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Exam 23: Bonus C: Managing Your Personal Finances

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Question 21

Multiple Choice

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Investing in a home is generally considered a:

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) All of the above
F) A) and D)

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Question 22

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Which of the following is a new form of term insurance that guarantees fixed premiums for the life of the policy?

A) Universal life insurance
B) Planned annuity life insurance
C) Declining coverage,fixed payment insurance
D) Multiyear level-premium insurance

E) C) and D)
F) B) and D)

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Question 23

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

In the future,the Social Security system is likely to:

An advantage of both traditional and Roth IRAs is that both the income invested and the earnings from these investments are never taxed.

A(n) _______ is a personal financial plan that allows you to take control of future spending.

Credit cards can be used to categorize and track your purchases.

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?

Funds invested in savings accounts and certificates of deposit (CDs)have traditionally outperformed stocks as a means of generating long-term financial gains.

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) :

Many small-business owners invest in 401(k)plans for their retirement.

Employees of small businesses can contribute to a Keogh plan.

Most homeowner's insurance policies do not cover certain types of expensive items unless you purchase a rider for the additional coverage.

One drawback to buying a home compared to renting is that your monthly mortgage payments will increase,while rental payments are fixed.

An IRA (individual retirement account)is a tax-deferred investment plan that encourages workers to save for retirement.

What advice might a personal financial advisor offer a recent college graduate desiring to become financially secure?

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

Leonardo is in the habit of using his credit card for expenditures made on business trips.The most likely reason he does this is to:

Earnings from traditional IRA investments are taxable at the time they are earned.

Recent demographic trends suggest that the financial condition of the Social Security program soon will begin to improve.