Question 1

A variable life insurance policy is considered riskier than a traditional whole life policy because it:

Accepted Answer

A)  invests savings more aggressively in securities that are riskier but offer higher potential returns.
B)  has no disability provision to waive premiums in the event of a serious accident or prolonged illness.
C)  may not allow the holder to renew the policy after the initial five year period has elapsed.
D)  pays only a very small death benefit unless the policy holder lives for at least 12 years after taking out the policy.E) All of the above
F) C) and D)

Question 2

The tax shelter offered by home ownership increases the overall cost of owning your home.

Accepted Answer

A) True 
 B)False

Question 3

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) None of the above
F) All of the above

Question 4

The first step in getting control of your finances is to prepare a budget.

Accepted Answer

A) True 
 B)False

Question 5

Keogh plans are most useful for stockholders of major corporations who earn most of their income from dividends rather than wages or salaries.

Accepted Answer

A) True 
 B)False

Question 6

Henri wants to get better control of his personal finances.He should begin by setting up a personal balance sheet and a personal income statement.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A)  Universal life insurance
B)  Planned annuity life insurance
C)  Declining coverage,fixed payment insurance
D)  Multiyear level-premium insuranceE) None of the above
F) B) and C)

Question 8

Which of the following is a benefit unique to buying a duplex,as opposed to the purchase of a single-family home?

Accepted Answer

A)  Real estate taxes are tax deductible.
B)  The rent income will help make the mortgage payment.
C)  Mortgage interest payments are tax deductible.
D)  The value of the home may increase over time.E) B) and C)
F) None of the above

Question 9

IRA funds are not available for withdrawal until you are 59 ½ years old.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Luke and Beth were recently married soon after graduating from college.Although they incurred a significant amount of debt to finance their education,both recently got good paying jobs and appear to have promising careers.Given their situation,down the road Luke and Beth:

Accepted Answer

A)  are almost certain to be able to retire comfortably when the time comes,given the high level of income they are likely to earn.
B)  could be able to retire comfortably,but doing so will take planning and discipline on their part.
C)  have little chance of enjoying a comfortable retirement because the college debts will take years to repay and become a major burden.
D)  will probably find that Social Security will provide an adequate retirement,but that they may need to supplement this with a modest pension if they really want to enjoy the fine life in their golden years.E) C) and D)
F) A) and B)

Question 12

A major source of revenue on your personal income statement is your salary or wages from your job.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

For individuals,budgets are usually more trouble than they are worth.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Your chances of becoming disabled at an early age are ________ than your chance of dying from an accident.

Accepted Answer

A)  the same
B)  much less
C)  much greater
D)  slightly lessE) B) and D)
F) B) and C)

Question 17

The tax-sheltered program to encourage self-employed people to accumulate retirement funds is called an) :

Accepted Answer

A)  401k) plan.
B)  IRA plan.
C)  COLA plan.
D)  Keogh plan.E) A) and D)
F) None of the above

Question 18

Which of the following is an advantage of home ownership?

Accepted Answer

A)  Home ownership is a good way to control the costs of utilities,maintenance,and insurance.
B)  Mortgage interest and real estate taxes are tax deductible.
C)  Money invested in a house is a highly liquid investment.
D)  Home ownership provides a guaranteed rate of return that is more stable than the return earned by investing in the stock market.E) C) and D)
F) None of the above

Question 19

People who have health insurance seldom need disability insurance.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 25: Managing Personal Finances

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

Correct AnswerverifiedShow Answer

Which of the following is a benefit unique to buying a duplex,as opposed to the purchase of a single-family home?

Correct AnswerverifiedShow Answer

For individuals,budgets are usually more trouble than they are worth.

Correct AnswerverifiedShow Answer

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

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

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

Correct AnswerverifiedShow Answer

The tax-sheltered program to encourage self-employed people to accumulate retirement funds is called an) :

Correct AnswerverifiedShow Answer

A major source of revenue on your personal income statement is your salary or wages from your job.

Correct AnswerverifiedShow Answer

The tax shelter offered by home ownership increases the overall cost of owning your home.

Correct AnswerverifiedShow Answer

Which of the following is an advantage of home ownership?

Correct AnswerverifiedShow Answer

A variable life insurance policy is considered riskier than a traditional whole life policy because it:

Correct AnswerverifiedShow Answer

Your chances of becoming disabled at an early age are ________ than your chance of dying from an accident.

Correct AnswerverifiedShow Answer

Luke and Beth were recently married soon after graduating from college.Although they incurred a significant amount of debt to finance their education,both recently got good paying jobs and appear to have promising careers.Given their situation,down the road Luke and Beth:

Correct AnswerverifiedShow Answer

IRA funds are not available for withdrawal until you are 59 ½ years old.

Correct AnswerverifiedShow Answer

People who have health insurance seldom need disability insurance.

Correct AnswerverifiedShow Answer

Keogh plans are most useful for stockholders of major corporations who earn most of their income from dividends rather than wages or salaries.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The first step in getting control of your finances is to prepare a budget.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Henri wants to get better control of his personal finances.He should begin by setting up a personal balance sheet and a personal income statement.

Correct AnswerverifiedShow Answer

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