PFIN FINAL
Earnings limitations on social security benefits cease at age
65
Which Homeowners' policy is best suited for a resident of a rented apartment to cover that person's personal property?
HO-4
The condominium owner would choose a ____ policy.
HO-6
Dr. Johnson is surgeon at University Hospital. She will pay ____ taxes on all of her $170,000 salary.
Medicare
Unlisted securities are traded on the
OTC market
The ____ is not an organized security exchange
Over-The-Counter Exchange
Which of the following qualities are essential in a trustee
Possess sound business knowledge and judgment
____ is a short-term investment activity.
Speculating in common stock
Which of the following companies does NOT rate the financial strength of life insurance companies?
Welch's
A bond selling below par value is selling at
a discount
A collection of investments is called
a portfolio
The SEC requires corporations to issue ____ describing the firm and the security issue it wishes to sell.
a prospectus
Bonds issued by subdivisions of the U.S. government but not guaranteed by the government are called
agency bonds.
A(n) ____ fund is quite speculative.
aggressive growth
All property insurance companies require you to show the following when making a claim:
all of the above
Asset allocation funds invest money in
all of the above
Estate planning us designed to:
all of the above
Investors tend to use mutual funds for which of the following reasons
all of the above
Miscellaneous sources of health care coverage include
all of the above
Terms of payment under your health insurance are governed by
all of the above
The basic principles of property and liability insurance pertain to:
all of the above
The goal of estate planning is to:
all of the above
The need for retirement planning is increased by the uncertainties of
all of these.
When writing a will, you should seek the professional services of
attorneys
Redeeming your mutual fund shares might result in a charge called
back end load
Market risk is often measured using
beta
Only the strongest, most stable and safe-return companies can be called
blue chips stocks
Which of the following is not a securities market
capital market
Which of the following is not a source of mutual fund returns
changes in IDB.
Corporate ownership is evidenced by
common stock
The major financial benefit of beginning your retirement funding early is related to
compound interest
Jackie pays $20 every time she visits her doctor. She is covered by a(n)
could be any of these except indemnity plan
Annual increases in the social security benefit check are related to the
current cost of living
A(n) ____ sells fund shares, either directly to the public or through certain authorized dealers
distributor
Medicare is a government-sponsored health care plan composed of Part A and Part B. Part B covers
doctor's bills
Insurance is a tool that can lessen ____ risk.
economic
Negligence results when a person
fails to act as a "reasonable person."
A lower expected return will mean a higher risk will have to be accepted.
false
A statement specifying how investment capital will be invested in order to reach targeted goals is called a marketing plan.
false
A written inventory of personal property is required by insurance companies for property insured under the unscheduled general contents coverage.
false
Advances in medical technology, prescriptions drugs and treatments have substantially reduced the costs health care in recent decades.
false
An investor with a small amount of money should stick to using loaded-funds instead of no-load funds.
false
As a tenant, you would purchase a HO-3 policy.
false
Bondholders will receive interest payments after the stockholders receive dividends.
false
Closed-ended mutual funds are guaranteed, they cannot lose value.
false
Deciding to sell a motorcycle would be an example of risk sharing.
false
Disability occurs only when someone is completely incapable of returning to work.
false
Estate planning requires knowledge of wills, trusts, and investments.
false
Generally, the primary purpose of life insurance is to provide a tax-advantaged investment plan.
false
Growth funds are mutual funds designed for short term investing.
false
Hospital expense coverage is adequate for long-term or catastrophic medical needs of most people.
false
Hospital insurance policies will pay for all hospital expenditures most of the time.
false
If you lose your job, COBRA permits you to continue your group health insurance coverage permanently as long as you pay the premium within 36 months of the termination of employment.
false
Investing is considered a short-term activity that involves the buying and selling of securities.
false
Investors select and purchase securities held within mutual funds.
false
It really makes little difference whether you start retirement savings at age 25 or at age 45.
false
Large employers are less likely to offer health insurance to their employees than small employers.
false
Market risk considers the possibility that the firm may fail.
false
Payments from a defined benefits plan will be determined by the investment performance of the retirement funds.
false
Preferred stock combines the fixed income features of bonds with the same price appreciation potential as common stocks.
false
Property insurance is meant to protect property owners from two basic types of exposures, physical loss of property and loss through depreciation
false
Risk avoidance means asking an insurance company to take over the risk for a small payment (the premium).
false
The HO-3 form is a good policy for first-time buyer owners because it is a named perils policy.
false
The appointment clause affirms that the will in question was really made out by the deceased.
false
The gift tax law allows a person to give gifts up to $10,000 tax free.
false
The intestate process is federally mandated, and is similar from state to state.
false
The life insurance needs of beneficiaries are secondary since most proceeds are paid to living policyholders.
false
The main objective of estate planning is to save attorney's fees.
false
The needs approach can determine your life insurance requirements with a single step.
false
The term "investment' refers to money placed in some medium where value and level of return are totally unpredictable
false
The unlimited marital deduction requires the filing of a separate tax return.
false
Underwriters can predict whether or not you will suffer a loss this year.
false
While you were away on your summer vacation, raccoons took up residence in your attic. They did $5,000 damage. Your H0-2 policy will cover this loss.
false
With a non-contributory pension plan, the employer makes no financial contribution to the account.
false
Companies with a great deal of long-term debt would rate fairly high in ____ risk.
financial
Your standard HO policy will not include coverage for damage done by
flood
____ would be a first-level death-related cost.
funeral expenses
The unified rate schedule applies to federal ____ taxes.
gift and estate
If you are gradually vested in a retirement plan over a 4-year period, the plan is a
graded plan
The principle of ____ states that an insured should not be compensated by an insurance company in an amount exceeding the economic loss.
indemnity
The biggest unknown factor that retirees have when estimating their retirement needs and income is
inflation
Bond prices and current interest rates are ____ related.
inversely
Securities sold in the primary markets are usually handled by a(n)
investment banker
A trust designed to provide liquidity for an estate without increasing the size of the estate is a(n) ____.
irrevocable life insurance
Common types of property that are subject to internal limits on homeowner's policies include
jewelry
In which of the following type of investment is the most liquidity risk?
land
Instructing your broker to buy or sell a stock at a particular price is a
limit order
The probability of a loss occurring can be reduced by
loss prevention
The fastest growing segment of the health care industry is
managed care plans
A(n) ____ actually runs the portfolio and makes the buy and sell decisions
money manager
What type of REIT is most attractive to income oriented investors?
mortgage
You have been offered an opportunity to buy shares of a diversified collection of securities. You will be investing in
mutual funds
Liability coverage provides payment to the
non-family members involved in the accident
A "trustee" is also called the
none of the above
The fund whose main objective is growth is known as a(n) ____ fund.
none of these
The fund whose main objective is to simply match the market known as a(n) ____ fund
none of these
The "O" in COBRA stands for which of the following words?
omnibus
If a life insurance policy pays dividends, it is called:
participating
Hospital indemnity policies would make payment for
per day hospital charges
Most employees select ____ for their health insurance needs.
preferred provider organizations
The ____ of a stock reflects stockholder confidence.
price/earning ratio
During a bull market
prices go up
Your real and personal property that can be transferred according to the terms of a will is called your
probate estate
The basic purpose of insurance is to
protect you from losses.
Which of the following types of risk affect owners of fixed income securities more than owners of equity securities
purchasing power risk
Fully insured status requires 40 ____ of employment covered by social security.
quarters
Your right to continue a health insurance policy if you choose is known as
renewablility
Estate planning is closely related to
retirement and insurance planning
The major mistake(s) people make in retirement planning is(are)
saving too little
Which of the following forms of life insurance requires the lowest premium per dollar of initial death benefits?
term life
The underwriting function is designed to be sure that premiums are based on
the chance of loss
Underwriting is
the determination of which exposures to insure.
From the standpoint of the person buying insurance, the central purpose of insurance should be:
to transfer risks of serious losses.
A company using cliff vesting would legally have to give you vesting rights if you worked at a company 3 or more years.
true
A peril is a cause of loss.
true
A potential estate planning problem is improper distribution of assets.
true
A retail stockbroker buys and sells securities on behalf of clients.
true
A stocks beta is an indication of its relationship to the general market.
true
A trust is a means of transferring property.
true
Aggressive growth funds typically buy stocks with high PE ratios and stocks with volatile price fluctuations.
true
All securities involve risk of some kind.
true
Changes in the value of securities due to social, political, or economic factors are referred to as market risk.
true
Compound interest is a very important concept when evaluating the return on an investment you plan to hold for a long time.
true
Conversion privileges allow investors to exchange one fund's shares for that of another, as long as the funds are in the same fund family.
true
Covered liability perils do not include claims for libel, slander, or character defamation.
true
Custodial accounts are used to protect the property of minor children.
true
Event risk occurs when something substantial happens to a company that has an immediate impact on its financial condition.
true
Exchange traded funds can create new shares to meet demand.
true
Exchange traded mutual funds are known as closed-end mutual funds
true
Exchange-traded funds have characteristics of both closed-end and open-end funds.
true
Floods are specifically defined in homeowner's policies
true
Having an accurate current income and expenditures statement would be very useful when calculating retirement needs.
true
Health Maintenance Organizations (HMOs) provide pre-paid health care to participants.
true
Hospital insurance will pay daily room and board charges up to a specified number of days and reimbursement for ancillary charges up to a specified dollar amount.
true
Insufficient capital can cause problems paying estate taxes.
true
Investing and speculating are two entirely different activities.
true
Life insurance needs change dramatically over one's lifetime.
true
Listed securities are traded on organized exchanges.
true
Millions of Americans are not covered by health insurance.
true
More than 50 percent of all wage earners and salaried workers today are covered by some type of employer-sponsored retirement or profit-sharing plan.
true
Most people are too conservative when investing their retirement funds.
true
Mutual funds may be classified by the types of securities they purchase.
true
Mutual funds provide professional management and diversification that individual investors - especially those with limited resources - can rarely obtain on their own.
true
NASDAQ is now the second largest securities market in the U.S.
true
Property inventories are important to identify insurance needs and to substantiate claims.
true
Self-employed workers pay twice as much for Social Security coverage compared to employed workers.
true
Spreading risk among a large number of people is a major principle of insurance.
true
Starting later in life and being too conservative when investing are both common retirement planning mistakes.
true
The basic purpose of insurance is to protect you from the results of accidental losses.
true
The current trend in retirement plans is towards contributory plans.
true
The multiple of earnings approach to evaluating life insurance needs is simplistic but can be unreliable.
true
The returns you expect from securities are income and growth.
true
You received a cash dividend from your stock investment this year. This is taxable income.
true
You would have a better chance to choose your own doctor with a PPO rather than an HMO.
true
Your goals tend to set the tone for your investment program, and they play a major role in determining how conservative or aggressive you're likely to be in making investment decisions.
true
Surgical expenses now generally are reimbursed on the basis of
usual, reasonable and customary expenses.
Homeowner's property insurance does not provide protection on the
vacant lot
Which of the following types of policies is most likely to allow you to switch investments?
variable life
Social security benefits for retirees less than 65 years of age may be reduced if
wages and salaries exceed certain limits
