Question 1

Fixed annuities have become much more popular than variable annuities.

Accepted Answer

A) True 
 B)False

Question 2

A common purpose of a rider added to a homeowner's policy is to:

Accepted Answer

A)   provide coverage for items that the standard policy does not cover.
B)   limit the insurance company's liability for certain types of losses.
C)   waive the provision that requires the owners to get a health exam.
D)   allow the policy holder to obtain health,disability,and auto insurance under their homeowner's plan.E) A) and B)
F) B) and C)

Question 3

In preparing an income statement for yourself,the wages from your job would be shown as:

Accepted Answer

A)   your revenue.
B)   an expense.
C)   an asset.
D)   your owner's equity.E) All of the above
F) B) and C)

Question 4

Your big screen HDTV would be listed as an asset on your personal balance sheet.However,the loan you took out to buy the TV would be listed as a personal liability.

Accepted Answer

A) True 
 B)False

Question 5

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) None of the above
F) All of the above

Question 6

A financial planner would encourage you to borrow money:

Accepted Answer

A)   only to buy assets that are likely to generate income or increase in value.
B)   to pay your day-to-day expenses and then to invest your income.
C)   only when facing bankruptcy.
D)   in order to reduce your debt level.E) B) and C)
F) All of the above

Question 7

Whole life insurance premiums provide the insured with both pure insurance and a savings plan.

Accepted Answer

A) True 
 B)False

Question 8

Jack is thinking about preparing a durable power of attorney.This indicates that he wants to:

Accepted Answer

A)   ensure that a single lawyer will be able to handle all of his legal needs.
B)   declare that his current will is invalid.
C)   eliminate the taxes on his estate when he dies.
D)   appoint someone to take over his finances if he should become incapacitateD.E) C) and D)
F) A) and B)

Question 9

The chances of becoming disabled at an early age are much higher than your chances of dying from an accident.

Accepted Answer

A) True 
 B)False

Question 10

Bernie owns a sports trading-card business.He can participate in a Keogh plan to save for his retirement.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A)   expense tracker
B)   revenue sheet
C)   budget
D)   debt managerE) C) and D)
F) B) and D)

Question 12

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

Question 13

The greatest return over a period of several years is likely to be earned by investing in a:

Accepted Answer

A)   small home in a great location.
B)   savings account in a bank.
C)   large home in a deteriorating neighborhood.
D)   moderate size home in a rural setting.E) All of the above
F) A) and B)

Question 14

Which of the following is true of credit cards?

Accepted Answer

A)   They are a cheaper way to finance your education.
B)   They are an efficient way to keep track of purchases.
C)   They are an effective way of controlling the amount of debt the consumer incurs.
D)   They are less convenient than carrying cash or writing a check.E) All of the above
F) A) and D)

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is least likely to result from the problems facing the Social Security system?

Accepted Answer

A)   an increase in the age at which full Social Security benefits are received
B)   cuts in benefits
C)   reductions in Social Security taxes
D)   reductions in cost of living adjustmentsE) B) and C)
F) A) and D)

Question 17

The earnings on a traditional IRA are:

Accepted Answer

A)   never taxed,in order to encourage people to invest for their retirement.
B)   tax free until the Social Security system is improved.
C)   taxed as income when they are withdrawn after retirement.
D)   available to the investor without a penalty.E) C) and D)
F) B) and C)

Question 18

A contract that calls for regular payments to an individual for life or for a fixed period of time is called a(n) :

Accepted Answer

A)   annuity.
B)   fixed dividend plan.
C)   mutual fund.
D)   level premium agreement.E) All of the above
F) A) and B)

Question 19

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) A) and B)
F) None of the above

Question 20

A(n) __________ is the person named in a will to assemble and value the assets of the deceased,handle tax matters,and distribute the assets.

Accepted Answer

A)   executor
B)   guardian
C)   arbiter
D)   intermediatorE) None of the above
F) A) and B)

Exam 22: Appendix B: Managing Risk

Fixed annuities have become much more popular than variable annuities.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A(n) __________ is the person named in a will to assemble and value the assets of the deceased,handle tax matters,and distribute the assets.

Correct AnswerverifiedShow Answer

Your big screen HDTV would be listed as an asset on your personal balance sheet.However,the loan you took out to buy the TV would be listed as a personal liability.

Correct AnswerverifiedShow Answer

A common purpose of a rider added to a homeowner's policy is to:

Correct AnswerverifiedShow Answer

The chances of becoming disabled at an early age are much higher than your chances of dying from an accident.

Correct AnswerverifiedShow Answer

Bernie owns a sports trading-card business.He can participate in a Keogh plan to save for his retirement.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Whole life insurance premiums provide the insured with both pure insurance and a savings plan.

Correct AnswerverifiedShow Answer

A contract that calls for regular payments to an individual for life or for a fixed period of time is called a(n) :

Correct AnswerverifiedShow Answer

Jack is thinking about preparing a durable power of attorney.This indicates that he wants to:

Correct AnswerverifiedShow Answer

Which of the following is true of credit cards?

Correct AnswerverifiedShow Answer

The greatest return over a period of several years is likely to be earned by investing in a:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A financial planner would encourage you to borrow money:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is least likely to result from the problems facing the Social Security system?

Correct AnswerverifiedShow Answer

In preparing an income statement for yourself,the wages from your job would be shown as:

Correct AnswerverifiedShow Answer

The earnings on a traditional IRA are:

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

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