Personal finance

You want to purchase a life insurance policy that pays a policy dividend. What kind of policy would you want to purchase?

Participating policy

Most people buy life insurance to

Protect the people who depend on the insured from financial losses caused by his or her death.

Julian's annual contributions to his retirement are not tax deductible, but his earnings accumulate tax free. He is investing in a

ROTH IRA

Megan decided to start investing in stocks. Which of the following should she do first?

Research the corporations she is interested in as well as their industries

Major factors that affect the affordability of your mortgage include all of the following except

Size of the home

Which of the following is not one of the four components of the risk factor to be considered when evaluating investments?

Stock

Fran is interested in purchasing a major medical policy that limits the total out-of-pocket amount that she will have to pay. She should consider a

Stop-loss provision

A defined benefit plan specifies the benefits that you will receive at retirement age

True

Angela wanted to rent an apartment, so her landlord required her to sign a lease. The lease is a legal document that defines the conditions of her rental agreement.

True

FSAs and HSAs provide tax advantages for health care expenses

True

For many people, the easiest way to begin an investment program is to participate in an employer-sponsored retirement account-often referred to as a 401(k) or a 403(b)

True

Investment goals are always oriented to the future

True

Lenny the landlord has the right to take legal action against tina the tenant for nonpayment of rent or destruction of property.

True

One of the four questions that should be asked when developing a risk management plan is "what do I need to insure?"

True

If you want to purchase term insurance, you will receive all of the following except

cash value

Excessive buying and selling of securities to generate commissions is called

churning

Nancy is studying the health insurance plan options offered by her employer. She wants a policy that will have the insurance pay a percentage of her medical expenses after she meets her deductible. She should review the

coinsurance clause

Amanda wants to be part of the most basic form of ownership for a corporation. She should invest in

common stock

Money management refers to

day to day financial activities

A traditional marital share will leaves everything to your spouse

False

If you purchase stock from another investor, such as your cousin Sam, then you are buying stock on the primary market

False

Rental insurance isn't very important since the landlord's insurance on the building includes coverage on all tenants' belongings.

False

Samuel should buy insurance in order to eliminate his risk of losses.

False

Stocks are guaranteed to have large returns.

False

Under no circumstances can a company suspend paying dividends in preferred stock holders.

False

Under no circumstances can a company suspend paying dividends to preferred stockholders

False

Terry wants to begin investing and needs some guidance because he is uncomfortable making investment decisions. He should use a(n)

Full-service broker

Which of the following types of stock funds invests in stocks issued by companies expecting higher than average revenue and earnings growth?

Growth funds

Young investors are often more interested in ______ investments than are older investors.

Growth oriented

Jacob is concerned that his out-of-pocket health care expenses will be quite high, so he is considering adding contributions to a tax-free account that he can use with his high-deductible policy to cover catastrophic expenses. What kind of plan does he have?

HSA

A handwritten will is known as a

Holographic will

Which of the following features is a benefit for investors of municipal bonds?

Interest may be tax exempt at the federal level

Of the following, which one is the most positive feature of whole life insurance for a person who wants a more structured way to live?

It builds cash value

Jamie lee Jackson has a savings account and emergency fund. These accounts would be classified as

Liquid assets?

The type of health insurance coverage that takes up where basic health insurance coverage leaves off is

Major medical expense

The main goal when setting insurance goals is to

Minimize personal, property, and liability risks.

Discretionary income is

Money left after paying for necessities

Why might someone buy life insurance?

Money to pay for kids college in the event the major breadwinner dies

Stephanie is the wage earner in a "typical family" with $40,000 gross annual income. Use the easy method to determine how much insurance she should carry.

$196,000

Georgia has a health insurance policy that includes a deductible of $500. If her total bill is $3,000, how much will her insurance pay?

$2,500

Last month some of your friends were injured in an accident. Their total injuries were as follows: -Brenda:$85,000 -Raquel: $125,000 -Louis: $40,000 Coverage was 100/300/50. What was the total medical coverage in this accident?

$225,000

Tim and Tammy are updating their financial plan and are concerned that they might not have enough life insurance coverage for their family, which includes two children, ages 4 and 10. They have determined that their annual income is $70,000 and their net worth is now $150,000. What is the amount of life insurance they should carry using the easy method?

$343,000

Larry has a health insurance policy that includes a deductible of $1,000 and a coinsurance of 20%. If his total bill is $7,000, how much will his insurance pay?

$4,800

A valid short-term investment goal is

Accumulating $3,000 in a savings account over the next 12 months.

How do mutual funds provide returns to their shareholders?

All of these

If you start a new job and are offered the opportunity to participate in the companies 401(k) or 403(b) retirement plan, which of the following decisions can affect your financial future?

All of these decisions can affect your financial future

What should a home buyer consider when evaluating a house?

All of these should be evaluated

Donald wanted to buy a house in the country so he sought advice from his cousin Evan. Evan explained the advantages and disadvantages of home ownership. However, he had some information incorrect. Which of the following is incorrect?

An advantage is that the down payment required is less than the security deposit for a rental.

Which of the following is not a true statement?

Because investment goals deal with the future, it is useless to make long term goals

A person who is named to receive the proceeds from a life insurance policy is a

Beneficiary

A stock issued by a stable corporation that generally attracts conservative investors is called a ___ stock

Blue chip stock

Self investments include all of the following except

Commodities

What steps should be taken in retirement planning?

Conduct a financial analysis and estimate retirement living expenses

Which of the following is not a benefit of home ownership?

Cost to repair, maintain, and improve the home

The amount that you must pay toward medical expenses before the insurance company pays benefits is called

Deductible

Tanya understands the "how to" of researching stocks and likes to make her own decision. However, she is not comfortable using the internet to trade stocks. She should use a

Discount broker

A distribution of money, stock or other property that is paid to the stockholders and of a company is called a

Dividend

An estate consists of

Everything you own

Which of the following is a fund that invests in the stocks or securities contained in a specific stock or securities index?

Exchange traded fund

Which of the following is correct for a closed end fund?

The price of its shares is determined by supply and demand, by the value of stocks in the portfolio, and by investor expectations.

Kelly selected a home and submitted an offer to the seller.

The seller may reject the offer and choose to provide a counteroffer.

When thinking of retirement, which of the following is correct?

The sooner you start saving, the better

Which of the following is not correct regarding preferred stock?

The yield on preferred stocks is often lower than the yield on corporate bonds.

Which of the following is not correct regarding preferred stocks?

The yield on preferred stocks is often lower than the yield on corporate bonds.

Which of the following questions should one ask when developing a risk management plan?

These are all good questions

Georgina and Henry are looking at houses. Which of the following is correct?

They should assess the school system in the area they want to live.

A PPO is a group of doctors and hospitals that agree to provide health care at rates approved by the insurer

True

Patrick Gustman wants to protect himself against losses in his investments after the purchase. To do this, he should monitor the value of his investments to determine if he should hold,sell, or increase his stake in a specific investment

True

The four primary sources of retirement income are employer pension plans, personal retirement plans, annuities, and public pension plans.

True

A legal arrangement that helps manage life assets of your estate for your benefit of that of your beneficiaries is called a

Trust

Prolly wants the opportunity to change the amount she pays for her annual premium through the life of her insurance policy without changing her coverage. Which of the following of whole life polices would meet her needs?

Universal life

Which of the following steps should be completed before making your first investment?

Work to balance your budget

The process of spreading your assets among several different types of investments to lessen risk is called

asset allocation

Thomas wants to invest in a fund that invests in stock, bonds, and money market instruments. Which of the following will meet his needs?

asset allocation funds

The potential return on any investment should

be directly related to the risk the investor assumes

If you hold mutual fund shares in a ROTH IRA, the taxes on reinvested income will be...

eliminated

When you die, this tax will be based on the fair market value of your investments, property, and bank accounts less an exemption.

estate tax

An investment that pays higher than average dividends is called a __ stock

income

Which of the following types of stock funds invests in the same companies included in the standard and poors 500 stock index?

index funds

If your main focus is to be able to buy or sell an investment quickly without substantially affecting the investments value, you are most concerned with

liquidity

Many mutual funds charge a commission every time shares are purchased by investors. These are called

load funds

A debt security issued by a state or local government

municipal bond

Whose shares are issued and redeemed by the investment company at the request of investors?

open-end fund

Insurance that covers valuable items, such as an expensive musical instrument, is called

personal property floater

What is the fee that a policyholder pays when an insurance company agrees to take on the risk?

premium

Which of the following expenses is not usually incurred by a tenant?

property taxes

If you choose to wear your seatbelt, you are using

risk reduction

If you choose to insure your home or your vehicle, you are using

risk shifting

Another name for temporary life insurance is

term life insurance