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Zero coupon bonds would be best suited for

A 35 year old woman with a high risk tolerance and no need for current income.

What do you call a check that a bank writes on its own account made payable to a third party on your behalf?

A cashier's check

An example of a liquid asset would be: - a home. - an automobile - a checking account - retirement account

A checking account.

Call Feature

A feature that allows corporation to call in or buy outstanding bonds from current bondholders before the maturity date

What document is generally used to name the guardian of your minor children in the event that both you and your spouse should die?

A last will and testament.

A personal exemption refers to

A reduction from adjusted gross income for the taxpayer(s) and each dependent listed on the tax return

An exemption refers to:

A reduction from adjusted gross income.

Which type of trust would be used for young adult children, where the deceased parents wish to ensure that the principal of the trust is maintained for a long period of time?

A spendthrift trust

Which investment would generally be inappropriate for a 25 year old with a traditional IRA invested for his/her retirement?

A substantial and permanent investment in money market mutual funds.

What are the 4 types of tax forms and what makes each unique

A. 1040 EZ B. 1040/1040 A C. 1040 X D. 1040 NR/ 1040-EZ

What important matter should you always assess before changing jobs?

A. Your current vesting status on the company 401-K plan. B. Your current vesting status on the company defined benefit pension plan. C. Your current vesting status on the company stock option plan. D. All of the above.

Bond Rating

AAA highest, D lowest or Aaa highest, C lowest. Low usually in default. The higher the better quality

What does the AGI stand for

Adjusted Gross Income

A common advantage associated with home ownership is

Appreciation of the house's value over long periods of time

With respect to federal tax law, life insurance proceeds paid to a beneficiary:

Are excluded from taxable income, but included in the taxable estate (unless a life insurance trust has been established)

Which of the following statements is false?

Asset allocation eliminates the risk associated with an investment program. Correct

Debenture Bond

Backed only by the reputation of the company

Motor Vehicle Insurance Coverages

Bodily Injury Liability Medical Payments Property Damage Liability Uninsured Motorist Underinsured Motorist

Loan money to a company and charge them interest

Bond

Premium Bonds

Bonds Trading above Par

Discount Bonds

Bonds Trading below Par

Which of the following statements is true? about bonds

Bonds may be purchased in either the primary or secondary market.

With respect to the taxability of corporate dividends paid to individuals and capital gains on stocks and bonds,

Both dividends from corporations and capital gains are non-taxable

A(n) ____ is a specific plan for spending.

Budget

Why corporate bond are sold

$,find it difficult to sell stocks, use interest paid as a tax-deductable

A couple has two children ages 4 and 7 and only one spouse has income. Using the "non-working" spouse method, they should have ________ of life insurance

$140,000

For 2011, estates up to $____________ are generally not subject to federal estate taxes.

$5,000,000

If a student has a net worth of $50,000 and liabilities of $20,000, what are his/her total assets?

$70,000

Treasury

- Int. rate not fixed but pay inflation rate

Systematic risk

- The risk inherent to the entire market or entire market segment

Which of the following statements is true? about short term capital gain

. The holding period for short-term capital gains is 12 months (1 year) or less

What are 5 filing status categories

1) Single 2) Married 3) Widow 4) Household 5) Married, singled filed

Four types of taxes

1) Taxes on purchases 2) Taxes on property 3) Taxes on wealth 4) Taxes on earning

How much of every dollar goes to taxes

1/3 or 30%

Long term capital gains and dividend income from corporations will be taxed at favorable

15%

Savings in 401-K In general, experts advise that one must save _______ of your salary in your 401-K plan in order to have sufficient funds to maintain your standard of living in retirement (this % would include both your savings and the employer match).

15-18%

at age 65 what is the average life expectancy of a woman

19 years

Using the Rule of 72, approximately how long does it take for your money to double in value if you earn an 22% annual return?

3.3 years

most lending institutions believe that a person can afford a monthly payment of about _______ percent of gross income less any long term debts

30

Most lending institutions believe that person can afford a monthly payment of about ______ percent of gross income less any long-term debts

35

Under the rules of COBRA, how long can you continue medical coverage under your former spouse's medical plan after a divorce (assuming the former spouse works at a company with more than 20 employees)?

36 months

Under what retirement plan does your employer make nontaxable contributions to the plan for your benefit and reduce your salary by the same amount?

401(k)

under what retirement plan does your employer make nontaxable contribution sot the plan for your benefit and reduce your salary by the same amount

401K

probate and administration costs of your estate may run between ______% of your estate

5 to 8 % this covers fees for attorneys, accountants, appraisers, executors, administrators, trustees, court costs. % decreases as size of estate increases

Medium term notes generally have maturities of?

5-12 years

Most of the information in your credit file may be reported for only _________ years (if you have not declared bankruptcy)

7

What percentage of the first year premiums on a whole life insurance policy go to the agent's commission?

80%

the best FICO score to have is

850

according to a federal law, REITs must distribute what percentage of their net annual earnings to shareholders

95%

When you invest in an employer's retirement saving plan such as 401k your contributions are taxed:

: when you withdraw them during retirement

When stocks are traded between investors, they are traded in the _____________ market.

?

Chapter 7 Bankruptcy

Can keep some property Recently made more difficult

Payments made to a fund's shareholders that result from the sales of securities in the fund's portfolio are called

Capital gains distributions (either short term or long term)

The savings plan that is likely to have a set rate of return

Certificate of deposit

The savings plan that is likely to have a set rate of return is a:

Certificate of deposit. (CD)

5 C's of Credit

Character, Capacity, Capital, Collateral, Conditions

Which of the following is not one of the five c's of credit

Climate

Which one of the following is not one of the five C's of credit? - conditions - climate - character - capacity

Climate

Which one of the following is not one of the five Cs of credit?

Climate

· used to raise money, expand business, pay off stuff without loan o Known as equity stocks and are more risky than preferred stocks of bonds

Common Stocks-

Who elects a corporation's board of directors?

Common stockholders

Un-systematic risk

Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through appropriate diversification

Mortgage Bond

Corporate bond that is secured by various assets of the issuing firm

Earnings Per Share (EPS)

Corporation's after-tax earnings divided by the number of outstanding shares of common stock

Double Taxation of Dividends

Corporations Pay Taxes, then pay dividends from after tax profits

Financial strategies refer to:

Courses of action to achieve financial goals

Whole Life Insurance

Covered for Life Accumulates Cash Value

A feature that enables preferred stock investors to receive omitted dividends is called a _____________ feature.

Cumulative

A stock that follows the business cycle of advances and declines in the economy is called a(n) ______________ stock

Cyclical

· Corporate bonds-

Debenture Mortage bond Subordinated debenture o Payment generally every 6 months

Assume the following: Assets = $100,000 Liabilities = $75,000 Net Worth = $25,000 Monthly credit payments = $1,440 Take home pay = $7,200 What is the debt ratio and debt payments ratio for

Debt ratio = 3.0 Debt payments ratio = .20

What is the first step in the financial planning process?

Determine your current financial condition.

Which type of trust is appropriate for couples who do not yet have enough assets to need a credit-shelter trust?

Disclaimer

Which best describes cash dividends paid by corporations?

Dividends generally come from after-tax earnings of the corporation, and are taxed again when received by an individual at a 15% maximum rate

Which of the following statements is true with respect to filing an auto insurance claim?

Don't file a claim if the repair cost is less than the deductible

Driver classification includes information on a person's ____ and is used to set auto insurance rates.

Driving habits

Driver classification includes information on a person's ______ and is used to set auto insurance rates

Driving habits

Gold prices are more likely to rise

During wars or other periods of significant geopolitical uncertainty.

Four Sources of Disability Income

Employer Social Security Workman's Compensation Disability Insurance

Which type of REIT invests directly in properties?

Equity

By the time you turn 60, a large percentage of your net worth will likely consist of

Equity in your primary residence

Convertible Bond

Exchangable for specified number of shares of common stock

A CD account is a checking account that earns interest

False

A CD account is a checking account that earns interest.

False

A corporation must pay dividends to stockholders.

False

A credit union usually offers a wider range of financial services than a commercial bank.

False

A deduction directly reduces the amount of taxes owed

False

A deduction directly reduces the amount of taxes owed.

False

A financial plan is a list of a family's spending for the next month.

False

A general sales tax is also referred to as an excise tax

False

A lease is mainly designed to protect the rights of the landlord

False

A lease is mainly designed to protect the rights of the landlord.

False

A line of credit is a long-term loan that is approved before the money is actually needed.

False

A participating policy has somewhat lower premiums than a nonparticipating policy.

False

A purchasing decision starts off with gathering information

False

A purchasing decision starts with gathering information

False

A purchasing decision starts with gathering information.

False

A tax deduction directly reduces the amount of taxes owed

False

An investor can reduce both systematic and non-systematic risk in a stock portfolio by increasing the number of individual stocks held in the portfolio.

False

Assets represent amounts owed to others that must be paid within the next year.

False

Assets represent amounts owed to others that must be paid withing the next year.

False

Churning occurs when the stockholder converts preferred stock to common stock.

False

Consumer information from business organizations is usually the most objective type of data available to help in a buying decision

False

Cooperative housing involves the purchase of an individual living unit in a multiunit complex or building

False

Demand deposits refer to money deposited in savings accounts

False

Dread disease and cancer insurance policies are usually good values for most individuals.

False

Enrolled agents are IRS auditors who visit people's homes to verify deductions.

False

Health insurance includes both medical expense insurance and disability income insurance

False

In the event of an accident, bodily injury liability coverage protects both individuals in the driver's car and people in other cars for medical expenses

False

In the event of an accident, bodily injury liability coverage protects both individuals in the driver's car and people in other cars for medical expenses.

False

Long-term objectives are defined as objectives that can be accomplished within one year.

False

Most consumer complaints are resolved with the use of a government agency or by taking legal action

False

Most consumer complaints are resolved with the use of a government agency or by taking legal action.

False

Most customer complaints are resolved with the use of a governmental agency or by taking legal action

False

Most financial records should be kept in a safe-deposit box.

False

Most mortgage rates are established by government agencies

False

Most natural disasters have not caused catastrophic amounts of property loss in the United States and other parts of the world

False

Most natural disasters have not caused catastrophic amounts of property loss in the United States and other parts of the world.

False

Most people mail the full amount owed in federal income tax each April

False

Personal financial planing starts by creating a plan of action

False

Personal financial planning starts by creating a plan of action

False

Personal financial planning starts by creating a plan of action.

False

Several financial benefits are associated with renting your place of residence

False

Social security payments are always tax free since they are primarily a return of your money, which was previously deducted from your paycheck.

False

Taxable income refers to the amount deducted from a person's pay

False

Taxable income refers to the amount deducted from a person's pay.

False

Taxable income refers to the amount deduction from a person's pay

False

Taxable income refers to the amount of taxes owed

False

The finance charge is the percentage cost (or relative cost) of credit on a yearly basis

False

The special form of homeowner's insurance includes all risks such as loss or damage from floods or earthquakes

False

The special form of homeowner's insurance includes all risks such as loss or damage from floods or earthquakes.

False

There is a rule of thumb that a good target is life insurance totaling nine to ten times your annual income.

False

There is no relationship between safety and risk when choosing an investment

False

When a simple interest is paid back in more than one payment, the method of computing interest is known as the add-on interest method

False

With closed-end credit, the borrower is permitted to take loans on a continuous basis and is billed for partial payments periodically

False

With closed-end credit, the borrower is permitted to take loans on a continuous basis and is billed for partial payments periodically.

False

With open-end credit, the borrower pays back a one time loan in a specified period of time and with a specified number of payments

False

With open-end credit, the borrower pays back a onetime loan in a specified period of time and with a specified number of payments

False

With open-end credit, the borrower pays back a onetime loan in a specified period of time and with a specified number of payments.

False

a deduction directly reduces the amount of taxes owed.

False

t/f personal financial planning starts by creating a plan of action

False : determine current. develop goals. identify alternatives. evaluate. create and implement. review and revise

Medicare

Federal Program for those 65+

When an IRS agent visits your home or office to verify tax records, this is referred to as a(n):

Field audit.

A common advantage associated with home ownership is:

Financial benefits

Conventional Mortgages

Fixed Rate , Fixed Payment, Amortized

A(n) ____ warranty covers most repairs of a product.

Full

Which of the following is not an attribute of mutual funds

Gauranteed returns

The cost of long term care, such as a prolong stay at a nursing home, is

Generally not covered by Medicare.

Using the link provided in the web work, how would the site classify a FICO score of 670?

Good

Which of the following investments would have the greatest potential for safety?

Government bonds

Health insurance plans can be purchased through

Group health insurance, individual health insurance, COBRA

Classification of Common Stocks

Growth Stock Blue Chip Stock Income Stock Value Stock Initial Public Offerings (IPOs) Cyclical Stock Defensive Stock

Point of Service Plan (POS)

HMO-PPO Hybrids

One of the following is not a method of estimating your life insurance requirements.

Hard

one of the following is not a method of estimating your life insurance requirements

Hard is not a method , DINK, family need, and easy are a method

Junk Bond

High Risk/High Yield

During periods of inflation, all of the following would be expected to occur to occur EXCEPT:

Higher disposable income for senior citizens on fixed incomes from corporate pensions and annuities.

With respect to interest rates, callable bonds would normally have

Higher interest rates than non-callable bonds.

A ____ allows a person to borrow on the paid-up value of a home.

Home equity loan

Second Mortgage

Home is Collateral Interest may be tax deductable

Which of the following statements is true with respect to flood insurance?

Homeowners insurance does not cover flood damage. Insurance must be purchased separately and is sold by the National Flood Insurance Program (NFIP).

An example of an adjustment to income is

IRA contributions

An example of an adjustment that is subtracted from gross income to compute "adjusted gross income" or "AGI" is:

IRA contributions (traditional IRA)

An example of an adjustment in income is

IRS contributions

What is a disadvantage of using an adjustable rate mortgage (ARM) compared to a fixed rate mortgage?

If interest rates rise, ARM interest rates will also increase after the lock in date. Your mortgage payments (principal and interest) are not fixed for the term of the loan with an ARM as they are with a fixed rate mortgage.

Which of the following is true with respect to wills?

If your state allows holographic wills, you don't need witnesses. You must date and sign the will. The will must be signed by at least two witnesses (for states that do not allow holographic wills). In most states, witnesses can not be heirs.

Bond Investment Considerations. A $1,000 bond was issued five years ago with an 8% coupon. If interest rates fall for comparable bonds, you would expect the fair market value of the bond to

Increase.

An example of closed-end credit is: - incidental credit - revolving check credit - credit cards - installment sales credit

Installment sales credit

Ajustable Rate Mortgages (ARM)

Interest Rate varies with prime rate but has a rate cap More interest risk on buyer. One Year/Option ARMs

What is a method of evaluating the cost of life insurance by taking into account the time value of money?

Interest adjusted index

The fewest financial services would probably be offered by a(n):

Investment company

Bull Market

Investors Optimistic More people are buying stock & stock market increases

Mutual Funds

Investors money is pooled and invested by a professional fund manager Lots of diversification.

Zero Coupon

Issued at deep discount, interest paid at maturity

______ are publically supported community law offices that provide legal assistance to consumers who cannot afford their own attorney

Legal aid societies

____ represents amounts owed to others.

Liabilities

______ represents amounts owed to others

Liabilities

__________ represents amounts owed to others

Liabilities

Legal responsibility for the financial cost of another person's losses or injuries is called:

Liability

A settlement option that provides for payment of life-insurance proceeds in equal periodic installments for a specified number of years after your death is called

Limited installment payment

Corporate & Govt. Bonds

Loan to a Corporation, fed govt., or a municipality Principal repaid at maturity Receive periodic interest payments

Most real estate professionals believe that the most important factor in selecting a home is:

Location

What form of insurance provides day-in, day-out care for long-term illness or disability?

Long-term care

Index Fund

Low Fees Extremely diverse and cheap (Buying entire stock exchange)

Medicaid

Low Income people of all ages

Health Maintenance Organizations (HMO)

Lowest Cost (Prevention and Wellness)

Which health insurance plan is administered by each state within certain broad federal requirements and guidelines?

Medicaid

Which health program is perhaps the best-known government health program?

Medicare

Preferred Provider Organizations (PPO)

More Providers + Specialists More Expensive

_______ is deductible as an itemized deduction

Mortgage interest

________ is deductible as an itemized deduciton

Mortgage interest

_______________ is (are) fully deductible as an itemized deduction on Schedule A.

Mortgage interest on a primary residence for mortgages less than $1 million

An investor who wants tax free investment income would choose a (an) _______ fund

Municipal bond

A bond that provides federally tax-free interest income is called a

Municipal bond.

Corporate bonds

Must be legally paid at maturity

What are your options for managing your property after your death if your children are still relatively young?

Name a property guardian in your will. Name a custodian under the Uniform Transfers to Minors Act. Set up a "pot or family trust" for your children.

You have net passive activity losses of $10,000 related to an investment in a real estate partnership. Which statement is true with respect to your federal tax return?

Net passive activity losses are carried forward to future tax returns and available to offset future passive activity gains.

Which life insurance provision allows you not to forfeit all accrued benefits?

Non-forfeiture clause

Which life insurance provision ensures that you will not have to forfeit all accrued benefits?

Non-forfeiture clause

Career planning is the part of the ____ component of financial planning.

Obtaining

Risky Mortgages

One Year ARMs/ Open ARMs Graduated Payments Balloon Payment

A mutual fund in which new shares are issued and redeemed by the investment company at the request of investors is called a(n) ___________ fund.

Open-end

Which of the following investments would have the greatest potential for risk?

Options or commodities

Interest Only Mortgage

Pay a low interest rate only first but converts to a regular mortgage after (Risky)

Annual Percentage Rate (APR)

Percentage cost of credit on a yearly basis Periodic rate x number of periods

Renter's property insurance would include coverage for: - personal belongings - structures attached to the main building - damages caused by a flood - business-related property

Personal belongings

Renter's property insurance would include coverage for:

Personal belongings.

Umbrella Policy

Personal catastrophe policy

Bear Market

Pessimistic Views of Economy More Investors selling stock

Chapter 13 Bankruptcy

Plan to pay a potion of your debt can keep most of property

Career planning is the part of the ________ component of financial planning

Planning

Receive cash dividends(which is stated or a %), unpaid cash dividends are paid to pref. Before common stockholders.(Less risky than stocks, but more risky than bonds (Avoid)

Preferred stocks

Mortgage Payments "PITI"

Principal, Interest, Taxes, Insurance, Advertisement, Hide ads ($1).

Losses caused by damage to your car by another person who is at fault in the accident are covered by:

Property damage liability

Which of the following monthly payments go to an escrow account?

Property taxes and Homeowners insurance

Term Life Insurance

Protection for a specified period of time No Cash Value

Reverse Mortgages

Provides elderly with tax-free income based on the home equity (Annuity and fixed term)

Primary Markets

Purchase Financials from Issuer of the Security

Types of RIsk

Pure Risk Speculative Risk

Coverage that pays for the current replacement cost of a stolen or damaged item is called:

Replacement value coverage

COBRA

Requires many employers to offer employees and dependents to continue their group coverage for a set period of time following a divorce

A ________________ endorsement is most useful when depositing checks by mail.

Restrictive

The final step in the financial planning process is to:

Review and revise your actions.

Trusts can be

Revocable or irrevocable.

An example of open end credit is

Revolving check credit

An example of open-end credit is: - installment sales credit - revolving check credit - mortgage loans - automobile loans

Revolving check credit

Which document is attached to the policy that modifies the coverage?

Rider

With respect to Roth IRAs and Traditional IRAs, which statement is true?

Roth IRA contributions are non-deductible, but earnings grow tax free.

Direct real estate investments include

Single family dwellings

Penny Stocks

Sold for cheap high risk and volatility

Secondary Markets

Stock Exchanges

Over the long term, which form of investment has yielded the highest returns?

Stocks

Which type of health insurance pays part or all of the surgeon's fee for an operation?

Surgical expense

Types of Risk

Systematic Risk Non-Systematic Risk

Which is a better (tax credit or tax deduction)

Tax credit

What is the difference between a tax credit and a tax deduction

Tax deductions subtracts from adjusted gross

If you and your spouse or anyone else own property as ________________, each individual is considered to own a proportionate share for tax purposes, and only your share is included in your estate.

Tenants in common

The major factor that affects a person's qualification for a mortgage is:

The applicant's credit rating

What happens if you die without a will?

The courts will determine how your assets will be distributed based on state law.

Which of the following is a disadvantage of direct investments in real estate, such as rental property?

The investment can be illiquid

Economics refers to:

The study of wealth.

Mutual funds performance is best measured by:

Total return

Opportunity cost refers to:

Trade-offs when a decision is made.

A government security issued in minimum units of $100 with 4-week, 13-week, 26-week, or 52-week maturities is called a

Treasury bill

A government security issued in minimum units of $100 with maturities that are 4-week, 13-week, 26-week, and 52-week is called a

Treasury bill.

A beneficiary is a person named to receive the benefits from an insurance company.

True

A budget deficit exists when actual spending exceeds projected spending.

True

A financial plan is a list of a family's spending for the next month

True

A financial plan is a list of a family's spending for the next month.

True

A higher deductible will reduce the amount paid for collision and comprehensive physical damage coverage

True

A higher deductible will reduce the amount paid for collision and comprehensive physical damage coverage.

True

A major purpose of personal financial planning is future economic security

True

A major purpose of personal financial planning is future economic security.

True

A mortgage bond is sometimes referred to as a secured bond.

True

A personal balance sheet reports the financial position of a person or family on a given date

True

A personal balance sheet reports the financial position of a person or family on a given date.

True

A quick source of cash is to liquidate savings

True

A quick source of cash is to liquidate savings.

True

A saving account with daily compounding will have higher earnings than an account with quarterly compounding.

True

A term insurance policy pays a benefit only if you die during the period that the policy covers.

True

An emergency fund is an amount of money that can be obtained quickly in case of immediate needs

True

An express warranty is usually in a written form

True

Blue Cross and Blue Shield are statewide organizations similar to commercial health insurance companies.

True

Corporations sell common stock to finance their business start-up costs and help pay for expansion and their ongoing business activities.

True

Credit encourages overspending and ties up future income

True

Credit encourages overspending and ties up future income.

True

Disability income insurance benefits provide for the full replacement of income lost by employees as the result of an accident, illness, or pregnancy.

True

Enrolled agents are IRS auditors who visit people's homes to verify deductions

True

Financial risks are associated with the purchase of a home

True

Financial risks are associated with the purchase of a home.

True

Homeowner's insurance covers the cost of living elsewhere while your home is being repaired from a fire

True

Homeowner's insurance covers the cost of living elsewhere while your home is being repaired from a fire.

True

Hospital expense insurance pays part or all of hospital bills for room, board, and other charges.

True

Inflation reduces the buying power of a dollar

True

Inflation reduces the buying power of a dollar.

True

Inflation reduces the buying power of the dollar bill

True

Most financial records should be kept in a safe-deposit box

True

Most financial records should be kept in a safe-deposit box.

True

National name products usually cost more than store brands or private label items

True

National name products usually cost more than store brands or private label items.

True

Savings and investment programs are the main method for achieving financial goals

True

Savings and investment programs are the main method for achieving financial goals.

True

Spending less than your income will increase your net worth

True

The book value for a share of stock is determined by deducting all liabilities from the corporation's assets and dividing the remainder by the number of outstanding shares of common stock.

True

The record date is the date when a stockholder must be registered on the corporation's books in order to receive dividend payments

True

The slope of the treasury yield curve normally reflects increasing interest rates over time, and represents the cost of borrowing for the US government.

True

Universal life insurance is essentially a term policy with a cash value

True

You can't predict exactly how much money you will need when you retire.

True

t/f a major purpose of personal financial planning is future economic security

True

Which policies provide term insurance with a money market type investment feature?

Universal life

Subordinated Debenture Bond

Unsecured bond that gives bondholders a claim secondary to that of other designated bond holders with respect to interest payments and assets

Betas

Used to measure stock risk

In what type of annuity is your money invested in common stocks or other equity securities, and the income you receive dependent on investment results?

Variable annuity.

Government Guaranteed Financing Programs

Veterans Admin Federal Housing Authority

A situation in which one person is held responsible for the actions of another is:

Vicarious liability

Life insurance is usually sold not bought, because the life insurance industry has a vested interest in selling you high commission, high cost ____________ policies

Whole life

When you sell shares of a mutual fund, how do you determine the basis of the shares held?

You may use either the specific identification or average cost method.

t/f a participating policy is sold by stock life insurance companies owned by stockholders

false stock companies sell non participating policies. mutual companies specialize in participating policy

in the article A Breadwinner's Tale the author's father was not aware he owed money on credit cards

false- actually i don't know i never read it

t/f a cd account is a checking account that earns interest

false: a CD is a savings account that a certain amount be left on deposit for a state time period to earn a specific interest rate

t/f cooperative housing involves the purchase of an individual living unit in a multiunit complex or building

false: a form of housing in which a building containing a number of housing units is owned by a nonprofit organization whose members rent the units

t/f most financial records should be kept in a safe deposit box

false: a home file should be where the majority of financial records should be kept

t/f an informational interview has the purpose of obtaining employment in a specific job position

false: a selection interview has the purpose of obtaining employment in a specific job position

t/f assets represent amounts owed to others that must be paid within the next year

false: assets represent cash and other property with a monetary value

t/f the special form of homeowners insurance includes all risks such as loss or damage from floods or earthquakes

false: endorsement is a form of homeowers insurance that allows an addition of coverage to standard insurance

t/f a limited partnership or sydicate is formed by limited partners who assume unlimited financial liability

false: sydicate is a temporary association of individuals or firms organized to perform a specific task that requires a large amount of capital

t/f a lease is mainly designed to protect the rights of the landlord

false: the lease defines conditions of rental

t/f a financial plan is a list of a family's spending for the month.

false: the managing of your money to achieve personal economic satisfaction

t/f demand deposits refer to money deposited in savings accounts

false: time deposits are money in savings accounts and certificates of deposits and demand deposits are checking accounts which give one the ability to transfer money to other parties

t/f several financial benefits are associated with renting your place of residence

false: when you rent there are no tax deduction available

t/f your credit report includes information regarding your salary level and savings account balances

false: your name, address, social security, birhtdate, employer, position, and spouses info are included on a credit report

the fair credit reporting act gives ________ the authority to enforce its provisions

federal trade commission ?

When an IRS agent visits your hoe or office to verify tax records, this is referred as a(n)

field audit

When an IRS agent visits your home or office

field audit

when an IRS agent visits your home or office to verify tax records, this is referred to as an

field audit

the best method of comparing credit cost is is the

finance charge and the APR.

Which consumer credit source has been viewed historically as a lender of last resort?

finance company

A common advantage associated with home ownership is

financial benefit

A common advantage associated with home ownership is

financial benefits

a common advantage associated with home ownership is

financial benefits

Definite financial obligations are referred to as

fixed expenses

definite financial obligations are referred to as

fixed expenses

A _____ warranty covers most repairs of a product

full

A(n) ___ warranty covers most repairs of a product

full

which of the following investments would have the greatest potential for safety

government bonds

A handwritten will that you prepare yourself is called a ___________ will.

holographic

a handwritten will that you prepare yourself is called a

holographic will

A _______ allows a person to borrow on the paid-up value of a home

home equity loan

A _______________ allows a person to borrow on the paid-up value of a home

home equity loan

which one of the following is a disadvantage of investing in realestate

illiquidity

A personal cash flow statement presents

income and payments

a personal cash flow statement presents

income and payments

What is tax- deferred income

income that will be taxed at a later date

If interest rates decline, the price of a bond or bond fund will generally

increase

An example of closed-end credit is

installment sales credi

An example of closed-end credit is

installment sales credit

An example of tax-exempt income is

interest from municipal bonds

an example of tax exempt income is

interest from municipal bonds

Index fund:

invest in the same company included in an index

The fewest financial services would probably be offered by a(n)

investment company

The fewest financial services would probably be offered by an

investment company

the fewest financial services would probably be offered by a

investment company

Real return=

investment return - inflation

The current yield for a bond

is determined by dividing the annual interest amount by a bond's current market price

the current yield for a bond

is determined by dividing the dollar amount of annual interest by its current market price

Stop order

is the request to Sell a stock at the next available opportunity after its market price reaches a specified amount

Limit order

is the request to buy or sell stock at a specified price or price range

Market order

is the request to buy or sell stock at the current market value

_______are publicly supported community law offices that provide legal assistance to consumers who cannot afford their own attorney

legal aid societies

________ represents amounts owed to others

liabilities

Legal responsibility for the financial cost of another person's losses or injuries is called

liability

Legal responsibility for the financial costs of another person's losses or injuries is called

liability

_______ would be an example of social buying influence

lifestyle

a settlement option that provides for payment of life insurance proceeds in equal periodic installments for a specified number of years after your death is called

limited installment payment

a consumer credit counseling service is a

local non, profit organization affiliated with the nation foundation for consumer credit . it is not a lending institution

A consumer Credit Counseling Service is a

local, nonprofit organization with thee National Foundation for Consumer Credit

Most real estate professionals believe that the most important factor in selecting a home is

location

most real estate professionals believe that the most important factor in selecting a home

location

an example of a social influence on career opportunities would be

longer life expectancy

some mutual funds charge 12B-1 fees to defray the cost of

marketing and distribution of the mutual fund

creditor of bond

me

Corporate bonds

more risky

which type of REIT invest in properties

mortgage

_______ is fully deductible as an itemized deduction

mortgage interest

Foreign bonds

mostly through mutual bonds since risky.

A bond that may provide tax-free interest income is called a

municipal bond

An investor who wants a tax-free investment would choose a(n) __________fund.

municipal bond

a bond that provides tax free interest income is called a

municipal bond

an investor who wants a tax free investment would choose an __________ fund

municipal bond

bonds issued by corporations

must be repaid at maturity

The highest prices for used cars are usually at a

new car dealer

which source of investment information provides the most current data

newspapers

which life insurance provision allows you not to forfeit all accrued benefits

non forfeiture clause

· Cyclical stocks

o Follows the business cycle of advances and declines in the economy o ex. automobiles, chemicals, and steel

· Stock orders

o Market order- is the request to buy or sell stock at the current market value o Limit order- is the request to buy or sell stock at a specified price or price range o Stop order- is the request to Sell a stock at the next available opportunity after its market price reaches a specified amount

Price to Earnings (PE) ratio

o Price of one share of stock divided by the earnings per share of stock over the last 12 months

· Defensive stock

o Remains stable during declines in the economy o ex. Kellogg, Procter & Gamble

bond time, short, med, long

o Short- Mature in 5 or less years o Medium-intermediate-term bonds in 10 years or less o Long- Longer than that

Career planning is the part of the ____ component of financial planning

obtaining

a mutual fund in which new shares are issued and redeemed by the investment company at the request of investors is called

open end

which of the following investments would have the greatest potential for risk

options

Renter's property insurance would include coverage for

personal belongings

renters property insurance would include coverage for

personal belongings

career planning is the ______ component of financial planning

planning

which life insurance provision permits the owner of the policy to borrow any amount up to the cash value of the policy

policy loan provision

When leasing a motor vehicle, the capitalized cost refers to the

price of the vehicle

a corporation whose stock is owned by relatively few people and is not traded openly in stock markets is called a ________ corporation

private

losses caused by damage to your car by another person who is at fault in the accident are covered by

property damage liability

Losses caused by damage to your car by another person who is at fault in the accident are covered by

property liability damage

A document that prospective mutual fund investors receive is called a(n)

prospectus

a document that prospective mutual fund investors receive is called

prospectus

Coverage that pays for the current replacement cost of a stolen or damaged item is called

replacement coverage

coverage that pays for the current replacement cost of a stolen or damaged item is called

replacement value coverage

A _______ endorsement is most useful when depositing checks by mail.

restricitve

a _______ endorsement is most useful when depositing checks by mail

restrictive endorsment

The final step in the financial planning process is to

review and revise your actions

Trusts can be

revocable or irrevocable

trusts can be

revocable- terms the trustor retains the rights to change or irrevocable- cannot be altered or ended by its creator

An example of open-end credit is

revolving check credit

Mortage bond

safer than debenture- bond secured by various assets of the issueing firm § Holders generally have more security

Government bonds

safest

the least objective type of consumer information is likely to be from a

sales brochure

A charge to purchase mutual fund shares is frequently called

sales load

a ______ mortgage allows a person to borrow on the paid-up value of a home

second mortgage

when stocks are traded between investors they are traded in the _________ market

secondary

The most common method of calculating the cost of credit is the

simple interest formula

direct real estate investments include

single family dwellings

Coupon

stated interest rate to be paid

Which type of investment has generally offered the best protection against inflation over long periods of time

stocks

in the article A Bread Winners Tale the authors father incurred debt to

support a standard of living well above his income level

Municipal bond fund interest "dividends" are

tax free

Municipal bond capital gain distributions are

taxable

The major factor that affects a person's qualification for a mortgage is

the applicant's credit rating

the major factor that affects a person's qualification for a mortgage is

the applicants credit rating

The best predictor of future mutual fund performance is:

the expense ratio

If two mutual funds hold the same securities, but one has higher operating expenses than the other one which of the following statements is true:

the fund with the lower expenses will have a higher return

A fund's after tax return may be influenced by

the funds distribution of capital gains and dividends, the funds pretax return, the funds buying and selling of securities

which of the following statements is true

the holding period for short term capital gains is 12 months or less

networking refers to

the process of making and using contacts for career development

the difference between the standard deduction and itemized deductions is

the standard deduction is a set amount which the taxpayer may deduct from adjusted gross income. and itemized deductions are specific expenses which the tax payer may identify and deduct from adjusted gross income

Economics refers to

the study of wealth

The goal of an index fund is to

track the investment return of a specific stock index or bond index

opportunity cost refers to

trade offs when a decision is made

Opportunity cost refers to

trade-offs when a decision is made

a governemnt security issued in minimum units of $1,000 within maturities that are 13 weeks, 26 weeks, 52 weeks, is called a

treasury bill

A defined-contribution plan does not guarantee any particular benefit at retirement.

true

A family of funds exists when one investment company manages a group of mutual funds.

true

Generally, there are a number of purchase options for fund investors.

true

Income earned on municipal bonds or dividends paid by municipal bonds or dividends paid by municipal bond funds are generally exempt from federal taxes

true

Most objective financial advisors suggest no load mutual funds and index mutual fund due to their superior performance

true

Shares in a close-end mutual fund are issued by the investment company only when the fund is organized.

true

Social Security is an important source of retirement income for most Americans.

true

T/f every adult should have a written will

true

T/f generally there are a number of purchase options and withdrawal options for investors that purchase mutual funds

true

The major reasons why investors purchase mutual funds are professional management and diversification.

true

t/f ERISA sets minimum standards for pension plans in private industry

true

t/f a bond indenture is a legal document that details all of the conditions relating to a bond issue

true

t/f a budget deficit exists when actual spending exceeds projected spending

true

t/f a chronological resume is most appropriate for individuals with a continuous school and work record leading to a specific career area

true

t/f a credit score is number that indicates how likely you are to pay on a loan or credit card as agreed

true

t/f a deduction is an amount subtracted from gross income to arrive at taxable income

true

t/f a higher deductible will reduce the amount paid for collision and comprehensive physical damage coverage

true

t/f a line of credit is a loan that is approved before the money is actually needed

true

t/f a mortgage bond is sometimes referred to as a secured bond

true

t/f a passive activity is a business or trade in which you do not materially participate such as rental activity

true

t/f a personal balance sheet reports the financial position of a person or family on a given date

true

t/f a quick source of cash is to liquidate savings

true

t/f a savings account with daily compounding will have higher earnings than an account with quarterly compounding

true

t/f a sinking fund is a fund to which deposits are made each year for the purpose of redeeming a bond issue

true

t/f a speculative investment is usually defined as one that is made in the hope of earning a relatively large profit in a short time

true

t/f a term insurance policy pays a benefit only if you die during the period that the policy covers

true

t/f an emergency fund is a certain amount of money that can be obtained quickly in case of immediate needs

true

t/f an express warranty is usually in a written form

true

t/f aptitude tests measure a person's interests related to different types of work

true

t/f at age 65 social security benefits are paid automatically

true

t/f brand name products usually cost more than store brands or generics

true

t/f corporations sell common stock to finance their business start up costs and help pay for their ongoing business activities

true

t/f corporations sell corporate bonds to help finance their ongoing business activities

true

t/f education level is a major influence on a persons potential earning power

true

t/f home prices have generally climbed steadily over the years

true

t/f homeowners insurance covers the cost of living elsewhere while your home is being repaired from a fire

true

t/f in a simple will ( i love you will) you leave everything to your spouce

true

t/f in the event of an accident bodily injury liability coverage protects the people in other cars for medical expenses, lot wages and other expenses associated with injuries

true

t/f inflation reduces the buying power of a dollar

true

t/f information which will likely impact negatively on your credit report includes late payments, accounts turned over to collection, judgments, liens, and bankruptcies.

true

t/f most people buy life insurance to protect someone who depends on them for financial losses caused by their death

true

t/f parents or family members are often the source of the least expensive loans

true

t/f real estate property tax is based on the appraised value of the property

true

t/f saving and investment programs are the main method for achieving financial goals

true

t/f shares ina mutual fund are bought and sold at their net asset value - NAV . is typically calculated at the end of each trading day

true

t/f the Federal Trade Commission enforces the fair Debt Collection Practices act

true

t/f the book value for a share of stock is determined by deducting all liabilities from the corporations books in order to receive dividends

true

t/f the finance charge is the total dollar amount paid to use credit

true

t/f the first phase in a purchasing decision is preshopping activities, which include defining your shopping problem and planning your course of action

true

t/f the ground rules for retirement planning are rapidly changing

true

t/f the major reasons why investors purchase mutual funds are the professional management, diversification, and accounting services, and liquidity

true

t/f the most basic method of calculating interest is the simple interest formula. it is the interest computed on principal only and without compounding

true

t/f the most important priority that an investor in preferred stock enjoys is receiving cash dividends before common stockholders are paid any cash dividends

true

t/f the purpose of a screening interview is to reduce the number of candidates for a job to a workable number

true

t/f the record date is the date when a stockholder must be registered on the corporation's books in order to receive dividends

true

t/f universal life insurance is the answer to the "buy term and invest the difference? philosophy

true

t/f social security is the most widely used source of retirement income

true it covers 97% of the U.S. workers, retirement, survivors, and disability benefits

in the article A Bredwinners Tale the author responded to his fathers predicament by

trying to get his dad to communicate the debt problem as the first step in possible resolving it

t/f consumer finance companies specialize in personal installment loans and second mortages

ture

t/f financial risks are associated with the purchase of a home

ture

t/f spending less than your income will increase your net worht

ture

Beta

used to measure stock risk ( generally between .5-2.0) conservative stocks have lower betas. o Ex. Procter & gamble's stock at .60, when stock market inc. by 10% they incr. 6% o 1-perfect correlation, 0- no correlation, >1.0 means it is more volatile or speculative o Negative beta means it moves in opposite direction as stock marker

in what type of annuity is the money you pay invested in common stocks or other equities, and the income you receive dependent on the investment results

variable annuity

a situation in which a person is held responsible for the actions of another person is

vicarious liability

among the riders which may be attached to a life insurance policy is

waiver of premium disability benefit, accidental death benefit, a guaranteed insurability option are all potential riders

the key determinant of your FICO score accounting for 35% of the total number is

whether you've paid your bills on time

The rate of return on a savings account may also be referred to as

yield

the rate of return on a savings account may also be referred to as

yield

a bond that is sold at a price far below its face, makes no interest payments, and is redeemed for its face value at maturity is called a _______ bond

zero coupon

Debenture

§ Interest rates based on general credit rating and bond terms

Emergency fund-

· An amount of money you can obtain quickly in case of immediate need An amount 3 to 9 months of living expenses

Growth stocks

· Earns above average profits of all firms in the economy o Less than 30% of profits are paid out as dividends, balance reinvested in firm o Investors realize appreciation in stock price o ex. Panera Bread, Apple

behind a stock's price

· How much they made · How much they make · How much they plan on making

Income stock

· Pays higher than average dividend yield o ex. utility stock

Foreign investments

· Risk-currency risk, foreign taxes, political risks · Best bought- through mutual fund · Traded on US exchanges as American Depository Receipt (ADR) (e.g. Sony) · EAFE is typical benchmark index

Blue chip stock

· Safe investment in strong and respected companies (flight to quality) o Attracts conservative investors o ex. General Electric, Walmart

Earnings Per Share

· are the corporation's after-tax earnings divided by the number of outstanding shares of common stock. Past, current and future earnings prospects drive stock prices!

Maturity date

· of a corporate bond is the date on which the corporation is to repay the burrowed money(usually 1-30 year)-short less than 5, intermediate 10-15, long- over 15

From 1926 to 2010 the average total return per year for large cap U.S.

· stocks was around 10%

If a fund charges an expense ratio of 1% for the current year:

· your fund returns will be reduced by 1% in the current year

A legally binding decision by a third party is

arbitration

a feature that enables preferred stock investors to receive omitted dividends is called a ________ feature

cumulative

a stock that follows the business cycle of advances and declines in the economy is called_________ stock

cyclical

Financial strategies refers to

courses of action to achieve financial goals

financial strategies refer to

courses of action to achieve financial goals

Subordinated debenture

an unsecured bond that gives bond holders with respect to int. payments repayment and assets. Higher risk, higher pay

The FDIC and NCUA insure non-retirement accounts in banks, savings & loans, and credit unions for up to__________:

`$250,000

Generally a portfolio that has 80% invested in common stocks would be best suited for

a 35 year old saving for retirement

An example of a liquid asst would be

a checking account

an example of a liquid asset would be

a checking account

if you want a risk proof real estate investment, invest in

a participation certificate- it is an equity investment in a pool of mortages that have been purchased by government agencies such as Ginnie Mae.

An exemption refers to

a reduction from adjusted gross income

a _________ interview is designed to judge the potential of final candidates for a job position

a selection interview

Line of Credit

a short term loan that is approved before the money is actually needed. Can later obtain money as soon as you need it

the first step in retirement planning is to begin buying annuities to insure cash flow

analyze your assets and liabilies

The first step in retirement planning is to

analyze your current assets and liabilities

an interest inventory is designed to measure

aptitudes

some creditors add finance charges after subtracting payments made during the billing period, this is called the

adjusted balance method

Some mutual funds charge 12b-1 fees to defray the cost of

advertising and marketing of the mutual fund

what is considered the "point of no return" in preparing for a comprehensive retirement

age 45

cafeteria style employee benefits means

allowing employee flexible selection among a variety of potential employee benefits

Dollar cost averaging is

an approach in which you invest the same amount of money in a fund at regular intervals

which type of trust is perhaps the most common estate planning trust

credit shelter- allows married couples to leave everything to each other tax free

financial goals should

be realistic. be stated in specific , measurable terms. have a time orientation

which of the following statements is true

bonds may be purchased in either the primary or secondary market

A _____ is a specific plan for spending

budget

A(n) ______ is a specific plan for spending

budget

a _______ is a specified plan for spending

budget

Corporate, U.S. government, & foreign bond funds pay "dividends" from interest earned

but these dividends are really interest and taxed at ordinary rates

payments made to a fund's shareholders that result from the sales of securities in the fund's portfolio which have risen in value since they were purchased are called

capital gain distributions

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

capital gains distributions

The savings plan that is likely to have a set rate of returns is a

certificate of deposit (CD)

the savings plan that is likely to have a set rate of return is a

certificate of deposite

A personal check with guaranteed payment is a

certified check

a personal check with guaranteed payment is a

certified check

An example of liquid asset would be a

checking account

you can often obtain medium priced loans from

commercial banks and credit unions

a significant tax strategy to reduce current federal income taxes include

contributing to a retirement plan IRA

a non profit organization created to save money for its members-owners when buying certain products or services is a

cooperative

When an IRS agent visits your home or office to verify tax records, this is referred to as a(n)

corresponding unit

Financial strategies refer to

courses of action to achieve financial goals

t/f a trustee is person who assumes the responsibilities of providing the children with personal care and managing the estate for them

false a GUARDIAN is the person who assumes the responsibilities of proving the children with personal care and managing the estate for them

t/f a living trust is a trust established by your will that becomes effective upon your death

false a testementary trust is established by your will and a living trust is created and provides benefits during the trustors lifetime

the widest variety of products is usually available at a

department store

Driver classification includes information on a person's ________ and is used to set auto insurance rates.

driving habits

Driver classification includes information on a person's ______________ and is used to set auto insurance rates

driving habits

driver classification includes information on a person's ______ and is used to set auto insurance rates

driving habits, sex marital status, driving record,

a stock split

enables management to bring a stock's price into an "ideal" price range

A stock split

enables management to bring a stock's price into an "ideal" price range.

The financial step in the financial planning process is to

evaluate and revise your actions

the final step in the financial planing process is to

evaluate and revise your actions

which type of will has been gainign popularity due to the increased exemption - 600,000 since 1987

exemption trust- everything passes to spouse with exemption of amount equal to exemption which would pass into trust

A living trust is a trust established by your will that becomes effective upon your death.

false

An executor cannot be a family member or a friend.

false

Common stocks always provide higher returns than bonds and money market investment:

false

Dividends and capital gains distributions from mutual funds holding common stocks are not taxable if they are reinvested in additional fund shares the time of distribution:

false

If you invest in a long term bond fund with an average maturity of 10 years you must hold the fund shares for at least 10 years:

false

Mutual funds are insured by the federal deposit insurance corporation

false

The most ideal time to buy a mutual fund in a taxable account is late in the calendar year in order to capture pending capital gain distribution

false

Typically, a management fee for a mutual fund ranges between 3 and 5 percent of the total dollar amount invested.

false

enrolled agents are IRS auditors who visit people's homes to verify deductions

false

t/f a corporation must pay dividends to stockholders

false

t/f a credit union usually offers a wider range of financial services than a commercial bank

false

t/f consumer information from businesses is usually the most objective type of data available to help in buying decision

false

t/f due to pensions and social security, most people do not suffer any decline in income after retirement

false

t/f every liability lawsuit involves an act of negligence

false

t/f gold prices tend to fall by such factors as fear of war, political instability and inflation

false

t/f if you find an error in your credit file, there is little you can do about it since the information did not originate with you

false

t/f long term objectives are defines as objectives that can be accomplished within one year

false

t/f most consumer compliants are resolved with the use of a government agency

false

t/f most mortgage rates are established by government agencies

false

t/f most people mail the full amount owed in federal income tax each april

false

t/f there is a rule of thumb that is good target is life insurance totaling nine to ten times you annual income

false

t/f there is no relationship between safety and risk when choosing an investment

false

t/f a revenue bond is a bond backed by the full faiht, credit and unlimited taxing power of the government that issued it

false :

a family of funds exists when each member of a investors family purchase the same mutual fund.

false : a family fund is managed by one investment company

t/f an executor cannot be a family member or a friend

false : any person over the age of 18 without being convicted of a felony

t/f shares in a closed end mutual fund are issued by the investment company from time to time when investors purhcased the fund

false : in a closed end mutual fund shares are issued by the investment company only when the fund is organized

t/f the purchase of real property does not provide protection against inflation

false : the purpose of real property is a hedge against inflation

t/f taxable income refers to the amount deducted from a person pay

false :taxable income is the net amount of income after allowable deductions on which income tax is computed


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