1.Consumer credit refers to the use of credit for personal needs (except a home mortgage) by individuals.
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2.You can depend on your employer’s health insurance plan and Medicare to pay all your medical expenses when you retire.
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3.Increased technology can result in a reduction of employment in one industry while creating new jobs in other industries.
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4.To stay healthy, you must get sufficient rest, relaxation, and exercise.
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5.No-fault insurance systems have consistently reduced the time and costs involved in settling claims.
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6.Medicare covers the cost of care received outside the United States, Canada, and Mexico.
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7.Financial leverage is a disadvantage when property values and incomes are rising.
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8.Developing and using a budget is part of the “obtaining” component of financial planning.
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9.Perhaps the largest drawback of direct real estate investments is the absence of large, liquid, and relatively efficient markets for them.
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10.ERISA established the Pension Benefit Guaranty Corporation (PBGC).
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11.A living trust does not avoid probate but it is less expensive, quicker, and private.
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12.Most states do not recognize living wills.
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13.Higher inflation usually results in lower interest rates.
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14.Real-estate property taxes are a major source of revenue for local governments.
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15.The borrower’s financial ability to meet credit obligations is called:
A.capacity.
B.character.
C.capital.
D.collateral.
E.conditions.
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16.Joseph Vu has assets worth $1,200,000. He has written a legal document that specifies that these assets be divided equally between his wife and his two sons upon his death. What is this legal document?
A.estate
B.will
C.trust
D.probate
E.liabilities
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17.The grace period normally allows ____________ days to elapse, during which time the premium may be paid on an insurance policy.
A.11 to 15
B.16 to 21
C.20 to 25
D.28 to 31
E.35 to 40
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18.Which method of determining life insurance requirements is designed specifically for a working couple with no dependents?
A.hard method
B.easy method
C.”nonworking” spouse method
D.thorough method
E.DINK method
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19.Because of up front commission charges, many financial experts and government agencies are critical of:
A.regular accounts.
B.voluntary savings plans.
C.contractual savings plans.
D.minimum withdrawal plans.
E.free contract plans.
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20.An umbrella policy is designed to cover:
A.expensive personal property.
B.additional buildings on your property.
C.property when traveling away from home.
D.major personal liability suits.
E.flood damage.
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21.The CCCS is basically concerned with:
A.lending money to destitute people.
B.giving debtors food and shelter.
C.helping destitute debtors to relocate into less expensive areas.
D.preventing and solving the problems related to credit overextension.
E.paying off mortgage loans.
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22.The Federal Deposit Insurance Corporation insures deposits up to $250,000 per person per financial institution. Suzanne has $200,000 in an individual account and $424,000 in a joint account with her husband, Ted. How much of Suzanne’s money is not covered by FDIC insurance?
A.$162,000
B.$174,000
C.$374,000
D.$50,000
E.$0
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23.Henrietta Marston plans to retire in the year 2050. She is considering a fund that will be more aggressive now and become more conservative as she approaches retirement. Which of the following funds would you recommend to her?
A.equity income fund
B.regional fund
C.sector fund
D.lifecycle fund
E.fund of funds
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24.All of the following statements are considered to be good advice for a potential investor starting an investment program except:
A.Work to balance your budget.
B.Increase credit purchases to conserve cash.
C.Establish specific and measurable investment goals.
D.Start an emergency fund.
E.Establish a line of credit.
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25.If your monthly net (after-tax) income is $1,500, what should be your maximum amount spent on credit payments?
A.$200
B.$300
C.$400
D.$500
E.$600
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26.Defective house wiring is an example of a:
A.hazard.
B.peril.
C.risk.
D.speculation.
E.planned danger.
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27.A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends a direction for your financial activities is a(n):
A.insurance prospectus.
B.financial plan.
C.budget.
D.investment forecast.
E.statement.
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28.Mohammad Ishaque has checked his credit report and believes there is an error in it. Which consumer protection law specifies that he has the right to have errors in his credit report investigated?
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
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29.Jeremy Irons has done some research and has discovered that the states with the largest population growth are Colorado and Arizona. Based on his findings, Jeremy believes these states will experience greater job growth as a result. This is an example of _____ influencing jobs in the future.
A.technology trends
B.economic conditions
C.industry trends
D.geographic trends
E.educational trends
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30.Which of the following is (are) false?
A.Stock companies generally sell nonparticipating policies.
B.A participating policy usually has a somewhat higher premium than a comparable nonparticipating policy.
C.Mutual companies generally sell participating policies.
D.You can expect to receive a policy dividend from a stock company.
E.More than one of the other answers is false.
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31.A mutual fund in which shares are issued only when the fund is organized is called a(n) ____________ fund.
A.closed-end
B.open-end
C.load
D.no-load
E.convertible
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32.A(n) ____________ trust is a property management arrangement that you establish while you are alive.
A.guardian
B.trustee
C.living
D.power of attorney
E.estate
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33.____________ is a type of major medical insurance that has a very low deductible amount and is offered without any separate basic plan.
A.Comprehensive major medical insurance
B.Major Medical expense insurance
C.Physician’s expense insurance
D.Hospital expense insurance
E.Surgical expense insurance
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34.The most commonly purchased type of credit insurance is:
A.credit life insurance.
B.credit accident insurance.
C.credit health insurance.
D.credit property insurance.
E.credit disability insurance.
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35.The Sears Kenmore dishwasher is an example of a:
A.national brand.
B.store brand.
C.generic brand.
D.local brand.
E.regional brand.
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36.Most insurers limit disability benefits from all sources of insurance to no more than ____________ percent of your take-home pay.
A.30-40
B.40-50
C.50-60
D.60-70
E.70-80
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37.A tax ____________ is an amount subtracted directly from the amount of taxes owed.
A.credit
B.exemption
C.deduction
D.exclusion
E.shelter
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38.Lorenzo Clowder has settled on purchasing a new Honda Accord and has found that the suggested retail price is $22,200 and that the dealer’s invoice price is $19,980. It is time for him to go to a dealer and negotiate the price he will pay for his new car. What step in the purchasing process is Lorenzo carrying out?
A.problem identification
B.information gathering
C.evaluating alternatives
D.determining the purchase price
E.post purchase activities
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39.The first step of the financial planning process is to:
A.develop financial goals.
B.implement the financial plan.
C.analyze your current personal and financial situation.
D.evaluate and revise your actions.
E.create a financial plan of action.
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40.Austin has invested $25,000 as one of 10 limited partners in a large shopping center that was purchased for $800,000. The shopping center has been unsuccessful and the four general partners fear that the property could be foreclosed upon soon. What is the most Austin might lose if the project fails?
A.$80,000
B.$57,143
C.$200,000
D.$25,000
E.$20,000
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41.Which one of the following is a source of government health insurance?
A.Blue Cross
B.Blue Shield
C.Medicare
D.HMO
E.PPO
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42.The total debts of you and your spouse include the following: mortgage, $180,000; auto loan, $10,000; credit card balance, $2,000; and other debts of $6,000. Further, you estimate that your funeral will cost $4,000. Your spouse expects to continue to work after your death. What is your life insurance need using the DINK method?
A.$103,000
B.$106,000
C.$226,000
D.$202,000
E.$99,000
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43.In recent years, membership in credit unions has:
A.become more difficult due to higher taxes.
B.continued to increase.
C.been limited to government employees.
D.declined due to poor credit union management.
E.stayed at about the same level.
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44.Which one of these terms is defined as the use of legitimate methods to reduce one’s taxes?
A.tax evasion
B.tax avoidance
C.tax exemption
D.tax deferral
E.tax deduction
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45.If a person deposited $50 a month for 6 years earning 8 percent, this would involve what type of computation?
A.simple interest
B.future value of a single amount
C.future value of a series of deposits
D.present value of a single amount
E.present value of a series of deposits
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46.(p.369,371,372)What is covered by Medicare Parts A and B?
A.intermediate and custodial nursing care
B.out-of-hospital prescription drugs
C.private-duty nursing
D.routine checkups
E.hospice care
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47.Mary Sheets is considering investing in 30 year Corporate Bonds issued by Duke Energy Company. She knows that she will earn an interest rate of 8% by purchasing these bonds. However, she is concerned because she might need to take her money out of this investment in a year and she has heard that she might have to sell the bonds at a significantly lower price than she will purchase them for. What type of risk is Mary concerned about?
A.Inflation risk
B.Interest rate risk
C.Income risk
D.Personal risk
E.Liquidity risk
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48.Which of the following is not something you should do when you are involved in an automobile accident?
A.stop your vehicle
B.turn off the engine
C.seek medical assistance for anyone with injuries
D.discuss the accident with anyone around, making sure to admit liability if the accident was your fault
E.obtain names and contact information of others in the accident and witnesses
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