Finance Final

Personal liability coverage does NOT cover:

A housekeeper

All of the following are acceptable types of documentation for a household inventory except:

A listing of items and their details in your memory

Mildred was diagnosed with terminal cancer and knows that she doesn't have long to live. Which of the following riders would allow her to receive cash now?

Accelerated benefits

Frank, age 38, was killed in a car accident. Which of the following riders provided an additional benefit for his heirs?

Accidental death benefit

Molly is thinking about buying a type of whole life insurance policy, but she is not sure about how much she will need in the next few years. She may need to change her coverage as her needs change. Which of the following policies would meet her needs?

Adjustable life

Which of the following is incorrect?

All disability policies pay you if you cannot work at your regular job.

Who is most likely to use a home health care agency?

An elderly neighbor

Which of the following statements is correct?

An immediate annuity allows an individual to receive income payments from an annuity beginning at once.

Which of the following investors would mostly prefer conservative investments with less risk to speculative investments with higher risks?

An unemployed single parent who just received a $300,000 divorce settlement

Medical payments coverage applies to medical expenses of:

Anyone who is injured in your vehicle, including you

This health insurance provision lets your insurer make direct payments to your doctor or hospital.

Assigned benefits

Val wants to invest in a fund whose primary objective is to conserve principal, provide income, and provide long-term growth. Which of the following will best meet her needs?

Balanced funds

The potential return on any investment should:

Be directly related to the risk the investor assumes.

Which of the following is not a true statement?

Because investment goals deal with the future, it is ineffective to make long-term goals.

Cliff retired 10 years ago and wants to still own a few stocks. Dividends are important to him, and he wants to invest in a large, stable corporation. He should purchase _______ stocks.

Blue chip

Which of the following statements is correct?

Bonds are a form of debt financing

Investors who earn larger returns because they borrow part of the money needed to buy a particular stock are using which of the following techniques?

Buying on margin

When you sell your shares in a mutual fund, you may receive a profit that results from an increase in value called a(n):

Capital gain

Payments to a fund's shareholders that result from the sale of securities in the fund's portfolio are:

Capital gain distributions

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

Cash value

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

Safe investments include all of the following except:

Commodities

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

Common Stock

The insurance that helps pay hospital, surgical, medical, and other bills with a low deductible is known as a(n):

Comprehensive major medical policy

Albert left his vehicle parked on the street in the front of his house when he went on vacation. While he was gone, his street flooded and his car was severely damaged. This damage would be covered under his:

Comprehensive physical damage coverage

Henry was driving at dusk and hit a deer running across the road. His damage would be covered under his:

Comprehensive physical damage coverage

After you purchase an investment, you should:

Continually evaluate your investment

Which of the following securities are rated by three companies?

Corporate bonds

A young employee is buying individual life insurance and is worried about the impact inflation will have on his life insurance coverage. Which of the following riders should he consider?

Cost-of-living protection

This life insurance is used to pay off certain debts, such as auto loans, in the event that you die before the debts are paid in full. Which of the following is typically not the best buy for the amount of protection offered?

Credit life

Which of the following is NOT a type of permanent life insurance?

Decreasing term

When monitoring the value of your stock investments, it is important to:

Determine their values using the price quotations reported on the Internet and in newspapers.

Marissa purchases $500 of stock directly from a corporation without having to use an account executive or a brokerage firm. She is using a:

Direct investment plan

Which of the following are major reasons that investors purchase mutual funds?

Diversification and professional management

All of the following statements are correct except:

Dividend payments must be approved by the stockholders.

Miguel is concerned that the health insurance option he is considering plays upon unrealistic fears. He is most concerned about a:

Dread disease policy

Professional advisory services provide detailed information about mutual funds. Which of the following is not a professional advisory service?

Dun and Moody's

When Stanley was visiting Elaine, he tripped on her front porch step and sprained his ankle. His injuries were covered by:

Elaine's medical payments coverage

Under the Patient Protection and Affordable Care Act of 2010, which of the following is NOT correct?

Employers must offer continuing coverage through COBRA for up to 24 months after you leave your job.

Francisco and Maria have three children and want to complete a detailed worksheet to determine the amount of life insurance they need to purchase. They will consider factors such as Social Security and liquid assets. Which method are they using to determine their life insurance needs?

Family need method

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

Full-service broker

Pam just started working at XYZ Widget Company and finally wants to get insurance coverage through her employer. She does not want to take a medical exam to get coverage, because she has some underlying health conditions and is concerned that she might not qualify for a policy. Which of the following life insurance policies should she apply for?

Group life

Bonnie is most concerned about being able to buy additional insurance without undergoing medical exams. Which of the following riders should she consider?

Guaranteed insurability option

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

Ethan wants to purchase some stock for the first time. Which of the following is correct?

His commission should be lower at an online broker than at a full-service broker.

Patrick sold his GE shares using his online broker. One can say that he sold them:

In the secondary market.

Earnings paid to shareholders that are not related to the sale of securities in the fund's portfolio are called:

Income dividends

All of the following statements are considered to be good advice for a potential investor in performing a financial checkup except:

Increase credit purchases and make installment payments in order to increase cash available for investing.

Cindy was contacted by her home insurance agent to discuss ways to decrease her premium. Which of the following should NOT reduce her premium?

Increasing the amount of coverage

An insurance company will

Insure pure risk, but not speculative risk

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

Interest may be tax-exempt at the federal level.

A provision in a health insurance policy that sets specific levels of repayment for certain services is called a(n):

Internal limits

This health insurance provision sets specific levels of repayment for certain services.

Internal limits

Which of the following is true about mutual funds and taxes?

Investment companies are required to send each shareholder a year-end statement that specifies how much each received in income dividends and capital gain distributions.

If you bought a stock on June 15, 2018, and sold it on July 15, 2020, you would likely be classified as a(n):

Investor

When considering why to buy annuities, which of the following statements is correct?

It is better to fully fund your IRA, Keogh, or 401(k) before buying an annuity.

When investing, in your role as an investor, you should not:

Let the investments manage themselves

Which of the following should reduce your auto insurance premium?

Maintaining good grades in college

Peter is a NASDAQ dealer who matches buy and sell orders for Ford. He is known as a(n):

Market maker

Annual reports:

May be sent to all stockholders on an annual basis.

Jack needs comprehensive medical coverage. However, his income is very low. What plan should he investigate?

Medicaid

Sally wants to invest in a fund that invests only in stock. Which of the following will meet her needs?

Mid-cap funds

Wendy has had a life insurance policy for five years with her spouse listed as the person who receives the benefit if she dies. She was recently divorced. Which of the following provisions should she take action on?

Naming a beneficiary

Jeanne wants to purchase a life insurance policy with guaranteed premiums. What kind of policy would she want to purchase?

Nonparticipating policy

Todd plans to purchase a life insurance policy from a stock life insurance company. What kind of policy is he planning to purchase?

Nonparticipating policy

Kelly bought some stock using an investment bank from the issuer of those securities. She bought her shares:

On the primary market.

Which of the following is correct?

One question that should be asked when developing a risk management plan is "What do I need to insure?"

Barbara left a skateboard on her front steps. A windstorm swept the skateboard up and the skateboard crashed through her window. The windstorm was a:

Peril

The type of health insurance coverage that may cover routine doctor visits, X-rays, and lab tests is:

Physician expense

Which of the following provisions requires the policyholder to again qualify as an acceptable risk and pay overdue premiums with interest in order to put a lapsed policy back in force?

Policy reinstatement

Which of the following would be considered speculative investments?

Precious metals

Yvonne's employer offers a health plan that has a group of doctors and hospitals that agree to provide specified medical services to members at prearranged fees. This health plan offers some flexibility since members can either visit a physician from a list or go to their own doctors. What kind of plan does her employer offer?

Preferred provider organization (PPO)

All else held constant, which of the following is typically true about an elimination period?

Premiums for a plan with an elimination period of 90 days will be less than premiums for a plan with an elimination period of 60 days.

Which of the following describes a growth company?

Profits are reinvested in the company for future growth.

Madeline had a severe allergy attack and crashed her car into a telephone pole while sneezing. The damage to the telephone pole would be covered under Madeline's:

Property damage liability coverage

Patrick has an old car and wants to keep his insurance costs down, but he wants coverage in case he damages the property of others, including street signs and telephone poles. In order to minimize the financial impact of an accident he may cause, he should, at a minimum, carry which type of insurance?

Property damage liability coverage

Which of the following is NOT correct about renter's insurance?

Renter's insurance covers the building and other structures on the site

Which of the following is NOT one of the commonly used general risk management techniques?

Risk maximization

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

Risk shifting

Which of the following steps is not a factor to be considered before making your first investment?

Save at least $10,000 to invest

Which of the following is correct?

Selling short is selling stock borrowed from a brokerage firm.

Mark was severely injured while on vacation and expects to be unable to work for at least 12 months. Because of his injury, he should expect to be eligible for disability income from:

Social Security

If you do not need to access your funds for 5-10 years or more, which of the following investments would be most appropriate?

Stocks and mutual funds

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

The type of health insurance coverage that may specify the maximum payment amount for each type of operation is:

Surgical expense

Which of the following is NOT a type of permanent insurance?

Term Life

Which of the following statements is correct?

The Internet provides websites that may be more up-to-date and thorough than printed materials.

When analyzing a price-earnings ratio:

The higher the price-earnings ratio, the more investors are paying for earnings.

Which of the following is NOT a feature of whole life insurance?

The policy will return all premiums if you survive to the end of the policy.

Which of the following is correct?

The price/earnings ratio is the price of a share of stock divided by the corporation's earnings per share of stock.

Gwendolyn and Jack Francis are investors with no financial training or investment background. Which approach will they likely take?

They will choose investments with less risk.

If you bought a stock on July 1, 2020, and sold it on July 15, 2020, you may be a(n):

Two of these are correct.

Megan wants to purchase a type of whole life insurance policy that will allow part of her premium to be invested in stock, bonds, or money market funds. Which of the following policies should she buy?

Variable life

Which of the following is NOT an underlying cause of high health care costs?

Victims of accidents and crimes require fewer emergency medical services than in the past.

Bill is worried about being able to pay his premium if he is totally and permanently disabled before age 60. Which of the following riders should he consider?

Waiver of premium disability benefit

When should you consider the tax consequences of selling your investments?

When you make your own decisions or when you have professional help

Melinda wants to withdraw some money from her mutual fund. She has a minimum required asset value of $10,000. Which of the following is not an option available for her to systematically withdraw some money?

Withdraw all principal and leave interest dividends and capital gain distributions in the account.

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

Work to balance your budget

If you have a loss due to a flood

You must have already purchased special coverage if you live in an area that has frequent floods in order to be covered

Jackson was interested in purchasing low-value securities that were not listed on the NYSE. He probably used _____ to complete his transaction.

the over-the-counter market