,so higher tax savings on contributions will be maximized by making the contributions now.E) A) and B)
F) A) and C)

Question 13

Joseph and Mack are good friends who have similar jobs that pay them well.Both have established budgets that allow them to invest several hundred dollars each month.Mack has a strategy of putting most of his money in bank CDs and a savings account.Joseph has opted for a strategy of investing in the stock market.According to the evidence of the past 50 years,it is likely that over the long-run:

Accepted Answer

A)   Mack and Joseph will experience very similar rates of return.
B)   Mack will experience a significantly higher return than Joseph.
C)   Joseph will experience a significantly higher return on his investments than Mack,but will also experience more ups and downs over the years.
D)   Mack will experience a slightly higher return,but Joseph's return will be more stable and predictable.E) B) and C)
F) A) and B)

Question 14

Regardless of potential changes,you can count on Social Security to provide you with a comfortable retirement.

Accepted Answer

A) True 
 B)False

Question 15

The best strategy to follow in using credit cards is to pay only the minimum amount required each month.

Accepted Answer

A) True 
 B)False

Question 16

For workers who qualify,the earnings from income invested in a traditional IRA are:

Accepted Answer

A)   not taxed until the funds are withdrawn.
B)   never taxed.
C)   taxed,at the time they are earned,but at the lowest individual rate.
D)   taxed both at the time the money is earned and at the time the earnings are withdrawn.E) A) and C)
F) None of the above

Question 17

With respect to personal financial planning,the first thing to do with any extra money you have is to start a savings plan.

Accepted Answer

A) True 
 B)False

Question 18

Your computer and car should both be listed on the asset side of your personal balance sheet.

Accepted Answer

A) True 
 B)False

Question 19

Everything else constant,the higher the deductible on your car insurance policy,the higher the premium for your car insurance.

Accepted Answer

A) True 
 B)False

Question 20

Investing in a home is generally considered a:

Accepted Answer

A)   poor choice when compared to renting.
B)   wise investment.
C)   luxury that should be postponed as long as possible.
D)   good decision,but only if you've saved enough to pay in full with cash.E) A) and B)
F) A) and C)

Exam 22: Appendix B: Managing Risk

According to contrarians,the big decline in the stock market during the early 2000s was:

Correct Answer
verified

With respect to personal financial planning,the first thing to do with any extra money you have is to start a savings plan.

Correct Answer
verified

Excessive debt is as much a problem of young consumers as it is of other age groups.

Correct Answer
verified

You should never borrow to cover regular expenses,but it makes perfectly good sense to use credit to cover unexpected expenses such as car or home repairs.

Correct Answer
verified

The biggest advantage of the Roth IRA is that:

Correct Answer
verified

On average,a person with a college education earns _________ over the course of his or her career.

Correct Answer
verified

The increase in the number of retirement plans approved by the federal government likely indicates that:

Correct Answer
verified

Everything else constant,the higher the deductible on your car insurance policy,the higher the premium for your car insurance.

Correct Answer
verified

The best strategy to follow in using credit cards is to pay only the minimum amount required each month.

Correct Answer
verified

Pete wants life insurance to provide benefits for his family if he were to die.He also wants part of his premium to go into a savings plan that he will need if he lives to retirement age.His best strategy to achieve insurance and savings with one premium is term insurance.

Correct Answer
verified

Credit-card debt represents an asset on a consumer's balance sheet.

Correct Answer
verified

For workers who qualify,the earnings from income invested in a traditional IRA are:

Correct Answer
verified

Correct Answer
verified

Financial planners encourage individuals to begin contributing funds into an IRA as early as possible.The major benefit of early and regular contributions is that:

Correct Answer
verified

Investing in a home is generally considered a:

Correct Answer
verified

Your computer and car should both be listed on the asset side of your personal balance sheet.

Correct Answer
verified

Term life insurance is a combination insurance plan and savings plan.

Correct Answer
verified

Romeo and Juliet are experiencing marriage difficulties regarding money.One technique to help them control and forecast their future financial situation,as well as allow them to achieve their financial goals,would be to prepare a(n) :

Correct Answer
verified

A simple IRA,which allows workers to contribute larger amounts than a regular IRA,is available to employees who work for firms with fewer than 100 employees.

Correct Answer
verified

Regardless of potential changes,you can count on Social Security to provide you with a comfortable retirement.

Correct Answer
verified

Exam 22: Appendix B: Managing Risk

According to contrarians,the big decline in the stock market during the early 2000s was:

Correct AnswerverifiedShow Answer

With respect to personal financial planning,the first thing to do with any extra money you have is to start a savings plan.

Correct AnswerverifiedShow Answer

Excessive debt is as much a problem of young consumers as it is of other age groups.

Correct AnswerverifiedShow Answer

You should never borrow to cover regular expenses,but it makes perfectly good sense to use credit to cover unexpected expenses such as car or home repairs.

Correct AnswerverifiedShow Answer

The biggest advantage of the Roth IRA is that:

Correct AnswerverifiedShow Answer

On average,a person with a college education earns _________ over the course of his or her career.

Correct AnswerverifiedShow Answer

The increase in the number of retirement plans approved by the federal government likely indicates that:

Correct AnswerverifiedShow Answer

Everything else constant,the higher the deductible on your car insurance policy,the higher the premium for your car insurance.

Correct AnswerverifiedShow Answer

The best strategy to follow in using credit cards is to pay only the minimum amount required each month.

Correct AnswerverifiedShow Answer

Pete wants life insurance to provide benefits for his family if he were to die.He also wants part of his premium to go into a savings plan that he will need if he lives to retirement age.His best strategy to achieve insurance and savings with one premium is term insurance.

Correct AnswerverifiedShow Answer

Credit-card debt represents an asset on a consumer's balance sheet.

Correct AnswerverifiedShow Answer

For workers who qualify,the earnings from income invested in a traditional IRA are:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Financial planners encourage individuals to begin contributing funds into an IRA as early as possible.The major benefit of early and regular contributions is that:

Correct AnswerverifiedShow Answer

Investing in a home is generally considered a:

Correct AnswerverifiedShow Answer

Your computer and car should both be listed on the asset side of your personal balance sheet.

Correct AnswerverifiedShow Answer

Term life insurance is a combination insurance plan and savings plan.

Correct AnswerverifiedShow Answer

Romeo and Juliet are experiencing marriage difficulties regarding money.One technique to help them control and forecast their future financial situation,as well as allow them to achieve their financial goals,would be to prepare a(n) :

Correct AnswerverifiedShow Answer

A simple IRA,which allows workers to contribute larger amounts than a regular IRA,is available to employees who work for firms with fewer than 100 employees.

Correct AnswerverifiedShow Answer

Regardless of potential changes,you can count on Social Security to provide you with a comfortable retirement.

Correct AnswerverifiedShow Answer

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