1.The exact amount of money you will need in retirement can be predicted accurately.
Answer:FALSE[/cpmembership]2.The annual percentage rate
is the percentage cost of credit on a yearly basis.
Answer:TRUE3.Estate planning is not an
essential part of retirement planning.
Answer:FALSE[/cpmembership]4.Time value of money refers
to changes in consumer spending when inflation occurs.
Answer:FALSE[/cpmembership]5.The yield to maturity takes
into account the relationship among a bond’s maturity value, the time to maturity, the
current price, and the dollar amount of interest.
Answer:TRUE6.The Truth in Lending law
does not set the interest rates or tell the creditor how to make interest calculations.
Answer:TRUE7.Interest is a periodic charge
for the use of credit, or other finance charges.
Answer:TRUE8.A mentor is an experienced
employee who serves as a teacher and counselor for a less experienced person in a career
field.
Answer:TRUE9.The most important priority
for an investor in preferred stock is receiving cash dividends before common stockholders
are paid any cash dividends.
Answer:TRUE10.Corporate culture refers to
the methods used by an organization to determine the value of employee benefits.
Answer:FALSE[/cpmembership]11.A deed is the document
that transfers ownership of the property from one person to another.
Answer:TRUE12.In a direct real estate
investment, the investor holds legal title to the property.
Answer:TRUE13.If your employer is a
tax-exempt institution such as a hospital, university, or museum, the salary reduction plan
is called a Section 403(b) plan.
Answer:TRUE14.Taxes are only considered
as financial planning activities in April.
Answer:FALSE[/cpmembership]15.The two most popular
personal retirement plans are individual retirement accounts (IRAs) and Keogh accounts.
Answer:TRUE16.Assume that you purchased
100 shares of a stock for $55 a share, that you received an annual dividend of $2.00 a
share, and that you sold your stock for $65 a share at the end of one year. What is the total
return on your investment? (Ignore commission amounts for this question.
A.$200
B.$1,000
C.$1,200
D.$1,500
E.$2,200
Answer:C
Total return = 100($65 + 2 – 55) = $1,200
17.Neil Guest writes a check to pay for day care for his son. What type of
financial service is Neil using?
A.payment service
B.savings service
C.borrowing service
D.trust services
E.asset management
Answer:A18.If you are married, your estate
planning involves:
A.the interest of at least two people.
B.fewer legal requirements.
C.fewer financial responsibilities.
D.seeking the services of a securities broker.
E.only yourself.
Answer:A19.Which one of the following
expenditures for retirees is most likely to decrease?
A.clothing expenses
B.insurance expenses
C.medical expenses
D.expenses for leisure activities
E.housing expenses
Answer:A20.Estate planning involves which
of the following?
A.managing your property while you are alive
B.dealing with what happens to your property after your death
C.your family’s financial security in the event of your death
D.your family’s financial security in the event of your spouse’s death
E.all of the activities listed in the other answers
Answer:E21.Comparison of earnings for
different savings plans can best be accomplished using the:
A.discounted present value.
B.compounded rate of return.
C.net present value.
D.annual percentage yield.
E.after-tax rate of return.
Answer:D22.When it comes to savings, most
Americans:
A.have an adequate emergency fund.
B.devote large portions of their income to savings.
C.find saving difficult.
D.keep substantial amounts in a regular savings account.
E.reduce the amount they save during their working life.
Answer:C23.By using the Yahoo! Finance
website, an investor can find all of the following information on a stock except its:
A.historical prices.
B.stock symbol.
C.current market value.
D.most recent dividend.
E.actual rate of return for the next year.
Answer:E24.A condominium involves:
A.renting a mobile home.
B.buying stock in a nonprofit organization.
C.ownership of an individual living unit.
D.government-subsidized housing.
E.renting a house with the option to buy.
Answer:C25.Which of these is a common
financial benefit of home ownership?
A.low security deposit
B.tax deductibility of the down payment
C.amortization of the equity
D.increased property value
E.no maintenance cost
Answer:D26.Craig Brown owns a home in
San Francisco, California. There is a major earthquake and his house is damaged by the
earthquake. What type of insurance would he have to have to cover this loss?
A.building and other structures
B.additional living expenses
C.personal property
D.personal liability
E.specialized coverage
Answer:E27.Which one of the following is
often the source of the least expensive loan?
A.parents or family members
B.banks
C.savings and loan associations
D.finance companies
E.loan sharks
Answer:A28.What is the approximate market
value for of a $1,000 corporate bond that pays 9 percent interest when comparable bonds
are paying 8 percent?
A.$800
B.$900
C.$1,000
D.$1,125
E.$1,600
Answer:D
Approximate value = ($1,000 x .09)/.08 = $1,125
29.An advantage of purchasing diamonds for investment purposes is that:
A.diamonds are not easily turned into cash.
B.diamonds are relatively limited in supply.
C.diamonds are largely controlled by DeBeers Consolidated Mines of South Africa.
D.the grading of diamonds is not an exact science.
E.diamonds are typically bought at retail and sold at wholesale.
Answer:B
30.Gaby Williams is thinking about buying some stock but wants some
protection should the issuer miss paying a dividend payment. Which one of the following
features would help provide this protection?
A.convertible
B.callable
C.cumulative
D.cancellable
E.common
Answer:C31.Karen Price has created a
financial statement for herself that lists all of the assets she owns as well as the debts she
owes. This would be an example of:
A.money management.
B.opportunity cost analysis.
C.a balance sheet.
D.a liquidation exercise.
E.a budget variance.
Answer:C32.Insurance experts have
estimated that extra costs of up to $_____________ a year may be required to replace the
services of a homemaker in a family with small children.
A.3,000
B.6,000
C.10,000
D.12,000
E.15,000
Answer:C33.Lester McCann is thinking
about getting a loan for a new car. He knows that when he goes shopping for a loan that all
of the banks must report the annual percentage rate as well as all other terms and
conditions of the loan. This will allow him to easily compare loans from different banks.
Which consumer protection law requires full disclosure on all loans?
A.Fair Credit Reporting Act
B.Fair Credit Billing Act
C.Equal Credit Opportunity Act
D.Fair Debt Collection Practices Act
E.Truth in Lending Act
Answer:E34.The beta of the S&P 500 is:
A.0.
B.1.
C.10.
D.50.
E.100.
Answer:B35.Which one of the following is a
true statement?
A.When choosing an investment, it is not necessary to consider the risk factor.
B.During inflationary times, there is a risk that the financial return on an investment will
not keep pace with the rate of inflation.
C.The interest rate risk associated with investments in bonds is the result of changes in
business conditions faced by companies.
D.The risk of business failure deals with changes in the value of stocks and bonds due to
changes in interest rates in the market.
E.The prices of stocks, bonds, and other investments never fluctuate in the market.
Answer:B36.Which of the following would
be deducted from gross income to obtain adjusted gross income?
A.alimony payments
B.mortgage interest
C.medical expenses
D.foreign income exclusion
E.charitable contributions
Answer:A37.Jane Calvert is applying for a
loan from a bank. The bank knows she owns a house worth $150,000 and a car with a
trade-in value of $15,000 as well as other personal assets worth approximately $50,000.
Which one of the 5 Cs of credit is the bank looking at?
A.character
B.capacity
C.capital
D.collateral
E.conditions
Answer:C38._____________ are expenses
that a taxpayer is allowed to deduct from adjusted gross income.
A.Exemptions
B.Exclusions
C.Itemized deductions
D.Tax credits
E.Passive income
Answer:C39.If you have a complaint against
The First National Bank of Edmond, who should you contact?
A.National Credit Union Association.
B.Federal Trade Commission.
C.Federal Reserve System.
D.Comptroller of the Currency.
E.Bank Vice-President.
Answer:D40.The purpose of an informational
interview is to:
A.obtain employment.
B.reduce the number of potential candidates.
C.ask job candidates some general questions.
D.practice interview skills.
E.gather information about a firm or for career planning.
Answer:E41.The purpose of an assigned risk
pool is to:
A.provide insurance for poor drivers.
B.reduce medical costs associated with auto accidents.
C.take unsafe drivers off the road.
D.reduce auto insurance premiums with state regulation.
E.offer premium discounts to safe drivers.
Answer:A42.Which bond rating does
Standard & Poor’s assign to a bond that is in default?
A.A
B.B
C.C
D.D
E.Z
Answer:D