quiz 1 answers, chapter 14 quiz answers, Chapter 14 quiz answers, Chapter 13 quiz answers, Chapter 12 quiz answers, Chapter 11 answers, Chapter 10 active learning, Chapter 10 quiz, Quiz 6 answers, Quiz 4 answers, Quiz 2 answers, Personal Finance midt...
Richard is carrying $5,600 in debt. Currently, he has a medical bill with a balance of $100 that is due immediately. He will make a payment of $100 this month. He also has a credit card with a 16.9% APR with a balance of $1,500 and will make a payment of $200 this month. Finally, he has an education loan with a 6.3% APR and a balance of $4,000 and will make a payment of $300 this month. His monthly debt repayment total is $600. Using the fold-down plan, NEXT MONTH (after this month's payments) Richard will pay $
$0 to his medical bill $300 to his credit card $300 to his education loan
a single person with a monthly taxable income of $7,000 in the 28 percent marginal tax bracket forgoes consumption and instead places $450 into a tax-sheltered retirement plan every month. What are the yearly tax savings due to these retirement contributions
$1,512
your son, Jason, left his skateboard at the bottom of your basement stairs. While going downstairs, you stepped on the skateboard and broke your ankle. The resulting medical bill was $2755. How much would your homeowner's insurance pay if you had a $1,000 per-person limit on no-fault medical payments coverage?
$0
marc purchased 100 shares of LXM stock for $25 per share and sold this same stock two years later for $28 per share. He paid commissions of $50 when he purchased the stock and $55 when he sold the stock. No dividends were paid during the period he owned LXM. marc's current income from this investment is ___ and his capital gains were ___
$0; $195
George and Kelly have a renter's policy with $1,000 per person no-fault medical payments coverage. Following a party at their home, Brian, one of their guests, fell on the stairs and broke his ankle. How much of the $1,850 medical bills will George and Kelly's renter's policy pay?
$1,000
if one is in the 25 percent marginal tax bracket, he or she will have an after-tax income of ___ from an investment that pays $1,500 in taxable income
$1,125
Lance, a volunteer baseball coach, was hit by a hard line drive. As a result of the injury, Lance was taken to the emergency room for treatment and admitted to the hospital. Lance's covered expenses totaled $4,000. How much of the $4,000 will Lance have to pay if these are his first medical expenses of the year and he has the following health insurance coverage? $500 deductible per year 80/20 coinsurance $1,000 per year out-of-pocket coinsurance cap
$1,200
Perry Hajda had four credit cards in his billfold when his wallet was stolen. He reported the cards missing four days after he discovered the loss, but the following charges were incurred before he reported the stolen cards: JCPenney $175 Visa $150 MasterCard $35 AT&T $120 How much is Perry's maximum legal liability for the fraudulent charges on these cards?
$185
compute the net asset value for a share of a mutual fund with the following characteristics
$22.76
Jerry and Gloria Collins expect the following cash surpluses or deficits the first three months of the year. The rest of the year they expect cash surpluses. Their revolving savings fund should be at least?
$250
Stephen Scott's monthly pay stub indicates that his monthly gross income is $3800. However, $800 is withheld for income and Social Seurity taxes and $200 for his disability insurance. How much is Stephen's disposable income>
$2600
Invest now or later? Twins Barbara and Mary are both age 27. Beginning at age 27, Barbara invests $2000 per year for ten years and then never sets aside another penny. Mary waits 10 years and then invests $2000 per year for the next 30 years. Assuming they both earn 7 percent, how much will each twin have at age 67? Step 1: Barbara starts investing $2000 annually for ten years and then stops. When Barbara reaches age 37 she has accumulated $[___]. (use appendix A.3)
$27632.8000
Jennifer and Chad have a homeowner's policy with contents replacement-cost coverage for personal property up to 50% of the insurance on their home. What will the insurance company pay for their stolen property under the following situation Insured value of house - $90,000 Deductible - $500 Actual cash value of stolen property - $20,000 Replacement value of stolen property- $35,000
$34500
Amy Lou Young purchased a health insurance policy with a $500 deductible and 40% coinsurance. If Amy Lou incurs $6500 in covered medical expenses, her policy will pay
$3600
Victoria has a homeowner's policy with personal property coverage of 50 % of insurance on her home. What will the insurance company pay for her stolen property under the following situation? Insured value of home- $80,000 Deductible- $500 Actual cash value of stolen property- $30,000 Replacement value of stolen property- $45,000 Contents replacement-cost coverage
$39,500
darla had $740
$475
Louise has just received her credit card bill. The APR on this account is 13.9% applied over 12 periods. Her account balance is $3,633.00 and the statement lists her average daily balance as $3,545.00. What is the periodic rate that will be applied to Louise's balance? Record your answer to 4 decimal spaces.
.0116
Antonio and Celsa Longoria have a combined disposable monthly income of $3,300. They also have committed themselves to the following monthly payments: • auto loan $350 • education loan $200 • home mortgage $765 What is Antonio and Celsa Longoria's debt-payments-to-disposable-income ratio? (this ratio does not include the mortage payment.)
.1660
you can take on more debt if your debt payments-to-disposable income ratio is in the range of
0-14 percent
Marcella, 25, just graduated from college in Environmental Studies and has been working in outreach for the Sierra Club for the past 12 months. She doesn't make a lot of money at her job, but she learned in her financial management class that she should do what she can to save and invest her money for her future financial goals. Currently, in her budget, she has been able to save $100.00 each month and at the end of her first year of working, she has accumulated $1,200.00. She has decided to invest her $1,200.00 in a Certificate of Deposit that will pay annual interest rate of 4% if she leaves the money on deposit (in the account) for 5 years. The multiplier (the number from the table in the Appendix) to calculate the future value of Marcella's savings is [ ].
1.2167
sales commissions charged on term insurance policies purchased directly rather than through an agent average approximately ___ percent
10
there are approximately ___ open-end mutual funds in the United States
13,000
if the consumer price index was 100 in 1984 and 244 in 2015 how much did prices increase during this period?
144 percent
research suggests that you can eliminate random risk by holding ___ or more stocks and bonds
15
A debt-payments-to-disposable-income ratio of ___ percent or more is considered ot be problematic.
16
What is the monthly payment for a 20 year mortgage for $230,000 at a 6% interest rate? (Use table 9.5 on page 275).
1646.8000
you are seriously overindebted if your debt payments-to-disposable income ratio is
19-28 percent
Blaine and Lindsay McDonald have total assets valued at $346,000 and total debt of $168,000. What is Blaine and Lindsay's asset-to-debt ratio?
2.06
federal law states that bills must be mailed to cardholders at least ___ days before payments are due
21
Gary purchased 250 shares of PAC stock for $37 per share and sold this same stock one year later for $44 per share. He paid commissions for $15 when he purchased the stock and $10 when he sold the stock. Dividends of $1.50 per share were paid during the year. The total rate of return on this investment was
22.70
Which of the following plans, often provided to workers by their employer, allows the employee to choose among a listing both tax-sheltered and non-tax-sheltered benefits?
Employer-sponsered qualified retirement plans
The most well-known of the many different types of credit scores used by lenders today is the
FICO score
The shortest-term Treasury issue is called a
Treasury bill
standardization of credit figures (total finance charge in dollars and the annual percentage rate of interest) is required by the
Truth in lending Act
typically the lowest rate of interest would be paid on
U.S. Treasury bills
interest on bonds must be paid
according to the bond indenture
a net surplus at the end of the month could be
all of these.
which of the following is the least expensive way of protecting yourself from fees should you overdraft your checking account
an automatic funds transfer agreement
the only real source for a free credit report is through
annualcreditreport.com
Rita and Jose Hernandez want to assess their financial progress over the next few years. they have decided to take a reading of their status every New Year's Day. Which financial statement would they prepare each year?
balance sheet
which of the following provides information about a person's financial condition at a specific point in time?
balance sheet
countercyclical stocks have a beta
below 1.0
Mack and Amy are making regular contributions of $200 a month from their salaries to a money market savings account. These transactions will.
both increase their net worth on their balance sheet and decrease the surplus on their income and expense statement.
an investor can make money on bond investments by recieving
both interest income and capital gains
Mary Beth has just applied for a credit card that offers a 6 percent interest rate for 12 months. At the end of 12 months, the interest rate will be "prime plus 9 percent." Which of the following characteristics does this card have?
both variable interest rates and teaser rates
which of the following policy feature typically cost extra
both waiver of premium and guaranteed insurability
all of the following are true except -buy term and spend the rest -husbands and wives need their own insurance plans -you can buy a life insurance policy with one payment -retirees need less, not more, life insurance
buy term and spend the rest
selling shares of stock for more than you originally paid is called
capital gain
realized net capital gains that a mutual fund pays out to its investors are called ___ distributions
capital gains
you put your money into a 0.05 percent savings account. after two years you take your money out of the account, only to find that your purchasing power has decreased. This is an example of ___ risk
inflation
___ is the long-term care provision that is especially important for a relatively young person purchasing this type of insurance
inflation protection
your collection of multiple investments in different assets chosen to meet your financial goals is your
portfolio
A tax that requires a higher income person to pay a higher percentage of his/her income in taxes is called a ______ tax whereas the _______ tax rate is the rate at which your last dollar earned is taxed
progressive tax; marginal tax
the contract for a loan is called the
promissory note
the loss of property itself, extra expenses that may arise because the property is unusable for a period of time, and loss of income if the property was used in the insured's work are all types of ___ losses.
property
The primary purpose of setting long-term financial goals is to help
provide direction for overall financial planning
A group of physicians and hospitals who have banded together to offer a health insurance contract in areas where there is no available HMO is called a
provider-sponsored network
the types of companies that are available to any investor who wishes to have stocks in their portfolios are
public corporations
which of the following ways of valuing personal property is the highest for most personal property
replacement value
a bond
represents a debt owed by a business or organization
the following is a sign of overindebtedness:
requesting new credit cards and increases in credit limits
During expansion, which of the following is high?
retail sales
People who are uncomfortable with risk and who avoid it whenever they can are using the approach of
risk avoidance
Anna Louise just purchased a new motorcycle and an insurance policy to cover her potential losses related to the motorcycle. What strategy is Anna Louise using to handle risk?
risk reduction
the decision not to buy collision insurance on an old car is called
risk retention
to an insurance company, you area a collection of:
risks
comprehensive automobile insurance protects against property damage losses caused by perils. Which one of the following is not covered peril?
rollover
which of the following goals is most clearly stated?
save $1,000 in one year for a vacation to San Diego
A ___ on your credit report tells the credit bureau not to release your financial records to anyone without your consent.
security freeze
Which of the following is not true regarding loans based on the cash values built up in cash-value life insurance policies?
should the insured person die before repaying the loan, the life insurance company will forgive the loan.
a substantial benefit for working families with young children should a parent die are
social security survivor's benefits
A condition of stagnant economic growth and high unemployment accompanied by rising prices is called
stagflation
the US government measures inflation using
the consumer price index
Jack and jill
the needed funds will automatically be transferred from their savings account
the amount loaned when a bond is issued is
the principal
If you receive tax-sheltered income, it means that
the taxes on the income will be deferred until a later date
net asset value increases when
the value of the underlying securities increases
Mike and Patty are saving monthly so they can buy a home but they are currently renting an apartment. The apartment is part of
their level of living
what do credit bureaus do?
they collect and provide credit information
which of the following sets NOW accounts apart from other checking accounts
they pay interest
under the concept of ___, lenders may offer lower interest rates to applicants with the highest credit scores while charging steeper rates to more-risky applicants.
tiered pricing
A method by which one can compare cash flows across time, either as what a future cash flow is worth today (present value) or what an investment made today will be worth in the future (future value) is called
time-value money
which of the following is the least appropriate reason for using credit?
to consolidate debt
___ would be classified as a countercyclical industry
tobacco
the formula for calculating surplus (loss) is
total income minus total expenses
a cash-flow statement shows flows of income in and expenses out of your finances for a given period of time.
true
a grace period is the time period in days during which deposits or withdrawals can be made and still earn the same interest as other savings from a given day of the interest period.
true
a person who has a negative net worth is technically insolvent
true
by analyzing financial statements, a person can assess his or her financial condition and progress
true
by saving and investing, people are much more likely to have funds available for future consumption
true
compound interest will produce larger investment values than simple interest.
true
deflation involves falling prices
true
there are some cases when you should file a federal income tax return even if you are not legally required to do so
true
to qualify for the earned income credit, taxpayers must have earned income
true
financial risk relates to the possibility that the investment
will fail to pay a return to the investor
when choosing among investment alternatives you want to focus on their
yields
Donald is a college student who has $4,000 in savings that he earned from his summer job. He plans to leave the $4,000 in a 6 percent certificate of deposit (CD) for three years, but his banker has asked Donald whether he wants the interest earned on the CD mailed to him at the end of each year or reinvested in the CD. Approximately how much more will Donald earn if he decides to reinvest the interest rather than withdrawing the interest income each year?
$44
Use the following financial information about Maria Espinoza • she earns $625 in wages from her job at the bookstore every 2 weeks • her parents give her $400 every month • she averages $75 in income each month by dog-sitting • she has $800 in her savings account • she has $350 in her checking account • she has a car worth about $3,500 • she rents an apartment with roommates, her portion of the rent is $420 every month • she deposits $100 every month into her savings account • her utilties and cell phone expenses run her about $250 per month • she spends about $85/week on food • she allows herself $40/week for entertainment • her car payment is $165/month • her car insurance is $300 every 6 months • the balance on her car loan is $1,250 • the balance on her credit card is $545 and she makes $50 payments monthly to the company for the balance on this account • she has an outstanding balance for medical expenses of $385 and she makes $25 payments monthly to the medical office owed Maria's current assets are $[ ]. DO NOT INCLUDE THE $ IN YOUR ANSWER. ONLY ENTER THE NUMBER FOR YOUR ANSWER OR BB WILL COUNT IT AS INCORRECT. (do not include income)
$4650.00
James was injured in a freak accident in his dorm room and had to spend several days in the hospital. His covered medical costs totaled $8,000. How much will James's health insurance policy pay for this claim given the following policy information? $400 deductible per year 80/20 coinsurance $2,000 per year out-of-pocket coinsurance cap
$6,080
___ is the most the insurance company would pay for both bodily injury and property damage liability in any one accident if the insured carried 300/500/200 coverage
$700,000
according to financial advisers a person with monthly living expenses of $2,500
$7500
Julie and Alex have compiled their financial records and would like to know if they are living within their level of income. What is their surplus?
$8,300
Julie and Alex have compiled their financial records and would like to know if they are living within their level of income. what is their surplus?
$8,300
ronalds gross income is 60000 and his living expenses consume 75%
$11,250 to $22,500
Maria Gomez would like to learn more about her financial situation. Help her calculate her current net worth.
$11,710
Kim was injured in a freak accident in her dorm room and had to spend several days in the hospital. Her covered medical costs totaled $14,000. How much will Kim's health insurance policy pay for this claim given the following policy information? $250 deductible per year 80/20 coinsurance $1,500 per year out-of-pocket coinsurance cap
$12,250
Mark is trying to decide whether or not he can afford the monthly payment of a loan to purchase a fancy flat screen television. The television costs $3,900. He is considering a 3-year loan at 9% interest. His monthly payment for a loan of the full amount would be _______ and with a down payment of $500 would be _______. (Hint, use table 7.1). If Mark borrows the full amount for the TV, his monthly payment would be ____ If puts $500 down on the purchase, his montly payment would be _____
$124.02; $108.12
Cindy Estrada is applying for a loan and the bank has asked her for some financial information. Use the following data to calculate Cindy's net worth.
$129,725
Connie and Sam's detached garage was recently destroyed by a tornado. Their house was insured for $135,000 and the detached structures coverage was 10% of the insured value of the home. the loss to the garage was valued at $15,000. The insurance company would pay ___ less teh deductible on this loss.
$13,500
what is the maximum amount william could borrow from this policy if it has been in force ten years
$14,250
Tara had a life insurance policy with a face value of $150,000. At the time of her death, the policy had a cash value of $33,000, an outstanding loan of $4,000, and earned but unpaid dividends of $2,000. Assuming this is a typical policy, what death benefit would be paid to Tara's beneficiary?
$148,000
Dana Garcia has a renter's policy with a maximum limit for personal property of $30,000. When her apartment suffered fire damage, $15,000 of her personal property was destroyed. The insurance would pay no more than ___ in this case.
$15,000
Perry Hajda had 4 credit cards in his billfold when his wallet was stolen. He reported the cards missing as soon as he discovered the loss (after 2 days), but the following charges were incurred before he reported the stolen cards: $175--Kohl's $150--Visa $35--MasterCard $120--Shell Fuel Card How much is Perry's maximum legal liability for the fraudulent charges on these cards?
$185.00
Maxwell has a life insurance policy with a face value of $250,000 and a cash value of $77,000. Maxwell was killed in an auto accident shortly after borrowing $56,000 from this policy. Assuming interest had been paid but no principal was repaid, how much would Maxwell's beneficiary receive?
$194,000
maria purchased 100 shares of JAX stock for $30 per share and sold this same stock one year later for $29 per share. She paid commissions of $50 when she purchased the stock and $45 when she sold the stock. Divendends of $2 per share were paid during the year. The capital loss on this stock transaction was
$195
Paul is a college student who has the following financial information. He would like your help in figuring his surplus for last year. What is Paul's surplus?
$2,200
the Amalgamated Fund has assets with a market value of $25 million dollars, liabilities of $1 million dollars and 10 million shares outstanding. Its net asset value is
$2.40
grandmother smith has just put $12000 into an investment earning 6 % a year for her granddaughter's college education. Approximately how much will be in the account in ten years assuming all the interest is left in the account?
$21,490
Craig and Jan Johnson have a health insurance policy with a $750 deductible and 35% coinsurance. Craig recently sustained $7250 in medical expenses. How much will Craig and Jan pay?
$3,025
The maximum annual deposit into a health savings account is ___ for an individual and ___ for a family
$3,300/ $6,550
what is the average share cost for the dollar-cost averaging strategy shown below?
$34.29
Marcella, 25, just graduated from college in Environmental Studies and has been working in outreach for the Sierra Club for the past 12 months. She doesn't make a lot of money at her job, but she learned in her financial management class that she should do what she can to save and invest her money for her future financial goals. Currently, in her budget, she has been able to save $100.00 each month and at the end of her first year of working, she has accumulated $1,200.00. She has decided to invest her $1,200.00 in a Certificate of Deposit that will pay annual interest rate of 4% if she leaves the money on deposit (in the account) for 5 years. Use the information provided above to fill in the Future Value (FV) formula: FV=PV*(i+1.0)n FV= _____*(_____+1.0) _______
FV = ___* ( ___ + 1.0 ) _____ >>> FV = 1200*(.04+1.0) 5
Financial success is defined as the achievement of
Financial aspirations that are desired, planned, or attempted
___ policies provide open-peril protection for the dwellings covered under the policy
HO-3
which of the following HO forms is especially written for renters?
HO-4
which of the following HO forms is especially written for condominium owners
HO-6
___ policy forms are especially written for owners of older homes
HO-8
which of the following is primarily intended for those workers who select the high-deductible health plan (HDHP) offered by their employer?
Health savings account (HSA)
Employer-sponsored retirement plans include all of the following except
IRA
a good time to invest in stocks is when the economy is
In the tough of a recession
Sally is in the 15 percent marginal tax bracket, Ben is in the 25 percent marginal tax bracket, and Julie is in the 28 percent marginal tax bracket. On the basis of only this information, a municipal bond investment would be most attractive to
Julie
Eligibility for which of the following is based on household income and net worth
Medicaid
health care plans for Medicare eligbel people that are purchased through a private company and provide both Medicare Parts A and B coverage are called
Medicare Advantage Plans
Ian and his friends have planned an extravagant trip through Asia when their children graduate from high school. The group of friends has agreed that they will take this trip together in the summer of 2021 (6 years from now). To cover all of his expenses, Ian would like to have $15,000 for this trip. He has an opportunity to invest a lump sum at an annual interest rate of 5%. Use the information about Ian to fill in the Present Value (PV) formula: PV=FV/(i+1.0)n PV= ____ / (_______+1.0)_______
PV= __/ (___+1.0)____ FV= $15,000 i= 5% or .05 n= 6
after a Halloween night of madness on sixth street, Mark and two friends took Mark's four-wheel-driving Bronco for a midnight tour of campus. The next morning campus police found Mark and his Bronco in the middle of the campus fountain. Of the various sections of Mark's auto insurance, damage to the fountain is covered by Marks ___ coverage, and damage to the Bronco is covered by his ___ coverage
Property damage liability; collision
which of the following is not a characteristic o Medicare Part A?
Requires monthly premium payments
during expansion, which of the following is high?
Retail sales
Ian and his friends have planned an extravagant trip through Asia when their children graduate from high school. The group of friends has agreed that they will take this trip together in the summer of 2021 (6 years from now). To cover all of his expenses, Ian would like to have $15,000 for this trip. He has an opportunity to invest a lump sum at an annual interest rate of 5%. The present value needed to meet Ian's savings goal is $[ ]. (just put the number, not the $)
11194.0200
Andrea is managing her finances and has an opportunity to earn some extra money developing a webpage for a start-up business. The owners of the new business have agreed to pay her $7,500 once the project has been completed. Andrea is in the 15% marginal tax bracket this year but next year, after she gets married, she will be in the 25% marginal tax bracket. If Andrea pushes to finish the project this calendar year, her estimated income tax liability on the extra earnings will be $ ______ and if she takes longer and completes the work next calendar year (after January 1) her estimated income tax liability on the extra earnings will be $______
1125; 1875
a debt-payments-to-disposable-income ratio with monthly nonmortgage debt repayments of $470 and a disposable income of $3,615 would be ___ percent
13
Use the following financial information about Maria Espinoza • she earns $625 in wages from her job at the bookstore every 2 weeks • her parents give her $400 every month • she averages $75 in income each month by dog-sitting • she has $800 in her savings account • she has $350 in her checking account • she has a car worth about $3,500 • she rents an apartment with roommates, her portion of the rent is $420 every month • she deposits $100 every month into her savings account • her utilties and cell phone expenses run her about $250 per month • she spends about $85/week on food • she allows herself $40/week for entertainment • her car payment is $165/month • her car insurance is $300 every 6 months • the balance on her car loan is $1,250 • the balance on her credit card is $545 and she makes $50 payments monthly to the company for the balance on this account • she has an outstanding balance for medical expenses of $385 and she makes $25 payments monthly to the medical office owed Maria's liabilities are $[ ]. DO NOT INCLUDE THE $ IN YOUR ANSWER. ONLY ENTER THE NUMBER FOR YOUR ANSWER OR BB WILL COUNT IT AS INCORRECT.
2180.00
recommended limits for auto liability insurance are at least
250/500/100
as a result of the health care reform Patient Protection and Affordable Health Care Act a child may stay on a parent's health care plan until age
26
Roberto and Jessica Suarez have a gross income of $53,000 a year and annual expenses of $51,000 and annual expenses of $51,000. According to the recommended standards for the debt- to- income ratio, the Saurez's ratio of
28 percent implies they have the ability to make their debt repayments
Joelle purchased 100 shares of PAC stock for $20 per share and sold this same stock one year later for $25 per share. She paid commissions of $60 when she purchased the stock and $70 when she sold the stock. Divedends of $2 per share were paid during the year. The total rate of return on this investment was
28.50 percent
Janice Leno has the following assets and debts listed on her balance sheet: Janice's asset-to-debt ratio is
3.45
Your total liabilities excluding mortgage debt should not exceed what percentage of your net worth excluding the value of your home if you are to have a manageable level of debt?
33
your total liabilities excluding mortgage debt should not exceed what percentage of your net worth excluding the value of your home if you are to have a manageable level of debt
33
there are approximately ___ mutual fund families in the United States
400
Eric Jones develops computer software for a major company. Eric's salary and bonuses total $82,000, but he pays $29,233 in income and Social Security taxes. If Eric's annual debt repayments are $33,620, what is his debt-to-income ratio?
41 percent
IF the consumer price index was 232 in 2013 and 244 in 2015, how much did prices increase during this time period?
5.2%
Your credit card liability for fraudulent usage of your lost or stolen credit card is limited to $___ if you report the loss
50
approximately ___ percent of all households invest in mutual funds
50
insurers generally cover a home's contents up to between ___ of the home's value.
50% and 75%
The Ronselli family has total assets of $460,000 and total liabilities of $186,000. Incoluded in their total assets are monetary assets of $47,000 and investment assets of $253,000. What is the Ronsellis' investment assets-to-total assets ratio?
55 percent
the average length of a bull market is ___ months, whereas the average length of a bear market is ___ months
55; 9
most investors own common stocks because their expected return over time can average___ percent from the combination of dividends and capital gains
6
the real rate of return on a taxable investment yielding 12 percent annually would be ___ percent if the investor were in the 25 percent marginal tax bracket and inflation were 3 percent
6.00 percent
Most companies will NOT write disability income policies for more than ___ percent of one's after-tax earnings
60-80
In what way(s) can health care costs potentially provide an income tax benefit?
All of these -flexible spending arrangement through an employer -writing off a portion of premium by self-employed people -itemizing deductions for health expenditures
Arvi, a college teaching assistant, received a raise of $650 from $13,000 to $13,650 this year. If inflation was 2 percent over the same period, which of the following is true?
Arvi's increase in real income was $382 [($13,650 / 1.02) - $13,000]
Arvi, a college teaching assistant, received a raise of $800 from $18,000 to $18,800 this year. If inflation was 3 percent over the same period, which of the following is true?
Arvi's increase in real income was @252
the most recognized professional designation held by financial planner is the
Certified Financial Planner (CFP)
a mutual fund that emphasizes well-balanced return of income and long-term capital gains is a ____ fund
balanced
You can't change many of your risk factors. But you can save money by taking advantage of discounts that insurers offer for:
behavior that lowers risk
the person who receives the proceeds of a life insurance policy at the death of the person whose life is insured is the
beneficiary
the primary person who is intended to be provided for by a life insurance policy is the
beneficiary
you can make sure that your mutual fund account passes to your desired heir by completing a ___ when you open your account
beneficiary designation
The provision in a disability income policy that states how long benefits will be received is called the
benefit period
the last day of the month on which any transactions are reported on the credit statement is called the
billing date
a temporary insurance policy that is typically issued when one applies for insurance is called a
binder
some of the least risky stocks on the market are called
blue-chip stocks
the claims of security owners in a corporation are satisfied in the following order
bondholders, preferred stockholders, common stockholders
A rising inflation rate is good news for
borrowers.
which is not a method for taking you funds out of a mutual fund
borrowing against your fund account
Banks that issue credit cards are increasingly likely to impose default rates on certain borrowers, that is, to raise the APR for the entire debt repayment when
both a payment is late and the credit limit is exceeded on accounts at the bank.
the purpose of a revolving savings fund is to
both accumulate funds for large, irregular expenses and meet occasional deficits.
a borrower with an excellent credit history would be most likely to receive credit with
both higher credit limits and lower interest rates.
a budgeting device on which annual estimated income and expenses are recorded for each month in an effort to look at surplus or deficit situations is called a
cash-flow calendar
The two most useful financial statements are ___ and ___
cash-flow statements, balance sheets
Life insurance is generally least needed on the lives of
children
Lyle's health care plan will pay 75 percent of all covered expenses over the first $500 per year. This policy contains
coinsurance and a deductible
of the following investments alternatives, which is highest on the investment pyramid
collectibles
Bruce's 2004 Chevrolet Malibu is pretty old now, and its resale value is low. Since he is always interested in saving insurance premium dollars when appropriate, which of the following types of insurance should he consider dropping
collision
Is the auto insurance coverage that would yield the most significant savings if eliminated
collision
which of the following statements is (are) correct
commission-only financial planners/brokers live solely on the commissions they receive on the financial products (such as investments or insurance) they sell to their clients.
which form of compensation is not considered an employee benefit
commissions
___ is an example of an ownership investment
common corporate stock
The first step in creating an insurance contract is
completing an application
automatic dividend reinvestment
compounds share ownership
the regulator of commercial banks and savings banks is the
comptroller of the currency
if your time horizon is zero to five years and your portfolio consists of 35 percent cash, 40 percent bonds, and 25 percent stocks, you would be considered to have a ___ investment philosophy.
conservative
____ make both secured and unsecured small loans and require repayment on a monthly installment basis.
consumer finance companies
the process of collecting on your property losses begins with ___ and ends with your ___
contacting your insurance representative; signing a release
the ___ is the recommended way to judge the cost of a term life insurance policy
cost per $1,000 of coverage per year
Will is concerned that his monthly disability income benefit would be eroded by inflation in case of a long-term disability. Which policy provision would guard against this problem? Correct!
cost-of-living adjustments
which of the following economic indicators tends to move in the opposite direction of where the economy is headed?
counter cyclical indicators
Maxine used her bank credit card to make a three-day reservation at a fancy hotel. When she tried to charge another purchase to the same credit card, Maxine was surprised to learn that her credit limit had been reached. What probably caused this?
credit card blocking
When trying to maximize your savings, it is good to know that many insurers give better rates to homeowners with good:
credit histories
___ typically pay the highest rates of interest on savings
credit unions
The percentage of your total credit limits that is actually owed is called your
credit utilization ratio
the present value of an annuity is the ___ worth of a stream of payments to be received in the future.
current
Financial objectives are rarely achieved without restraining
current consumption
Your health insurance requires that you pay $50 each time you visit the doctor's office and $15 for each prescription drug. This is an example of
a copayment
if you purchase an item using a credit card and later take it back for a refund you will receive
a credit receipt and the amount will be charged back to the merchant by your card issuer
Which of the following is a general term used to describe an HMO, health insurance or another plan that pays for or provides reimbursement for direct health care expenditures? A legal document that directs life support measures, such as a respirator, to be removed is called
a health care plan
which of the following best describes a preexisting condition
a previously diagnosed medical condition
If brent is concerned about not being able to pay his life insurance premium should he become disabled, he should consider a policy with
a waiver of premium
the most important feature of a life insurance company is its
ability to pay its obligations
Wendy Wilson, a successful college graduate, is currently employed in a position paying $49,500 a year. Wendy's annual living expenses are only $42,000 so she has accumulated $7,200 in monetary assets and $27,000 in investment assets since her graduation. Use the liquidity ratio to figure how long Wendy could pay expenses if she were to lose her job
about two months
an umbrella liability policy provides
additional liability protection over and above any other liability insurance you carry
settlement options for life insurance proceeds include all of the following except
additional paid-up insurance
Under the Affordable Care Act, a health policy that cost 8 percent of your income for premiums or 9.5 percent of family income if obtained through an employer is referred to as
affordable health insurance
disposable income is income
after all employer withholding including taxes
___ investors primarily seek capital gains
aggressive
which is not a typical investment found in a bond fund
aggressive growth stocks
which investment would not be an appropriate choice for a conservative investor
aggressive-growth stocks
___ would be classified as cyclical industries
airlines
The replacement cost is estimated by determining the average local building cost in your region and applying it to your home's:
all of the above (size, style, quality of construction)
The three broad areas of financial plans include financial plans for
all of these
To construct a balance sheet you need to compile dollar values for your assets and liabilities. good sources from which to begin are
all of these
Which of the following is a characteristic of a cash-flow statement?
all of these
Wise money managers should select the savings option that
all of these
a net surplus at the end of the month could be
all of these
a stock brokerage firm is a licensed financial institution that
all of these
financial goals
all of these
which of the following could incur fees and penalties on a checking account
all of these
which of the following is a characteristic of a cash-flow statement
all of these
your understanding of insurance policy provisions is enhanced if you focus on ___ covered
all of these
mutual fund investors must pay federal income taxes on
all of these - capitol gains distributions -capital gains from selling their shares -ordinary income dividend distributions
current information about mutual funds can be found at (in)
all of these -CNNMoney.com -businessweek -the value line mutual fund survey
As a result of the health care reform Patient Protection and Affordable Health Care Act which of the following aspects of health care plans will no longer be allowed?
all of these -charging men and women different rates -denial of coverage for preexisting conditions -payout maximums
___ should be considered when evaluating income-replacement needs
all of these -contributions of a spouse's income -the value of employment fringe benefits -lost income of the deceased
endorsements may be added at any time during the life of an insurance policy to
all of these -expand coverage -raise policy limits -make other changes
in what way(s) can health care costs potentially provide an income tax benefit
all of these -flexible spending arrangement through an employer -writing off a portion of premium by self-employed people -itemizing deductions for health expenditures
a benefit of treasury securities is that they
all of these -have excellent liquidty -are simple to acquire and sell -represent a safe source of current income
___ coverages can be included in an automobile insurance policy
all of these -liability -medical payments -physical damage
advantages of mutual funds include
all of these -liquidity -diversification -professional management
if a homeowner is considering insuring the home computer used inhis or her home office, which of the following losses should be identifies and evaluated?
all of these -loss of income sustained because of its loss -extra expenses that may arise because of its loss -the computer itself
securities are made up of
all of these -mutual funds -stocks -bonds
insurance dividends may be
all of these -used to buy small amounts of paid-up life insurance -received in cash -left with the insurance company to earn interest
your collision coverage generally protects you when you drive
all of these -your friends' car -rental cars -your own car
an insurance rate
all of these -represents the average cost of providing coverage to various groups of insureds, -is the price charged for each unit of insurance coverage -should be sufficient to provide coverage for that applicant
to understand the different versions of cash-value life insurance policies that pay a variable return, you must evaluate
all of these -the rate of return on the invested funds -the cost of the insurance protection portion -the company's expense charges
credit card costs can include
all of these (annual fees, interest, transaction fees)
which of the following can be obtained using credit?
all of these (goods, services, money)
which type of bank agreement will result in the lowest fees
an automatic funds transfer agreement
If you are a person who always pays off the total outstanding balance on your credit card each month, which of the following aspects of the credit agreement will you be least interested in?
annual interest rate
the best measure of the true cost of credit is the
annual percentage rate of interest.
the approximate compound yield (ACY) formula provides a measure of the
annualized compound growth of any long-term investment
a settlement option for a life insurance policy can be
any of these -income for life -a lump sum -interest income for a period of time with the remainder paid at the end of the period of time
adjustable life insurance allows you to change ___ on your policy
any of these -the face amount -the rate of cash-value accumulation -the premium
when a bond is first issued, it is sold at when a bond is first issued, it is sold at
any of these, -premium -face value -discount
open-end mutual funds
are sold at their current net asset value
the investment strategy that requires the percentage of dollars invested in stocks, bonds, and cash to remain fixed over a long period of time is called
asset allocation
a mutual fund that invests in a mix of assets (usually stocks, bonds, and cash equivalents and sometimes international assets, gold, and real estate), and they buy and sell regularly to reduce risk while trying to outperform the market is a
asset allocation fund
the formula for calculating net worth is
assets minus liabilities
A balance sheet includes __,___ and ___
assets, liabilities, net worth
capital gains on the sale of municipal bonds are taxable and will occur when bonds are purchased
at a discount and then sold at a higher price at full value at maturity
Robert and Louisa have identified the following potential loss exposures, but they are not sure whether they should purchase insurance to reduce these risks: 1.Loss of their health, which could cause extensive medical bills and loss of income 2.Loss to their car, which would cause automobile repair or replacement. 3.Liability claims related to their car, which could require them to pay for other person's losses When Robert and Louisa prioritize their insurance choices, ___ would be categorized as important, but not necessary.
auto collision and comprehensive insurance
a mutual funds ___ can allow investors to have amounts as low $25 per month transferred from their bank account to purchase shares
automatic investment program
If bethany works at a job where her income fluctuates from month to month and is concerned about not being able to pay her cash-value life insurance premium some months, she should consider a policy with
automatic premium loan provision
compounding is attained in mutual fund investing through
automatic reinvestment of dividends
the fairest method for calculating interest on an account...
average daily balance
There should be enough money in a revolving savings fund to
avoid running out of money
Which of the following can provide increased disability income from your disability income policy whenever you do not qualify for Social Security disability benefits?
Social Security rider
which of the following investments has the lowest risks
T-bills
savers should select an institution that calculates interest
daily
The dollar-amount of benefits under a long-term care insurance plan is on a per-____ basis
day
unsecured bonds are called ___ bonds
debenture
the promise not to smoke in exchange for lower life insurance premiums would be included in the ___ section of an insurance policy
declaration
___ provide the basic descriptive information about the insured person or property, the premium to be paid, the time period of the coverage, and the policy limits
declarations
with a decreasing term policy, the face value amount ___ annually and the premiums ___ annually
decreases ; remain constant
diversification ___ risk, and leverage ___ risk
decreases; increase
A worker covered by a health care plan might have to pay the first $1000 of any health expenses during a year. This requirement is called the
deductible
Traditional health insurance plans typically have ___ and ___ requirements that result in out_ of-pocket costs for the insured
deductibles; coinsurance
meaning that their use of credit will decrease.
deleveraging
a checking account that does not pay interest is called a
demand-deposit account
a personal identification number is not needed for which of the following of elecentronic funds trandfers
direct deposits
common stock owners typically expect to make money on stocks by receiving
dividends and capital gains
a living benefit clause provides
dollar benefits to the insured prior to death if the insured is terminally ill
four strategies of portfolio management for long-term investors are portfolio diversification, asset allocation, buy-and-hold, and
dollar-cost averaging
periodic, systematic investment in mutual funds is very much like ____ when buying stocks
dollar-cost averaging
tammy and richard have $100 a month automatically transferred from their checking account to their mutual fund account. This is an example of
dollar-cost averaging
the investment strategy where an ivestor buys a fixed dollar amount of stocks or mutual funds regularly over a long period of time is called
dollar-cost averaging
a ___ is a systematic program where an investor agrees to invest a specific dollar amount periodically over a long time.
dollar-cost averaging plan
Occasionally, the economy will dip into a trough before it has reached a new peak after a previous trough. This phenomena is called a?
double dip recession
Which of the following is not an advantage of participating in your employer's retirement plan?
higher take home pay
which of the following methods is appropriate for determining the value of your home?
hire an appraiser or ask your insurance agent
closed-end investment companies
issue a limited and fixed number of shares
___ bonds are long-term, high-risk, high-interest-rate corporate (or municipal) IOUs issued by companies ( or municipalities) with poor or no credit ratings
junk
The rate of return on cash-value life insurance has historically ___ what can be achieved by a diversified portfolio of stock and bond mutual funds
lagged well behind
your waiting period on disability income insurance can be ___ if you have some savings set aside as an emergency fund
lengthened
a 5-year term life policy will cost ___ a 1-year renewable term policy during the fifth year of the 5-year period, other factors being equal.
less than
the principle of idennity is very difficult to apply to ___ insurance
life
the principle of indemmity is very difficult to apply to ___ insurance
life
the life insurance policy in which death benefits last a lifetime but premiums are all paid after a specified time period is a(n) ___ life policy
limited-pay whole
a legal document that directs life support measures, such as a respirator, to be removed is called a
living will
Reimbursement for costs associated with intermediate and custodial care in a nursing facility or at home is provided by
long-term care insurance
which type of insurance provides reimbursement for costs associated with custodial care in a nursing facility or at home
long-term care insurance
which type of insurance provides reimbursement for costs associated with custodial care in a nursing facility or at home?
long-term care insurance
in general you receive higher rates of interest on your certificate
longer, larger
Perhaps the greatest disadvantage of credit use is the
loss of financial flexibility in personal money management.
perhaps the greatest disadvantage of credit use is the
loss of financial flexibility in personal money management.
traditional health insurance provides protection against direct medical expenses and, thus, does not cover
lost income when you cannot work due to illness or injury
life insurance needs are ___ until your first child is born, then the need is ___ until the youngest child is ten, and then the need ___ until retirement
low; high; decreases
the ___ the APR, the ___ the true cost of the credit
lower; lower
the ____ the APR, the ___ the true cost of the credit
lower; lower
Antonio and Trina are a young couple with two small children, Jason (age four) and Claudia (age two). Trina enjoys managing investments and believes that she could get a higher yield on the proceeds from Antonio's life insurance than the insurance company would pay. Which settlement option should be selected for Antonio's policy in the event of his death?
lump sum
the ___ settlement option specifies that the insurance company pay out the total amount of the death benefit immediately after death
lump-sum
when you have a homeowner's loss, you should not
make permanent repairs until the insurance company has inspected the premises
most mutual funds are
managed funds
Bill and Alma are shopping for their first home. They have found two houses that are nearly identical except for their locations. One house costs $250,000 and is 15 miles from their places of employment. The second house costs $275,000, but it is within 5 miles of where they both work. Now Bill and Alma are trying to decide if living 10 miles closer to their workplaces is worth the extra $25,000 in the cost of the house. Which decision-making concept are they using?
marginal analysis
the ___ of a bond is variable
market price
an investment that can be sold quickly but only by making price concessions suffers from ___ risk
marketability
Minor injuries to passengers in your car would be covered by which of the following parts of your auto insurance policy
medical payments
mutual funds that invest in lesser-known companies with a market capitalization of $2-$10 billion that are expected to grow rapidly are called ___ funds
mid-cap
if your time horizon is six to ten years and your asset allocation consists of 10 percent cash, 30 percent bonds, and 60 percent stocks, you would be considered to have a ___ investment philosophy
moderate
___ life policies are designed especially for those whose life insurance needs are high but who cannot immediately afford the required premiums
modified
cash-value buildup is relatively slow in ___ life policies
modified
which of the following types of assets is primarily used for emergencies, maintenance of living expenses, savings, and payment of bills?
monetary
which of the following are examples of monetary assets
money market account, cash on hand, and certificates of deposit
which of the following would be included in the category of assets known as monetary assets
money market accounts
___ invest in highly liquid, relatively safe securities with very short maturities
money market funds
Using a budget design that keeps a declining balance helps one
monitor unexpended balances
using a budget design that keeps a declining balance helps one
monitor unexpended balances
the cost of a health maintenance organization is generally a(n)
monthly fee, a deductible, and copayments
Milton can sell his house for $175,000 but he has an outstanding mortgage of $195,500. Rather than selling the house, he is thinking about "helping" it burn to the ground so he could collect the $190,000 for which the house is insured. This would be an example of a ___ hazard
moral
insurance companies often limit of deny coverage if a loss occurs as a result of a ___ hazard
moral or morale
a person who leaves his or her insured car running when he or she runs into the convenience store provides an example of a ___ hazard
morale
the advantage of term insurance is
more coverage per premium dollar
___ is an example of a lending investment
mortgage-backed bonds
Which of the following is classified as a tangible asset
motorcycle
ordinary income dividend distributions earned on___ funds is tax-exempt for federal income taxes
municipal bond
failure to pay the balance in full in a given month on a credit card with a grace period means that you
must pay interest on all new borrowings with the card since the last billing statement.
a group of mutual funds managed by the same investment company is called a
mutual fund family
Determining the magnitude of possible losses from a premature death can be complicated. the best method is the
needs-based approach
the most accurate and complec method of calculating life insurance needs is the
needs-based approach
Negative aspects of using credit include which of the following
negative aspects of using credit include both loss of financial flexibility as well as overspending.
amounts stipulated in a life insurance policy that protect the cash value in the event that the policyholder chooses not to pay the required premiums are
nonforfeiture values
Vincent and Paula Farelli have decided to pay off their $875 MasterCard debt by taking $875 out of their money market savings account. this transaction will
not change their net worth on their balance sheet
long-term custodial care is NOT covered by health insurance because the care is
not medically necessary
A short term goal is one that is projected to be achieved within how much time
one year
Which of the following types of disablility income insurance policies will only provide benefits if you can no longer perform the occupation you had at the time you became disabled
own-occupation policy
People slip up in building and maintaining good credit when they
pay more than 15 percent of disposable income toward non mortgage debt payments
A person who wants to continue health insurance coverage through you COBRA rights must
pay the full premiums plus a 2 percent administrative fee.
an individual checking or savings account can be set up to go automatically to another person when the depoistor dies if it is set up as a
payable at death account.
interest rates and inflation climb at what phase of the economic cycle?
peak
the rate of increase in prices of items purchased by a particular individual is called the
personal inflation rate
the basis for financial planning is
personal values
steep staircases with no lighting are an example of a
physical hazard
an investor who reduces random risk by investing in a variety of types of investments is using
portfolio diversification
current shareholders generally have the right to buy additional shares in the company before new shares of the company's stock are offered to the public. This is called ___ rights
pre-emptive
Your se, your age, your marital status, and what neighborhood you live in all contribute to an insurer's ____ of whether you'll file a claim
prediction
your sex, your age, your marital status and what neighborhood you live in all contribute to an insurer's ___ of whether you'll file a claim
prediction
which of the following life insurance applicants would pay the lowest insurance premiums?
preferred
which of the following statements accurately describes preferred stock investments?
preferred stock is a fixed-income investment
which of the following might be used by an employer to pay an employee
preloaded debit card
___ is the current value of an asset that will be received in the future.
present value
investors who do not want to lose any of the money that they have invested are most interested in
preservation of capital
Mutual fund investors expect to profit from their investments through the receipt of mutual fund dividends and
price appreciation resulting in a capital gain when the shares are sold back to the fund
the homeowner's policy written for condominium owners does not provide which of the following coverages?
primary coverage for the building
which of the following is not a benegit of a savings account
protection against inflation
___ risk exist when there is no potential for gain, only the possibility of loss
pure
under the affordable care act, all health care plans must cover ten essential benefits of adequate coverage and be labeled as a
quality healthcare plan
investing in a mutual fund rather than an individual stock reduces
random risk
a REIT is a type of closed-end mutual fund that focuses on
real estate
which of the following would not be considered as securities
real estate
the first thing you need to do when valuing your home properly is to determine the cost of:
rebuilding your house
if you want to avoid paying capital gains taxes for the whole year on mutual fund shares purchased partway into the year, you would want to buy the shares after the
record date
the process for recording the sources and amounts of dollars earned and spent is called
record keeping
A longer waiting period on a disability income policy will
reduce the disability income insurance premium
the interest rate printed on the bond certificate
remains the same until maturity
the income received in return for someone's use of your property is called
rent
which of the following coverages are relatively inexpensive to carry
rental reimbursement and towing
your home should be insured for its ___ which is the amount it would cost to rebuild your home if it were totally destroyed
replacement cost
your home should be insured for its ____ which is the amount it would cost to rebuild your home if it were totally destroyed
replacement cost
the disability income insurance feature that provides a reduced level of benefit when you suffer a partial disability is called a
residual clause
to protect your credit card privacy, which of the following is recommended?
review your credit bureau report at least once year
Hillary and Justin Palmer havea long-term goal of saving $6,000 for a down payment on a new vehicle they would like to buy in three years. Which of the following is a short-term goal that is most consistent with this long-term goal?
save $2,000 this year
negotiable instruments of ownership or debt such as stocks and bonds are examples of
securities
a ____ on your credit report tells the credit bureau not to release your financial records to anyone without your consent.
security freeze
which of the following can be obtained using credit?
services, goods, and money
the first step in the budgeting process is
setting financial goals
Negative credit information (excluding bankruptcy) can generally be included on a credit file for ___ years.
seven
___ risk exists in situations that offer potentail for gain as well as for loss
speculative
a condition of stagnant economic growth and high unemployment accompanied by rising prices is called
stagflation
new companies sell new issues of stock to obtain
start-up capital
Which of the following is classified as an investment asset
stocks
shares in the ownership of a corporation are called
stocks
a company gives an employee the right and opportunity to exercise the option of an ESO by buying the stock sometime in the future at a ___ price established when the option was given.
striking
when an insured dies, any outstanding loan balance is ___ to determine the death benefit
subtracted from the face value
market risk is also known as
systematic risk
if you want to receive periodic, regular income from your mutual fund account you would set up a
systematic withdrawal plan
which of the following is a way to receive free money to deposit into a tax-sheltered retirement plan?
take advantage of your employer's "match"
which of the following is (are) characteristic of a safe-deposit box
takes two keys to open
which of the following types of assets is primarily used for the maintenance of a lifestyle
tangible
___ funds offer investors premixed portfolios of stocks, bonds, and cash that investors of a certain age and risk tolerance might prefer
target-date retirement
the primary reason for giving a child an allowance is to
teach the child about how to manage money
___ analysis is a method of evaluating securities that focuses on statistics generated by market activity, such as past prices and sales volume.
technical
Under the Affordable Care At, all health care plans must include
ten specified essential health benefits
if one commits suicide less than one year after becoming insured, the life insurance will pay the beneficiary
the amount of premiums that had been paid
to calculate the total estimate of the required rate of return on an investment, multiply
the beta value times the estimated market risk return plus the risk-free T-bill rate.
the two statistics one should track to understand the future direction of the economy are
the consumer confidence index and the index of leading economic indicators.
open-end mutual fund shares have good liquidity because
the fund company will buy back the shares whenever requested
which of the following statements is not true about insurance dedcutibles
the higher the deductible, the higher the insurance premium
It is __________ job to restore you financially and it is ____________ job to prove your losses.
the insurer's; your
which of the following statements regarding series EE U.S. savings bonds is not true?
the interest on the bonds is paid out semiannually
losses to ___ are not covered under a standard homeowner's policy
the lot that your house is built on
risk retention is not appropriate when
the retention is due to inaction
when a bond is purchase at its face value, yield to maturity will be ___ the coupon rate printed on the certificate
the same as
tyler is going to invest $2000 in a money market mutual fund. he has narrowed his choices to a tax-free fund currently earning 2.8 percent and a taxable fund earning 4.1 percent. if tyler is in the 28 percent marginal tax bracket, which of these funds would give him the highest after-tax yield?
the taxable fund
when a star football running back pays an insurance company to insure his legs, this is an example of
transferring risk
Molly went to her bank...
traveler's check
___ are sold on a discount basis with the gain at maturity representing the interest earned
treasury bills
___ are located at the base of the investment risk pyramid
treasury securities
An asset management account is a multiple-purpose, coordinated package that provides a wide variety of financial services
true
Being able to prove your deductions with actual records is crucial to keeping more of your money.
true
Keeping track of all income and expenses is very important to achieving your financial objectives.
true
a joint account that gives each owner access to the account (without the other's signature) is called a joint tenancy account with right of survivorship
true
a series EE savings bond is a type of discount bond.
true
according to economic theory, people will seek additional utility as logn as marginal utility exceeds marginal cost
true
an advantage of an employer-sponsored tax-sheltered retirement plan is the tax-deferred growth of contributions and earnings
true
an ill-advised credit purchase can have negative effects on your budget for years.
true
beginning in 2013, new car manufacturers will be required to disclose the vehicle's overall environmental impact in a window sticker
true
buying items that are on sale is only helpful when you will really use the item.
true
compounding serves as the basis of all time value of money considerations
true
if the balance on either a super NOW account or a money market deposit account falls below a specified level, the account generally earns interest at the lower rate paid on a regular NOW account.
true
individuals who are age 65 and older or are permanently and totally disabled may claim a nonrefundable federal tax credit
true
many high-income taxpayers must pay a higher alternative minimum tax rather thatn the tax they owe after taking allowable adjustments and deductions
true
money market deposit accounts are normally federally insured whereas money market mutual funds are not federally insured
true
most people keep track of their finances on a cash basis rather than on an accrual basis
true
tax credits can be taken both by taxpayers who itemize deductions and by those who don't itemize
true
taxpayers may claim both the child tax credit and the dependent care tax credit in the same year
true
the IRS requires receipts for cash contributions of $250 or more
true
the asset-to-debt ratio compares total assets with total liabilities and is a broad measure of a household's financial liquidity
true
when shopping for any product, it may help to review publications on a more specific topic, such as PC World. Bear in mind that trade magazines accept advertising for the products they report on and may not be as unbiased as Consumer Reports.
true
with a rebate, the seller refunds a portion of the purchase price of the product either as a direct payment or a credit against future purchases.
true
you can use the liquidity ratio to determine the number of months that you could continue to meet your expenses using only your monetary assets should all income cease
true
in insurance, risk is defined as the ___ a financial loss will occur
uncertainty about whether
value funds specialize in securities of companies that are
underpriced
the process of deciding which insurance applicants to insure is called
underwriting
a ___ buys and holds an unmanaged fixed portfolio of fixed-maturity securities such as municipal bonds
unit investment trust
with a ___ policy, if premiums drop below the amount necessary to cover the insurance protection and expenses, funds are removed from the cash-value account to cover the shortfall
universal life insurance
index funds are
unmanaged
The strictest method of controlling budgets is
using the envelope system
what type of investor believes that the market isn't always efficient and that it is possible to find companies that are trading for less than they are worth?
value investor
commissions are generally based on the
value of the transaction
A standard homeowner's insurance policy provides protection from various types of property losses such as damage to all except
vehicles parked in an attached garage
the likelihood that an investment market will fluctuate up and down is its market
volatility
You can help yourself afford a longer benefit period under a disability income insurance plan by selecting a longer
waiting period
one's need for life insurance is generally the greatest during which phase of the life cycle
young married with children
One should accumulate enough savings to cover living expenses for six to nine months.
false
a low asset-to-debt ratio is a positive indicator of financial well-being
false
a taxpayer can claim a personal exemption for any person he or she provides over 50 percent of support during the tax year
false
by law, all financial planners must be Certified Financial Planners (CFPs)
false
for children younger than 18, the first $1,700 of unearned income ( the income earned from an investment) earned on custodial account assets is tax-free to the child false (the first $950 of unearned income earned on custodial account assets is tax-free to the child) financial ratios are numerical calculations designed to make assessments of financial conditions more complex.
false
interest accrued on a series EE savings bond is tax-free at redemption if the proceeds are used for the purchase of your first home
false
it is usually easy to reduce a fixed expense
false
many experts recommend that people should have assets equal to one year's expenses in emergency cash reserves
false
needs and wants should both be considered necessities
false
one can lower monthly auto payments by shortening the repayment period on the loan
false
prioritizing wants becomes easier when a decision has multiple facets.
false
the full market value of any lost property can be deducted as a casualty or theft loss when the loss results from a sudden, unexpected, or unusual event.
false
the rule for tax-related records is, "when in doubt, throw it out."
false
the sticker price on a new car is typically the final sales price
false
the term money market account describes a variety of high-interest earning accounts that normally have unlimited check-writing privilegs.
false
to claim an earned income credit, one must have a child
false
when comparison shopping, your goal is to make a decision
false
you can always get more for your old car by trading it in for a new car rather than by selling it on your own.
false
___ are specifically designed for situations where more that one person is likely to be driving the car being insured
family automobile policies
which of the following is the one key interest rate to focus on when trying to forecast interest rate trends in the future?
federal funds rate
An alternative name for traditional health insurance is a(n)
fee-for-service plan
if the consumer price index was 100 in 1984 and 244 in 2015, the purchasing power of the dollar
fell 59 percent
A financial planner who makes recommendations solely based on the best interest of the client regardless of the impact on the planner is said to adhere to a
fiduciary standard
the full additional cost of credit measured in dollars is called the
finance charge
XYZ corporation has suffered a major downturn in business and will not be able to pay interest on its bonds. this is an example of ____ risk
financial
which of the following perils is not covered under any of the standard homeowner's forms
flood
which of the following types of insurance can be purchased only through a federal government program
flood insurance
life insurance needs typically ___ over your lifetime
fluctuate
discretionary income is used to pay for things like
food
in order for a potential loss to be insurable it must be
fortuitous and financial
which of the following is simply an estimate based on projected future earnings
forward P/E ratio
the largest final expense for most families would be
funeral and burial expenses
since 1927 the worst 20-year performance for stocks was a ___ of ___ percent
gain; 3
which of the following is a court-sanctioned procedure by which a portion of your wages are set aside by your employer to pay a debt?
garnishment
whatever your claim, your best protection is to keep:
good records of the event
if finance charges are not assessed on new credit card transactions during the period between the posting date and the due date, this period is called the ___ period
grace
Which of the following items is least appropriate to purchase with a credit card unless you will pay the bill in full when the statement is received?
groceries
which of the following items is least appropriate to purchase with a credit card unless you will pay the bill in full when the statement is received
groceries
a mutual fund that provides the investor with some income and a good chance for long-term price appreciation has a ___ objective
growth and income
which of the following statements regarding cash dividends is true?
growth and speculative companies typically pay little or no cash dividends.
a conservative investor would be least likely to invest in
growth mutual funds
A legal document in which individuals designate another person to make health care decisions on their behalf if they are incapable of making their wishes know is called a
health care proxy
_____ provide(s) preventative care as well as other types of care fora set monthly fee which is considered to be advance payment for the care received
health maintenance organization (HMO)
Preventive health care and catching medical problems early is encouraged by
health maintenance organizations (HMOs)
Persons who have a high-deductible health plan can make tax-sheltered deposits into an investment account called a ____ from which they can pay medical expenses
health savings account
bonds pay the face value to the investor when they are
held until maturity
the legal document detailing the debtor's responsibilities regarding the bond issue is called the
indenture
the type of mutual fund is unmanaged is called a ___ fund
index
Millie wants a life insurance policy that forces her to save, but she would also like to have her savings go into a mutual fund that tracks a large group of stacks. which type of policy should millie select
index-universal life
the financial product used for transferring and reducing risk by have a large number of people share in the financial losses suffered by members of the group is called
insurance
the financial product used for transferring and reducing risk by having a large number of people share in the financial losses suffered by members of the groups is called
insurance
the contract between the person buying the insurance and the company providing the insurance is the
insurance policy
the person on whos life a life insurance policy is written is called the
insured
the ___ are the broadly defined coverages provided under the policy
insuring agreements
the ___ method of comparing the costs of life insurance policies assumes the policy will be cashed in at the end of a certain period of time rather than remaining in force until death
interest-adjusted cost index
if gus believes interest reates are going to fall in the near future
invest in long-term fixed rate certificate of deposit
the best use of the money saved when you buy term verses cash-value life insurance is for
investing for the future; especially retirement
the firms that serve as intermediaries in selling newly issued securities are called ___ firms
investment banking
which of the following serve as the intermediaries between companies and investors when new issues of stocks or bonds are offered
investment banking firms
which of the following certificates of deposit is not covered by bank deposit insurance offered by the FDIC
investment certificate
an explanation of your investment philosophy and your logic on investing to reach specific goals is a
investment plan
an explanation of your investment philosophy and your logic on investing to reach specific goals is a(n)
investment plan
Medicare Part A
is a hospitilization program for persons over 65 and requires no premiums
Betty and Bill just won $10,000 in the Pennsylvania state lottery. They decide to spend $3000 now and put the remaining $7,000 in an investment earning 8 percent coumpounded annually. If they use the money in that investment for a vacation in five years, approximately how much will they have available to spend on that vacation?
$10,285
Jason and Larissa would like to accumulate three times their monthly expenses in monetary assets. They currently have $2,800 in their money market account, and their monthly expenses are $4,500. How much more do they need in their money market account to reach their goal?
$10,700
the interest earned on a ___ will equal the inflation rate plus a fixed assigned rate of return
I-bonds
Lucas had a life insurance policy on his own life for $200,000 with a cash value of $24,000. The $1,687 premium was due annually on June 1. However, Lucas was in the hospital from May 16 through June 3, and the life insurance premiums were not paid. Lucas's brother realized that the premium had not been paid and sent the funds to the insurance company on June 11. Lucas died on June 24. Which of the following statements is true?
Lucas's beneficiary will receive $200,000
Mac and his girlfriend, Jessica, were involved in an accident with another car, which was not Mac's fault. They both sustained minor injuries, and Mac's car needed $2,000 in repairs. Mac had automobile property and liability insurance coverage, and his company paid the covered claims promptly. Which of the following statements regarding this situation is false?
Mac's insurance company would try to subrogate
In community property states, the rights of the husbands and wives are unequally protected.
false
A ___ power of attorney takes effect when a incapacitating medical condition occurs
durable
A ___ is designed to take effect only when the grantor is unable to manage his or her own financial affairs owing to incapacitation
durable power of attorney
A ____ does not take effect until a specified event occurs usually physical or mental incapacitation
durable power of attorney
Ginnie Mae and Freddie Mac bonds are examples of ___ bonds
ederal agency
Employees can benefit from the appreciation in the stock in their company even if they put no money down if their employer offers
employee stock options
consumer credit can thake the form of an installment loan that is repaid in ___ payments over a ___ period of time.
equal; set
The economic phase with conditions making it easy for consumers to buy homes, cars, and other goods is called
expansion
a flexible spending account (FSA) is a vehicle that allows employee-paid expenses for medical or dependent care to be paid with pretax dollars the preferred phase of the economic cycle is
expansion
a term life insurance policy will pay out the ___ value if the insured ides during the term of the contract
face
assets on the balance sheet are valued at their
fair market value
your continuing record of credit usage is called your credit
history
as reported in the newspaper, an insurance company paid a claim for a dent on a car roof after a man barbecuing steaks accidentally dropped one over his balcony and watched it fall 17 floors onto the car. Assuming the car belonged to someone other than the chef, which of the chef's insurance coverages would have covered the dented roof?
homeowner's liability coverage
Medicare Part B covers all of the following except
hospitalization
To set the stage for financial success, one must
identify financial values and goals.
What is the first step in the risk-management process?
identify sources of risk
companies that consistently pay out higher than average cash dividends are classified as ___ stocks
income
which of the following should be the easiest for a person to forecast
income
A cash-flow statement is also known as a ___ statement
income and expense
A cash-flow statement is also known as a ____ statement
income and expense
the after-tax return is the net amount remaining after selling the investment and subtracting the
income taxes
debt payments can be handled through either debt-repayment needs or ___ needs
income-replacement
debt payments can be handled through either debt-repayment needs or ___ needs.
income-replacement
for families with children the bulk of their life insurance need relates to their
income-replacement
the multiple-of-earnings approach addresses only the ___ needs in life insurance needs evaluation
income-replacement
paying expenses with pretax dollar
increases after-tax income
by investing in alternatives that are higher on the investment pyramid, one is exposed to ___ risk to his or her capital and ___ risk of loss
increasing; decreasing
