Question 1

Unlike whole life policies,a universal life insurance policy typically invests part of the premium in very aggressive,high-risk assets.

Accepted Answer

A) True 
 B)False

Question 2

The reason you would prepare a durable power of attorney is to make sure that someone was named to take over your finances if you become incapacitated.

Accepted Answer

A) True 
 B)False

Question 3

Most financial experts will tell you to save about 1 month of earnings for contingency purposes.

Accepted Answer

A) True 
 B)False

Question 4

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 5

Young married couples that find themselves running out of money at the end of the month,might be well advised to:

Accepted Answer

A)  keep track of all of their expenses.
B)  keep track of cash spent on major purchases.
C)  prepare a balance sheet.
D)  apply for additional credit cards.E) C) and D)
F) None of the above

Question 6

Bob's credit card charges him 14% interest on his unpaid balance.His bank is offering him 5% interest on a savings account.The first thing Bob should do with any extra money he may have is to:

Accepted Answer

A)  invest in the stock market.
B)  open a savings account.
C)  pre-pay for necessities,like rent and utilities.
D)  pay off the credit card balance.E) None of the above
F) A) and C)

Question 7

If possible,it is almost always better to buy a single home rather than a duplex.

Accepted Answer

A) True 
 B)False

Question 8

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

Question 9

As a recent college graduate just starting out on his own,Greg needs health,disability,car,and auto insurance.He may be able to save money by obtaining an umbrella policy.

Accepted Answer

A) True 
 B)False

Question 10

The best way to save money is to:

Accepted Answer

A)  pay yourself first by taking out money for savings from each paycheck before deciding what to do with the remaining money.
B)  start your own business designed to create business tax deductions.
C)  prepare a balance sheet.
D)  pay yourself last.E) B) and C)
F) B) and D)

Question 11

Once they've accumulated enough money,buying a low-priced home is often a good investment for young adults.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Budgets are:

Accepted Answer

A)  useful for businesses,but too restrictive to be used by individuals or households.
B)  a financial plan of projected revenues and expenses.
C)  just another name for cash flow statements.
D)  only helpful to people who earn more than $50,000 per year.E) None of the above
F) B) and C)

Question 14

Multiyear level-premium insurance is a form of term insurance with fixed premiums for the life of the policy.

Accepted Answer

A) True 
 B)False

Question 15

The number of workers paying into Social Security for each retiree receiving Social Security benefits is:

Accepted Answer

A)  fixed by law.
B)  increasing.
C)  decreasing.
D)  not fixed by law,but has remained relatively constant for several decades.E) A) and C)
F) A) and D)

Question 16

Investments in IRA accounts:

Accepted Answer

A)  are limited to money market funds and government bonds.
B)  can be in stocks,bonds,mutual funds,or even precious metals.
C)  are matched by the employer.
D)  are taxed at the lowest individual tax rate regardless of the actual tax bracket of the investor.E) B) and D)
F) None of the above

Question 17

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) B) and C)
F) A) and C)

Question 18

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) C) and D)
F) A) and B)

Question 19

If your personal liabilities exceed your assets,your are on the road to financial security.

Accepted Answer

A) True 
 B)False

Question 20

Slobo is an immigrant to the United States from a formerly communist country.He is searching for advice to help him succeed in a capitalist system.He would be well advised to:

Accepted Answer

A)  find a job and live frugally in order to save money to invest.
B)  rely heavily on government assistance programs to maintain a relatively comfortable life style.
C)  get a credit card,even if it has a very low credit limit,and use it to establish a good credit rating.
D)  follow the buy now,pay later rule of personal finance.E) A) and D)
F) B) and C)

Exam 23: Bonus C: Managing Your Personal Finances

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

Correct AnswerverifiedShow Answer

If possible,it is almost always better to buy a single home rather than a duplex.

Correct AnswerverifiedShow Answer

Unlike whole life policies,a universal life insurance policy typically invests part of the premium in very aggressive,high-risk assets.

Correct AnswerverifiedShow Answer

The number of workers paying into Social Security for each retiree receiving Social Security benefits is:

Correct AnswerverifiedShow Answer

As a recent college graduate just starting out on his own,Greg needs health,disability,car,and auto insurance.He may be able to save money by obtaining an umbrella policy.

Correct AnswerverifiedShow Answer

Multiyear level-premium insurance is a form of term insurance with fixed premiums for the life of the policy.

Correct AnswerverifiedShow Answer

Young married couples that find themselves running out of money at the end of the month,might be well advised to:

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

Investments in IRA accounts:

Correct AnswerverifiedShow Answer

Most financial experts will tell you to save about 1 month of earnings for contingency purposes.

Correct AnswerverifiedShow Answer

The best way to save money is to:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Budgets are:

Correct AnswerverifiedShow Answer

Slobo is an immigrant to the United States from a formerly communist country.He is searching for advice to help him succeed in a capitalist system.He would be well advised to:

Correct AnswerverifiedShow Answer

The reason you would prepare a durable power of attorney is to make sure that someone was named to take over your finances if you become incapacitated.

Correct AnswerverifiedShow Answer

Bob's credit card charges him 14% interest on his unpaid balance.His bank is offering him 5% interest on a savings account.The first thing Bob should do with any extra money he may have is to:

Correct AnswerverifiedShow Answer

Once they've accumulated enough money,buying a low-priced home is often a good investment for young adults.

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

If your personal liabilities exceed your assets,your are on the road to financial security.

Correct AnswerverifiedShow Answer

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