BA 281 Personal Finance Final Exam
The additional 10 years of saving earned save Abe more than __________ than saver Ben for retirement. $200,000 $100,000 $62,000 none of these $80,000
$200,000
Up to _______ of social security benefits received may be subject to federal income tax. 32% none of these 64% 85% 100%
85%
Which class of shares charges a commission (sales charge) when shares are purchased? Select one: A B C K Q
A
An individual who purchases an insurance policy is called The insurance company. An insurer. An employer. A victim. A policyholder.
A policyholder.
The Patient Protection and Affordable Care Act of 2010 Ensures consumers have access to an effective appeals process to appeal decisions by the health insurance plan. Bans insurance companies from dropping people from coverage when they get sick. Eliminates co-pays for preventive services. Prohibits denying coverage to children with preexisting medical conditions. All of these are true.
All of these are true.
Which of the following is a type of motor vehicle insurance available to drivers? Towing and emergency road service coverage Rental reimbursement coverage Wage loss insurance All of these may be available to drivers. None of these are available to drivers.
All of these may be available to drivers.
Which of the following statements is incorrect? A life insurance policy allows the beneficiary to receive proceeds at some future date. An annuity is more advisable for people in poor health than for those who are likely to live longer than average. A deferred annuity allows an individual to receive payments from an annuity at some future date. An annuity is a financial contract written by an insurance company that provides you with regular income. An immediate annuity allows an individual to receive income payments from an annuity beginning at once.
An annuity is more advisable for people in poor health than for those who are likely to live longer than average.
A contingent deferred sales load is known as a Back-end load. Redemption fee. B fund. None of these are correct. Back-end load, B fund and redemption fee are all correct.
Back-end load, B fund and redemption fee are all correct.
Brenda purchases stock and plans to hold on to it for a number of years. She could be considered to be using a Buy-and-hold technique. Direct investment plan. Margin technique. Dollar cost averaging technique. Direct reinvestment plan.
Buy-and-hold technique.
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? Accidental death benefit Guaranteed insurability option Accelerated benefits Waiver of premium disability benefit Cost-of-living protection
Cost-of-living protection
All of the following are examples of defined contribution plans except Stock bonus plan. Profit-sharing plan. Money-purchase plan. Defined-benefit plan. Salary-reduction plan.
Defined-benefit plan.
Market risk is associated with fluctuations in the market due to A reduction in purchasing power. Changes in interest rates. Economic conditions such as rapid expansion and recession. Predictable sources of income. Bad management and/or unsuccessful products.
Economic conditions such as rapid expansion and recession.
Which of the following types of stock funds invests in stock issued by companies with a long history of paying dividends? Equity income funds Regional funds Index funds Growth funds International funds
Equity income funds
Candice is updating her estate planning and wants to write a legal document that will allow all of her assets to go to her spouse except for a certain amount that will be set up in a trust. The trust (plus interest) can provide her spouse lifelong income that will not be taxed. She is writing a(n) Traditional marital share will. Guardian will. Simple will. Stated amount will. Exemption trust will.
Exemption trust will.
True or false In 2012 life expectancy had risen, and a male who is 25 years old would expect to live an additional 60 years.
False
A will that is usually prepared with the help of an attorney is known as a(n) Formal will. Statutory will. Ordinary will. Holographic will. "I love you" will.
Formal will.
Which of the following types of stock funds invests in stock issued by companies expecting higher-than-average revenue and earnings growth? Equity income funds Growth funds Regional funds Index funds International funds
Growth funds
Which of the following is correct? Health insurance plans may reimburse an individual for hospital stays, doctors' visits, and medications. Medical expense insurance provides payments to make up for income of a person who cannot work as a result of injury or illness. A premium is the amount your employer will pay for your health insurance coverage. A premium reimburses you for hospital stays, doctors' visits, and medications. Disability income insurance pays actual medical costs.
Health insurance plans may reimburse an individual for hospital stays, doctors' visits, and medications.
Which of the following provides up-to-date information that can help investors made decisions quickly without having to make a trip to the library? Internet Newspapers Professional advisory services Mutual fund annual report Financial publications
Internet
Which of the following should reduce your auto insurance premium? Select one: Increase your number of claims Maintain good grades in college Pay your speeding tickets immediately Decrease your deductible Stop smoking
Maintain good grades in college
When an employer promises to set aside a certain amount of money for each employee each year, it has set up a Salary-reduction plan. Profit-sharing plan. Defined-benefit plan. Money-purchase plan. Stock bonus plan.
Money-purchase plan.
This type of plan combines features of Health maintenance organizations and PPOs. It uses a network of participating physicians and medical professionals who have contracted to provide services for certain fees. Public insurance company Home health care agency Hospital and medical service plan Point-of-service (POS) plan Medicare
Point-of-service (POS) plan
The settlement option in which the company acts as trustee and pays interest to the beneficiary is called Proceeds left with the company. Life income option. Lump-sum payment. Final life payment. Limited installment payment.
Proceeds left with the company.
A legal form that requests that stockholders transfer their voting rights to individual(s) is called a Common stock. Proxy. Dividend. Savings account. Bond.
Proxy.
Speculative investments include all of the following except Commodities. Savings accounts. Precious metals. Precious stones. Options.
Savings accounts.
A will prepared on a pre-printed form from a stationery store is called a(n) Ordinary will. Holographic will. "I love you" will. Formal will. Statutory will.
Statutory will.
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. Dread disease policy. Hospital indemnity policy. Copay. Coinsurance.
Stop-loss provision.
Timothy was driving his friend Nick to football practice. While driving, he was hit by a driver who had coverage of 100/300/50. Tim and Nick each suffered some physical injuries. Based on this information, which of the following is correct? Nick's injuries would be covered to $50,000. The total coverage for Timothy and Nick would be $100,000, and the driver who caused the accident would be covered to $50,000. The policy would provide a maximum of $100,000 for each person who was injured, and no more than $300,000 for total injuries of all parties in the accident. Timothy's injuries would be covered to $100 and property damage would be limited to $300. Individually, Timothy and Nick's injuries would be covered to $300,000 each.
The policy would provide a maximum of $100,000 for each person who was injured, and no more than $300,000 for total injuries of all parties in the accident.
According to the video, the best way to keep your auto insurance rates down is: To establish and maintain a safe driving record To report accidents as soon as possible none of these To negotiate your premiums with the insurance company To only buy insurance six-months in advance
To establish and maintain a safe driving record
When comparing the interest rates for U.S. government securities, which of the following is correct? Treasury bills < Treasury notes < Treasury bonds Treasury bills < Treasury bonds < Treasury notes Treasury bonds < Treasury notes < Treasury bills Treasury bonds < Treasury bills < Treasury notes Treasury notes < Treasury bills < Treasury bonds
Treasury bills < Treasury notes < Treasury bonds
True or false For many investors, mutual funds have become the investment of choice and are a part of their retirement account.
True
If you bought a stock on July 1, 2016, and sold it on July 15, 2016, you may be a(n) Investor. Speculator. Trader. Two of these are correct. All of these are correct.
Two of these are correct. (Individuals who routinely buy and then sell stocks within a short time are called speculators or traders.)
Which of the following is not a factor in determining driver classification: Age Type of car you drive Sex Driving record Marital status
Type of car you drive
Level 3 investments on the pyramid include all of the following except: Growth-oriented mutual funds Rental Property all of the above U.S. Government Bonds Growth stocks
U.S. Government Bonds
If you have children and are writing your will, you need to do all of the following except Write the will with the help of an attorney. Select a guardian. Select beneficiaries. Sign the will in front of two witnesses. Select an executor.
Write the will with the help of an attorney.
The main reason for a change in the amount of social security benefits is: the state you live in the weather the number of people receiving benefits none of these a cost of living adjustment
a cost of living adjustment
Insurance companies consider which of the following when determining insurance rates on the car you drive: Where you work none of these Where you live all of these Where you drive
all of these
The process of spreading your assets between several different types of investments to lessen risk is called: asset differentiation asset coordination none of these asset allocation asset relocation
asset allocation
The cause of most bond price fluctuations is due to: bond quality changes in interest rates in the economy changes in the number of bonds available none of these the size of the bond market
changes in interest rates in the economy
The first step to determine the market value of a bond is to: determine the annual interest on the bond Divide the face value of the bond by the interest rate determine the face value of the bond look up the market value of the bond none of these
determine the annual interest on the bond
True or false An investment company sponsoring a mutual fund must give potential investors an annual report.
false
True or false As investors age, they tend to invest more in growth-oriented investments.
false
True or false If a will is found to be invalid, the result is called in-probate.
false
True or false If you save on a regular basis, you not have money to pay your bills, make major purchases, meet your living expenses during your retirement, and cope with emergencies.
false
True or false In the event of bankruptcy, stockholders have a claim to assets of the corporation before bondholders.
false
True or false Many financial experts believe that a corporation's ability or inability to generate dividends in the future may be one of the most significant factors that account for an increase or decrease in the value of a stock.
false
True or false The only way to get reliable information about mutual funds is to pay a fee for it.
false
True or false When Don retires, his transportation expenses will likely increase.
false
True or false: A good disability income insurance plan will pay you if you cannot work at any job.
false
True or false: Mutual life insurance companies specialize in the sale of nonparticipating policies.
false
Capital Gains occur when you sell your shares: that are held in a retirement account for a price lower than the purchase price for a price higher than the purchase price for a price equal to the purchase price none of these
for a price higher than the purchase price
Higher-level investments may increase in dollar returns, but also increase: in risk none of these in demand in face value in price
in risk
Bond prices will decrease when: market interest rates decrease none of these market interest rates increase market interest rates remain constant
market interest rates increase
Monitoring an investment's value can help you determine if you are: meeting your long-term and short-term goals able to pay your debts a risky investor a savvy investor none of these
meeting your long-term and short-term goals
Most people desire a quality of living in retirement that requires: less income than is provided by social security more income than just social security they live with their children after retirement none of these they continue to work into retirement
more income than just social security
According to the video, what percentage of Americans are eligible for social security benefits? 24% 99% none of these 68% 79%
none of these
Coinsurance is when: none of these the insured shares the cost of medical treatment with their spouse you share the cost of medical care with your spouse the insurer and the hospital share the cost of medical treatment the hospital and the insured share the cost of medical treatment
none of these
The value of a close-end fund is determined by all of the following except: investor expectations value of investments in the portfolio none of these number of investors supply and demand
number of investors
Net Asset Value is calculated by dividing the value of the stocks less liabilities by: annual dividends loads number of investors none of these number of shares
number of shares
When creating a chart to monitor your investment value, the dollar amounts should go: on the horizontal axis none of these on the vertical axis on the X axis
on the vertical axis
Which of the following is an important reason to review your health care coverage from your employer-sponsored plan: plan benefits never change once you sign up for coverage none of these plan benefits often change every year you don't need to factor health care costs into your budget
plan benefits often change every year
According to the video, when making a decision on whether to hold, buy, or sell an investment, you should consider: current market opportunity price movement stock volatility none of these demand
price movement
A deductible is: none of the above the amount you must pay the insurance company before they will reimburse expenses the amount of medical expenses paid by the insurance company the amount the insurance company will pay you for medical expenses the amount you must pay for medical services before expenses are reimbursed by the insurance company
the amount you must pay for medical services before expenses are reimbursed by the insurance company
The major disadvantage of an exchange-traded fund is: the value of the investments in the portfolio the number of funds available none of these investor expectations the cost of buying and selling shares
the cost of buying and selling shares
If your policy is for replacement value, the payment you will receive in the event of a loss is: 80% of the cost of the item the current cost of the item less depreciation the market value of the item less depreciation none of these the cost of replacing the item
the cost of replacing the item
If your policy is for actual cash value, in the event of a loss you will receive: none of these the residual value of the property the current replacement cost of the property less depreciation 80% of the current replacement cost the replacement cost of the property in the year of original purchase
the current replacement cost of the property less depreciation
Saver Abe had more after 40 years than saver Ben due to the: amount saved every year time value of money interest rate earned on the investments none of these
time value of money
True or false A "good" fund manager has the ability to increase the share value when the economy is good and retain that value when the economy is bad.
true
True or false If you drive a model of vehicle that is frequently stolen, you will probably pay a higher premium for your auto insurance.
true
True or false Income dividends are taxable unless they are part of a 401(k) retirement account, traditional IRA account, or other retirement account.
true
True or false Open-end funds, closed-end funds, and exchange-traded funds all pay income dividends.
true
True or false The turnover ratio is a measure of a fund's trading activity.
true
True or false Value Line, Standard & Poor's reports, and Mergent are three widely used advisory services that provide detailed research for stock investors.
true
True or false When Paul leaves his job at Acme Bending Company, he may choose to move his 401(k) balance to a plan called a rollover IRA.
true
Three additional factors that can affect your home insurance premiums include: your age your income none of these your marital status where you live
where you live
