1.A lease protects the rights of both the tenant and the landlord.
Answer:TRUE2.One of the misconceptions
about retirement is that your expenses will drop when you retire.
Answer:TRUE3.In a newspaper quotation,
NAV stands for “not accessible value.”
Answer:FALSE4.The debt-to-equity ratio is
calculated by dividing your monthly debt payments (not including house payments) by
your net worth.
Answer:FALSE5.If you think you want to
live in another city during retirement, it’s a good idea to plan vacations now in areas you
might enjoy later.
Answer:TRUE6.A job tends to have less of a
long-term commitment to a field than a career.
Answer:TRUE7.Continuing career education
can be in a formal or an informal setting.
Answer:TRUE8.Capital gain distributions
result when you decide to sell shares in a mutual fund at a price higher than you paid.
Answer:FALSE9.Your executor can be a
family member, a friend, an attorney, an accountant, or the trust department of a bank.
Answer:TRUE10.Consumer awareness of
life insurance has changed little over the years.
Answer:TRUE11.A decrease in the demand
for a product or service may result in a decrease in wages for people producing that item.
Answer:TRUE12.A letter of last instruction
can provide your heirs with important information.
Answer:TRUE13.With collateral, you will
probably pay a higher interest rate on your loan than you would without collateral.
Answer:FALSE14.A living will provides for
your wishes to be followed if you become so physically or mentally disabled that you are
unable to act on your own behalf.
Answer:TRUE15.Installment cash credit is a
direct loan of money for personal purposes, home improvements, or vacation expenses.
Answer:TRUE16.The rule of 78s formula
dictates that you pay less interest at the beginning of a loan.
Answer:FALSE17.Which one of the
following is the most widely used source of retirement income?
A.IRAs
B.Keogh plans
C.Social Security
D.company pension plans
E.union pension plans
Answer:C18.The financial planning process
concludes with efforts to:
A.develop financial goals.
B.create a financial plan of action.
C.analyze your current personal and financial situation.
D.review the financial plan.
E.review and revise your actions.
Answer:E19.Some experts claim that credit
life insurance policies are:
A.the nation’s biggest rip off.
B.the best buys.
C.useful for creditors and debtors alike.
D.less expensive than term life insurance.
E.an excellent investment.
Answer:A20.Fundamentally, group insurance
is ____________ insurance.
A.term
B.whole life
C.ordinary life
D.permanent
E.universal life
Answer:A21.Which of the following would
be covered by a home insurance policy?
A.hospital expenses for surgery
B.damage to another person’s car when driving
C.accidental injury to a coworker on the job
D.wind damage to your roof
E.theft of business supplies from your office
Answer:D22.Greg Rossman likes to play
golf. This would be an example of a(n) _________ factor that influences his purchasing
decision.
A.economic
B.social
C.personal
D.global
E.financial
Answer:B23.In a newspaper quotation,
which one of the following letters would indicate if a mutual fund has a 12b-1 fee?
A.NL
B.r
C.p
D.t
E.w
Answer:C24.Lindsey Holt owns stock in the
Galloway Gems Company. She knows she will receive a $1.50 dividend each quarter.
Given this, you know for sure that she purchased which type of stock?
A.preferred
B.common
C.blue chip
D.growth
E.penny
Answer:A25.Dave Johnson’s objective was
to purchase a government bond that provided some protection against inflation and higher
prices. To fulfill this objective, John purchased a:
A.T-bill.
B.T-note.
C.T-bond.
D.TIPS.
E.general obligation bond.
Answer:D26.A stock that remains stable
during declines in the economy is called a(n) ____________ stock.
A.defensive
B.cyclical
C.growth
D.income
E.blue-chip
Answer:A27.The Consumer Credit
Counseling Service (CCCS) is affiliated with the:
A.National Foundation for Consumer Credit.
B.Federal Trade Commission.
C.Better Business Bureau.
D.U.S. Consumer Protection Agency.
E.Federal Reserve Banks.
Answer:A28.A tax credit of $50 for a person
in a 28 percent tax bracket would reduce a person’s taxes by:
A.$10.
B.$28.
C.$14.
D.$50.
E.$35.
Answer:D29.Ben Carmichael has been
making contributions into an individual retirement account for his retirement. His
contributions are tax deductible as his employer does not offer a retirement plan. What
type of individual retirement account does he have?
A.traditional IRA
B.Roth IRA
C.spousal IRA
D.Education IRA
E.401(k)
Answer:A30.Scott Cumbie believes he has a
typical’ family and wants to determine his life insurance need. What method would
probably be the fastest method for him to use to calculate his insurance need?
A.easy method
B.DINK method
C.nonworking spouse method
D.family need’ method
E.sample method
Answer:A31.Sarah Logan is a professor at a
public university. Her employer makes nontaxable contributions to a plan in her name and
reduces her salary by the same amount. What type of retirement plan does Sarah have?
A.money-purchase pension plan
B.stock bonus plan
C.profit-sharing plan
D.defined benefit plan
E.403(b) plan
Answer:E32.Equity financing is a popular
choice to provide long-term financing for a corporation because:
A.a lender is always available to provide this type of financing.
B.it does not have to be repaid.
C.repayment doesn’t have to be made for ten years or more.
D.only interest must be paid for the first five years.
E.it does not cost anything to sell in the primary market.
Answer:B33.Which of the following would
not be considered personal property under a typical homeowner’s insurance policy?
A.furniture
B.clothing
C.buildings and other structures
D.jewelry
E.a silverware set
Answer:C34.James Monroe is a member of a
nonprofit organization that allows him to rent a living unit in a building. What type of
housing is James most likely living in?
A.A condominium
B.A duplex
C.A cooperative
D.A prefabricated home
E.A mobile home
Answer:C35.Which one of the following
statements is correct?
A.Stock is a form of debt capital.
B.Stock must be repaid at maturity.
C.Bonds are a form of debt capital.
D.Bonds do not have to be repaid at maturity.
E.Interest payments to bondholders must be declared by the board of directors.
Answer:C36.A good example of open-end
credit is:
A.the use of a bank credit card to make a purchase.
B.a mortgage loan from a savings and loan institution.
C.an automobile loan from a credit union.
D.an installment loan from a furniture store.
E.an installment loan for purchasing a major appliance.
Answer:A37.Which of the following is a
drawback of a money market fund from an investment company?
A.penalty if money is withdrawn early
B.lower rate of interest if redeemed within the first five years
C.minimum required holding period
D.lack of FDIC insurance
E.taxed at a higher rate than other investments
Answer:D38.Gary Simpson notices that his
neighbor has a brand new Ford F150 truck parked in the driveway. Even though his current
car is fine, Gary decides that he needs a new car and goes out and purchases a Hummer
with a six-year loan. Which one of the answers best explains Gary’s spending?
A.misunderstanding or lack of communication
B.the use of money to punish
C.the expectation of instant comfort
D.keeping up with the Joneses
E.overindulgence of children
Answer:D39.Tom Husson recently
coordinated a fund raising project for an organization that assists homeless youth. This
would most likely be an example of experience in:
A.doing research on a company.
B.obtaining financial planning and budgeting skills.
C.public speaking.
D.human relations.
E.problem solving.
Answer:B40.Group health insurance does
which one of the following?
A.provides coverage for you but not your immediate family
B.covers all of your health insurance needs
C.provides more health coverage than private plans
D.typically covers all of an individual’s medical costs
E.generally requires proof of insurability
Answer:C41.A person with a total tax
liability of $4,350 and withholding of federal taxes of $3,975 would:
A.receive a refund of $3,975.
B.owe $4,350.
C.owe $375.
D.receive a refund of $4,350.
E.receive a refund of $375.
Answer:C
$4,350 – $3,975 = $375
42.Estate planning has two parts. The first part consists of:
A.building your estate through savings, investments, and insurance.
B.transferring your estate in the manner you have specified.
C.deciding who is going to get what.
D.evaluating your assets and liabilities.
E.planning for the period right after you die.
Answer:A43.A person or institution that
holds or generally manages property for the benefit of someone else under a trust
agreement is called a(n):
A.beneficiary.
B.executor.
C.trustee.
D.guardian.
E.executrix.
Answer:C