177. (p. 640) About _______ of all U.S. households own stock in corporations.
178. (p. 640) According to contrarians, the big decline in the stock market during the early 2000s was:
D. proof that the future of capitalism should rely more on small, unincorporated businesses rather than big
corporations.
179. (p. 639) Real estate taxes and mortgage interest payments are both:
A. expenses of home ownership on which the government levies a tax.
180. (p. 641) The total cost of purchasing a stereo or television with cash is ________ the cost when using credit
cards to finance the same assets.
A. the same as
181. (p. 640) A benefit of using credit cards is that they:
D. allow the consumer to spread out payments and reduce overall costs.
182. (p. 641) When purchasing with a credit card, it’s important to remember that ________ if you do not pay the
balance in full within a stated time period.
A. the credit limit is reduced
183. (p. 641) One disadvantage of having credit cards for personal use is that:
184. (p. 638) Which of the following is a benefit unique to buying a duplex, as opposed to the purchase of a
single-family home?
D. The value of the home may increase over time.
185. (p. 639) The factor likely to have the greatest impact on how fast the value of a home appreciates over time is
the:
186. (p. 639) Mortgage interest payments and property taxes are:
D. both likely to decline the longer you own the home.
187. (p. 639) The greatest return over a period of several years is likely to be earned by investing in a:
D. moderate size home in a rural setting.
188. (p. 639) For a young person, one of the worst places to invest money for the long-term is:
D. the stock market.
189. (p. 639) From a financial viewpoint, it is best to buy a:
A. large home in a good neighborhood.
190. (p. 640) Which of the following is true of credit cards?
D. They are less convenient than carrying cash or writing a check.
191. (p. 637) Slobo is an immigrant to the United States from a formerly communist country. He is searching for
advice to help him succeed in a capitalist system. He would be well advised to:
D. follow the buy now, pay later rule of personal finance.
192. (p. 638) Bonnie and Clyde are newly married college graduates. Both have jobs with bright futures. One
strategy that they could use to accumulate capital for investment purposes, would be to:
A. borrow heavily to buy a house.
193. (p. 639) Which of the following is an advantage of home ownership?
D. Home ownership provides a guaranteed rate of return that is more stable than the return earned by investing
in the stock market.
194. (p. 641) During her sophomore year in college Melody received a letter indicating she was eligible for a credit
card along with a free gift from Metro State Bank. Melody was really excited until she remembered that any
cash she has usually “burns a hole” in her pocket. Melody would likely not be successful with a credit card
because:
D. her dad would not agree to cosign for her.
195. (p. 640-641) Which of the following statements about the use of credit cards by college students is most
accurate?
A. Of the debtors seeking help at the National Consumer Counseling Service, less than half were between 18
and 32.
196. (p. 639) Given a 25% tax bracket, the after-tax cost of a house mortgage interest payment of $1,000 would
be:
D. $1,250.
197. (p. 639-640) Joseph and Mack are good friends who have similar jobs that pay them well. Both have
established budgets that allow them to invest several hundred dollars each month. Mack has a strategy of
putting most of his money in bank CDs and a savings account. Joseph has opted for a strategy of investing in
the stock market. According to the evidence of the past 50 years, it is likely that over the long-run:
A. Mack and Joseph will experience very similar rates of return.
198. (p. 640) Petulia has been following the stock market, and has noticed that it has generally been declining for
the last several weeks. Many of her friends have sold stock, but Petulia looks at this situation as a good
opportunity to buy. Petulia’s views are consistent with the ___________ approach to investing in the stock
market.
D. negativist
199. (p. 640) Hannah is excited about getting her first credit card. However, she should be aware of the fact that:
A. credit cards are no longer accepted in many places as a valid source of credit.
200. (p. 640) Leonardo is in the habit of using his credit card for expenditures made on business trips. The most
likely reason he does this is to:
A. lower his business expenses.
201. (p. 640-641) Which of the following is the best advice about the use of credit cards?
A. Except for very small purchases, credit cards should always be used instead of cash.
202. (p. 642) ________ life insurance offers pure insurance protection for a given period of time.
D. Equity-based
203. (p. 642) One disadvantage of term life insurance is that:
D. it is generally not available to young people.
204. (p. 642) Which of the following is a new form of term insurance that guarantees fixed premiums for the life of
the policy?
205. (p. 642) According to Newsweek magazine, a young couple with a new baby should have life insurance
coverage equal to:
A. $500,000.
206. (p. 642) _________ is a form of life insurance that provides both a savings plan and pure insurance coverage.
A. Term life insurance
207. (p. 642) Which of the following is a form of whole life insurance that provides a death benefit that varies with
the performance of the investments of the insurance company?
D. multiyear level-premium insurance
208. (p. 642) A contract that calls for regular payments to an individual for life or for a fixed period of time is
called a(n):
D. level premium agreement.
209. (p. 643) Your chances of becoming disabled at an early age are ________ than your chance of dying from an
accident.
A. the same
210. (p. 643) Purchasing ________ insurance is a relatively low cost way of protecting yourself from lost income
due to an accident or prolonged illness.
211. (p. 643) ________ insurance provides protection from the cost of medical care for illnesses and injuries.
D. Homeowner’s
212. (p. 643) ________ insurance provides protection from losses of furniture, appliances, and clothes.
A. Term
213. (p. 643) A homeowner’s insurance policy that includes a provision for __________ would provide the
homeowner with enough cash to replace the items lost.
A. actual book value protection
214. (p. 644) One strategy to lower the cost of automobile insurance is to purchase a policy with a:
D. health coverage rider.
215. (p. 643) A(n) ________ is a provision added to a homeowner’s insurance policy that provides for coverage at
a reasonable cost for items that the policy otherwise would not cover.
D. modifier
216. (p. 644) Many insurance providers offer __________ policies that give a discount to families who buy several
types of insurance coverage from them.
D. rider-enhanced
217. (p. 641) Stan and Heidi are married and both have careers in business. If one of the two were to die, there
D. car insurance.
218. (p. 642) A comparison of variable life insurance to a standard whole life plan would reveal that:
A. they are essentially identical.
219. (p. 643) The purpose of a rider on a homeowner’s policy is to:
D. allow the policy holder to obtain health, disability, and auto insurance under their homeowner’s plan.
220. (p. 644) Which of the following deductible levels would result in the lowest premium for automobile
insurance?
A. $ 200
221. (p. 644) Hernando and Margarita have decided to take out an umbrella policy from an insurance company.
The main reason they would probably want to do this would be to:
A. protect against major disasters, which are known as “rainy days.”
222. (p. 642) Hillary and Bill are married and have a young child. Both work, but Hillary earns a higher salary than
Bill. Insurance experts suggest that:
A. there is no real need for this couple to have life insurance, since they both are employed.
223. (p. 643) Although he has a good health insurance policy, Ken is concerned that a serious accident or lengthy
illness would still be devastating to his family because of the lost income and other expenses not covered by his
policy. Ken would probably be interested in obtaining:
D. a rider on his homeowner’s policy.
224. (p. 643) Annette and Ron just got married. They received some very expensive wedding gifts including some
beautiful silverware and jewelry. Their homeowner’s policy:
A. automatically covers these items.
225. (p. 642) A variable life insurance policy is considered riskier than a traditional whole life policy because it:
D. pays only a very small death benefit unless the policy holder lives for at least 12 years after taking out the
policy.
D. 1976.
227. (p. 644) The number of workers paying into Social Security for each retiree receiving Social Security benefits
is:
A. fixed by law.