Question 1

One disadvantage of having credit cards for personal use is that

Accepted Answer

A)   they offer no protection if they are stolen.
B)   they are less convenient than other forms of credit.
C)   many companies have a policy that prevents employees from having both personal credit cards and credit cards for business use.
D)   they can make it easy to pile up a large amount of debt quickly.E) B) and C)
F) A) and D)

Question 2

Compare the basic features of the traditional IRA and Roth IRA.

Accepted Answer

Both the traditional and Roth IRAs offer...

Question 3

Thomas contributed $2,800 to a Roth IRA. He is currently in the 25% tax bracket. How will his contribution affect his income tax for the current year?

Accepted Answer

A)   It will reduce the amount of taxes he owes in the current tax year by $700.
B)   It will increase the amount of taxes he owes in the current year by $700.
C)   It will reduce the amount of taxes he owes in the current year by $2,100.
D)   It will have no effect on the amount of taxes he owes this year.E) A) and B)
F) C) and D)

Question 4

Ricky wants to decrease his current taxable income and save for retirement. He should consider a traditional IRA.

Accepted Answer

A) True 
 B)False

Question 5

A traditional IRA affords workers who qualify the opportunity to deduct from their reported income the money they put into a qualified retirement account.

Accepted Answer

A) True 
 B)False

Question 6

When purchasing with a credit card, it's important to remember that ________ if you do not pay the balance in full within a stated time period.

Accepted Answer

A)   the credit limit is reduced
B)   no returns are allowed
C)   interest is charged on the remaining balance
D)   discounts are availableE) A) and D)
F) All of the above

Question 7

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 8

Employers often match part of the contribution of their employees into a 401(k) retirement plan.

Accepted Answer

A) True 
 B)False

Question 9

Describe the major steps involved in estate planning.

Accepted Answer

For people with young children, the firs...

Question 10

Casey wants to obtain life insurance at the lowest possible cost, but is leery of term insurance because she has heard the premiums tend to go up every few years. One way for her to avoid this concern would be to purchase multiyear level-premium insurance.

Accepted Answer

A) True 
 B)False

Question 11

One step toward the goal of taking control of your finances is to keep track of all your expenses.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Both the Roth and traditional IRA allow individuals to put as much money as they want into their retirement account.

Accepted Answer

A) True 
 B)False

Question 14

A contrarian would advise you to buy stock when stock prices are falling and most other people are selling.

Accepted Answer

A) True 
 B)False

Question 15

About half of the U.S. population accumulates enough money to afford a comfortable retirement.

Accepted Answer

A) True 
 B)False

Question 16

Financial planning begins with

Accepted Answer

A)   spending money wisely.
B)   earning money.
C)   insuring your assets against an unexpected loss.
D)   saving money.E) None of the above
F) C) and D)

Question 17

One strategy to lower the cost of automobile insurance is to purchase a policy with a

Accepted Answer

A)   low deductible.
B)   high deductible.
C)   liability coverage rider.
D)   health coverage rider.E) C) and D)
F) A) and C)

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

The best way to save money is to pay yourself first.

Accepted Answer

A) True 
 B)False

Question 20

Personal financial planners recommend renting a home, rather than incurring the cost of buying a home.

Accepted Answer

A) True 
 B)False

Exam 24: Appendix: Managing Personal Finances

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

Correct AnswerverifiedShow Answer

Employers often match part of the contribution of their employees into a 401(k) retirement plan.

Correct AnswerverifiedShow Answer

Casey wants to obtain life insurance at the lowest possible cost, but is leery of term insurance because she has heard the premiums tend to go up every few years. One way for her to avoid this concern would be to purchase multiyear level-premium insurance.

Correct AnswerverifiedShow Answer

A contrarian would advise you to buy stock when stock prices are falling and most other people are selling.

Correct AnswerverifiedShow Answer

Thomas contributed $2,800 to a Roth IRA. He is currently in the 25% tax bracket. How will his contribution affect his income tax for the current year?

Correct AnswerverifiedShow Answer

Personal financial planners recommend renting a home, rather than incurring the cost of buying a home.

Correct AnswerverifiedShow Answer

One strategy to lower the cost of automobile insurance is to purchase a policy with a

Correct AnswerverifiedShow Answer

Ricky wants to decrease his current taxable income and save for retirement. He should consider a traditional IRA.

Correct AnswerverifiedShow Answer

One disadvantage of having credit cards for personal use is that

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

A traditional IRA affords workers who qualify the opportunity to deduct from their reported income the money they put into a qualified retirement account.

Correct AnswerverifiedShow Answer

One step toward the goal of taking control of your finances is to keep track of all your expenses.

Correct AnswerverifiedShow Answer

Describe the major steps involved in estate planning.

Correct AnswerverifiedFor people with young children, the firs...View AnswerShow Answer

About half of the U.S. population accumulates enough money to afford a comfortable retirement.

Correct AnswerverifiedShow Answer

The best way to save money is to pay yourself first.

Correct AnswerverifiedShow Answer

Compare the basic features of the traditional IRA and Roth IRA.

Correct AnswerverifiedBoth the traditional and Roth IRAs offer...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Both the Roth and traditional IRA allow individuals to put as much money as they want into their retirement account.

Correct AnswerverifiedShow Answer

Financial planning begins with

Correct AnswerverifiedShow Answer

When purchasing with a credit card, it's important to remember that ________ if you do not pay the balance in full within a stated time period.

Correct AnswerverifiedShow Answer

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For people with young children, the firs...
View Answer

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Both the traditional and Roth IRAs offer...
View Answer

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