1.Medicare does not cover the expenses of private-duty nursing care.
Answer:TRUE2.The basic unit of gold
bullion is one troy ounce.
Answer:FALSE3.One reason for the high
cost of health care is the use of sophisticated and expensive technologies.
Answer:TRUE4.If you cosign and the debt is
not paid off, that fact does not become a part of your credit record.
Answer:FALSE5.Department stores and
gasoline companies are good places to obtain your first credit card.
Answer:TRUE6.A person’s birth date, sex,
height, and weight should only be included on a rsum if that information relates
specifically to qualifications for an employment position.
Answer:TRUE7.Investors in closed-end,
exchange-traded funds, and open-end funds can make money by purchasing shares at a
low price and then selling them at a higher price.
Answer:TRUE8.Unfortunately, most salaried
workers in the United States do not participate in the Social Security programs.
Answer:FALSE9.Interest payments for
registered bonds are usually mailed directly to the bondholder of record.
Answer:TRUE10.Skilled nursing care
beyond 100 days per benefit period is approved and covered by Medicare.
Answer:FALSE11.A chartered life
underwriter (CLU) is a life insurance agent who has passed a series of college-level
examinations on insurance and related subjects.
Answer:TRUE12.The amount of the
minimum required distribution from a 401(k) at age 70 is based on your life expectancy at
the time of the distribution.
Answer:TRUE13.Consumer credit dates
back to colonial times.
Answer:TRUE14.In a revocable trust, you
forfeit the right to end the trust or change its terms during your lifetime.
Answer:FALSE15.If you want a relatively
risk-proof real estate investment, participation certificates (PCs) are for you.
Answer:TRUE16.Medical payments
coverage in a home insurance policy is designed to pay for legal action taken against a
homeowner who may be legally responsible for injury or property damage of others.
Answer:FALSE17.Condominiums involve
the purchase of an individual living unit rather than an entire building.
Answer:TRUE18.Using a credit card, such as
Visa or MasterCard, is an example of closed-end credit.
Answer:FALSE19.Long-term care insurance
was virtually unknown 25 years ago, but now it is growing faster than any other form of
insurance.
Answer:TRUE20.With a revolving line of
credit, borrowings are permitted up to a specified limit and for a stated period.
Answer:TRUE21.Which type of health
insurance is simply a bad buy?
A.individual health
B.group health
C.dread disease
D.dental
E.vision
Answer:C22.Which type of life insurance
plan requires you to pay premiums for a stipulated period, usually 20 or 30 years, or until
you reach a specified age?
A.modified life policy
B.variable life policy
C.adjustable life policy
D.limited payment policy
E.endowment policy
Answer:D23.A closed end-fund is:
A.a fund that generally invests only in the stocks or other securities contained in a specific
stock or securities index.
B.a fund whose shares are issued by an investment company only when the fund is
organized.
C.professionally managed so investors need not monitor the performance of the fund.
D.a fund whose shares are issued and redeemed by the investment company at the request
of investors.
E.one whose shares trade only at end-of-the-day prices.
Answer:B24.Frank West wants to borrow
money for three years to purchase a new boat. He has been offered a seven percent fixed
rate loan and also a variable rate loan that has an initial rate of five percent. By choosing
the variable rate loan, Chuck is reducing the lender’s risk by:
A.sharing the interest rate risk.
B.increasing his monthly payments.
C.taking a larger stake in the asset he is purchasing.
D.repaying the loan over a faster period of time.
E.pledging collateral.
Answer:A25.The Rule of 78s demonstrates
that a borrower pays:
A.more interest at the beginning of the loan period.
B.more interest at the end of the loan period.
C.more interest in the middle of the loan period.
D.less interest than indicated by the APR
E.equal amounts of interest throughout the loan.
Answer:A26.Which of the following would
be a benefit of establishing a trust?
A.It can reduce or provide payment for estate taxes.
B.It can allow you to avoid probate and transfer assets immediately to beneficiaries.
C.It can free you from managing your assets, while providing you a regular income.
D.It can ensure that your property serves a desired purpose after you die.
E.A trust can do everything listed in the other answers.
Answer:E27.Total earnings of a person minus
the deductions for taxes and other items is called:
A.budgeted income.
B.gross pay.
C.net worth.
D.total revenue.
E.take-home pay.
Answer:E28.Which one of the following
items is a set amount of income on which no taxes are paid?
A.itemized deductions
B.standard deduction
C.earned tax credit
D.withholding
E.capital gains
Answer:B29.(p.85, 87)Allen Arnold has
determined that the amount of money he spends on his mortgage payment, car insurance
payment, and cable bill totals $1,200 each month. What type of expenses has Allen
determined with this calculation?
A.current liabilities
B.long Term liabilities
C.net worth
D.variable expenses
E.fixed expenses
Answer:E30.A method of evaluating the cost
of life insurance by taking into account the time value of money is called:
A.double indemnity.
B.guaranteed insurability.
C.an interest-adjusted index.
D.the consumer price index.
E.a present value index.
Answer:C31.Aside from a home, the real
property investment most widely favored by the small investor is:
A.a post office building.
B.land.
C.a building with 30 or more apartments.
D.a condominium.
E.the duplex, four-plex, or small apartment building.
Answer:E32.What is the purpose of a cover
letter?
A.obtain career planning information
B.request a reference for a job
C.develop rsum information
D.research a career area
E.express interest in a job
Answer:E33.For a class action suit to be
valid, it must:
A.involve several people with the same problem.
B.involve a national retail store.
C.be a case that would not be handled by an attorney.
D.involve low-income individuals.
E.be a legal problem against a government agency.
Answer:A34.Twenty years ago, you began
investing $250 a month. Because your investments earned an average of 8 percent a year,
your investment portfolio has a current dollar value of $145,000. How much did you earn
on your investments over the 20-year period of time?
A.$142,000
B.$80,000
C.$85,000
D.$140,000
E.$132,000
Answer:C
Earnings = $145,000 – (20 x 12 x $250) = $85,000
35.Allen Arnold earns $3,000 per month. He pays his mortgage, utilities,
grocery and other bills and then he makes sure to set aside $150 for his savings and
investment accounts before he spends money to go to movies and other personal expenses.
Which suggestion for obtaining the money he needs for investing is he following?
A.paying himself first
B.taking advantage of employer-sponsored retirement programs
C.participating in an elective savings program
D.making a special effort once or twice a year to save
E.taking advantage of gifts, inheritance and other windfalls
Answer:A36.Installment cash credit is a:
A.loan that must be repaid in total on a specified day.
B.direct loan of money for personal purposes.
C.loan that allows the consumer to receive merchandise, such as a refrigerator.
D.down payment made on a purchase.
E.synonym for single lump-sum credit.
Answer:B37.A common opportunity cost
associated with renting is interest lost on money spent for:
A.the down payment.
B.closing costs.
C.property taxes.
D.maintenance costs.
E.the security deposit.
Answer:E38.A mutual fund in which new
shares are issued and existing shares redeemed by the investment company at the request
of investors is called a(n) ____________ fund.
A.closed-end
B.open-end
C.load
D.no-load
E.convertible
Answer:B39.Which one of the following
statements is true?
A.When buying stock on margin, an investor borrows stock from the brokerage firm.
B.Usually, a bank arranges for the loan in a margin transaction.
C.Investors buy on margin because doing so offers them the potential for greater profits.
D.The margin requirement is established by the New York Stock Exchange.
E.The current margin requirement is 25 percent.
Answer:C40.Why are a growing number of
students without health insurance?
A.insurance companies refuse to insure them
B.students are young and healthy
C.students don’t need health insurance
D.students don’t care if they get sick
E.older students are not covered by family policies
Answer:E41.When preparing a bank
reconciliation, outstanding checks should be:
A.added to the bank statement balance.
B.subtracted from the bank statement balance.
C.added to the checkbook balance.
D.subtracted from the checkbook balance.
E.ignored until they have cleared.
Answer:B42.During 2008, Lincoln Masters
received income dividends of $850 and capital gain distributions of $540. Based on this
information:
A.both amounts must be included as taxable income.
B.only the dividends are taxable.
C.only the capital gains are taxable.
D.both amounts are tax-exempt.
E.both amounts are taxed at a rate of 5 percent.
Answer:A43.Melanie Davis is getting ready
to purchase shares in a mutual fund. The fund will charge her a sales charge only if she
redeems her shares within a stated period of time. What type of shares is she buying?
A.class A
B.class B
C.class C
D.either class A or B
E.either class B or C
Answer:B44.Deflation in commercial real
estate began sporadically in the:
A.1960s.
B.1980s.
C.late 1970s.
D.early 1970s.
E.1990s.
Answer:B45.A bank that is looking at your
past payment records on your loans is most likely examining which aspect of the 5 Cs of
lending?
A.character
B.capacity
C.collateral
D.capital
E.conditions
Answer:A46.When an individual makes a
purchase without considering the financial consequences of that purchase, ignores the
______________ aspect of financial planning.
A.borrowing
B.risk Management
C.spending
D.retirement and Estate Planning
E.obtaining
Answer:C47.Most participating policies are
sold by:
A.federal government agencies.
B.state insurance commissioners.
C.mutual life insurance companies.
D.stock life insurance companies.
E.investment banks.
Answer:C48.Kyle Burroughs has purchased a
suit and has interviewed with three companies through the career placement center at his
university. He was surprised by some of the questions asked and does not feel he answered
them well. He has developed some answers that he feels are better answers and better
reflects his abilities and aptitudes. Which step in the career planning process has Kyle
completed?
A.assess and research personal goals and abilities.
B.evaluate the employment market to identify specific employment opportunities.
C.develop a resume and cover letter to apply for specific positions.
D.interview for specific positions and assess the interview performance.
E.evaluate financial and other factors of positions offered.
Answer:D49.(p.235, Exhibit 7-5)Which one
of the following is not a danger signal of potential debt problems?
A.paying the minimum balance due each month
B.receiving notice of prompt payment from creditors
C.using savings to pay for major purchases
D.repaying loans faster than required
E.depending on overtime and moonlighting to meet expenses
Answer:D50.Which of the following would
be found in a mutual fund’s prospectus?
A.statement describing the risk factors associated with the fund
B.description of the fund’s past performance
C.information about the fund’s management
D.the process for buying and selling shares in the fund
E.all of the information in the other answers
Answer:E51.Most health insurance policies
in the United States are sold to:
A.victims of communicable diseases.
B.individuals with families.
C.single individuals with no dependents.
D.elderly individuals.
E.employers, who in turn offer the benefits to employees.
Answer:E52.Which of the following
represent the use of credit?
A.demand deposits
B.mortgage
C.ATM withdrawals
D.time deposits
E.debit card
Answer:B53.A plan that insures a large
number of persons under the terms of a single policy without requiring medical
examinations is called a(n) ____________ life insurance policy plan.
A.individual
B.whole
C.large number
D.permanent
E.group
Answer:E54.Which one of the following
statements is false?
A.The responsibility for choosing the right mutual fund rests with the individual investor.
B.Professional fund managers do make mistakes.
C.Although investing in mutual funds provides professional management, individual
investors should continually evaluate their mutual fund investments.
D.There is no need to evaluate mutual fund investments because investment companies
hire the best professional managers they can to manage their funds.
E.Individual investors should be involved in choosing a mutual fund because they know
how the objectives of a mutual fund match their own investment objectives.
Answer:D55.Which health insurance policy
pays benefits only when you are hospitalized, but pays these benefits in cash which you
can use as you like?
A.hospital indemnity
B.interim or short-term
C.disability income
D.comprehensive major medical
E.major medical expense
Answer:A56.Which one of these investments
produces tax-exempt income?
A.U.S. savings bonds
B.corporate stock
C.stock mutual fund
D.municipal bond
E.corporate bond
Answer:D57.Which one of the following is a
true statement about retirement planning?
A.I should wait until at least age 40 to start saving for retirement.
B.My pension benefits will increase to keep pace with inflation.
C.I should update my retirement plan periodically.
D.My employer’s health insurance plan will cover my medical expenses.
E.Social Security will cover my medical expenses.
Answer:C