personal Finance
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
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
t/f a major purpose of personal financial planning is future economic security
True
a _______ is a specified plan for spending
budget
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, sex marital status, driving record,
a stock split
enables management to bring a stock's price into an "ideal" price range
the final step in the financial planing process is to
evaluate and revise your actions
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
which of the following investments would have the greatest potential for safety
government bonds
a handwritten will that you prepare yourself is called a
holographic will
which one of the following is a disadvantage of investing in realestate
illiquidity
a personal cash flow statement presents
income and payments
an example of tax exempt income is
interest from municipal bonds
the fewest financial services would probably be offered by a
investment company
the current yield for a bond
is determined by dividing the dollar amount of annual interest by its current market price
_______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
_______ 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 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
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
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
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 value coverage
direct real estate investments include
single family dwellings
in the article A Bread Winners Tale the authors father incurred debt to
support a standard of living well above his income level
the major factor that affects a person's qualification for a mortgage is
the applicants credit rating
networking refers to
the process of making and using contacts for career development
T/f every adult should have a written will
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
t/f consumer finance companies specialize in personal installment loans and second mortages
ture
at age 65 what is the average life expectancy of a woman
19 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
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
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%
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.
a _________ interview is designed to judge the potential of final candidates for a job position
a selection interview
some creditors add finance charges after subtracting payments made during the billing period, this is called the
adjusted balance method
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
the first step in retirement planning is to begin buying annuities to insure cash flow
analyze your assets and liabilies
an interest inventory is designed to measure
aptitudes
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
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
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
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
financial strategies refer to
courses of action to achieve financial goals
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
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
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
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 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
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
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 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 benefits
definite financial obligations are referred to as
fixed expenses
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
which type of REIT invest in properties
mortgage
_______ is fully deductible as an itemized deduction
mortgage interest
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
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
a _______ endorsement is most useful when depositing checks by mail
restrictive endorsment
trusts can be
revocable- terms the trustor retains the rights to change or irrevocable- cannot be altered or ended by its creator
the least objective type of consumer information is likely to be from a
sales brochure
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
which of the following statements is true
the holding period for short term capital gains is 12 months or less
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
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
T/f generally there are a number of purchase options and withdrawal options for investors that purchase mutual funds
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
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 financial risks are associated with the purchase of a home
ture
t/f spending less than your income will increase your net worht
ture
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
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