1) Auto insurance agents need to be informed when a student keeps a car at college.
2) Institutions usually have a rule requiring that savings account holders give 30 to 60
days notice for withdrawals, although this restriction is seldom enforced.
3) You should always obtain a prequalification from a lender before your search for a
home to buy.
4) A mutual fund is an investment company that pools funds obtained by selling shares
to investors and makes investments to achieve financial goals.
5) It generally pays to shop around for insurance coverage because rates vary
considerably from company to company.
6) By selecting a longer waiting period, the purchaser of disability income insurance
obtains long-term coverage and keeps the premiums affordable.
7) One formally applies for a mortgage loan only after signing a purchase contract.
8) According to the U.S. Census Bureau, getting an advanced degree has a bigger
impact on annual income (as compared to a bachelor’s degree) than getting a bachelor’s
degree (as compared to graduating from high school).
9) To employ leverage, you should borrow funds to make an investment with the goal
of earning a rate of return in excess of the after-tax costs of borrowing.
10) The marginal tax rate may be the single most important concept in personal finance.
11) Mutual fund expenses can have a substantial effect on your retirement nest egg.
12) The add-on method is commonly used for computing interest on installment loans.
13) The higher the loan-to-value ratio, the greater the amount of leverage in an
investment project.
14) The date on which a credit cardholder makes a purchase or receives a credit is
known as the transaction date.
15) The figure in the Yld% column of the stock quotes represents the yield as a
percentage of dividend income.
16) In an employer-sponsored retirement plan, the employee should make at least the
contributions needed to receive the maximum employer matching contribution
provided.
17) Medicare (Part B) requires a monthly premium for coverage.
18) Buying a home represents the largest expenditure most people ever make.
19) The interest rates on cash advances using a credit card are usually higher than the
rates for purchases.
20) Which of the following is the least expensive way of protecting yourself from fees
should you overdraft your checking account.
a. An automatic funds transfer agreement
b. An automatic overdraft loan agreement
c. Opt-in overdraft/bounce protection
d. Paying the overdraft/bounced check fee
21) Financial risk relates to the possibility that the investment
a. will fail to pay a return to the investor
b. is subject to a sharp price changes
c. will fall in value
d. is illiquid
22) Calculate the amount of monthly payment for principal and interest for a $95,000, 8
percent, 25-year loan. The payment per $1,000 debt under these terms is $7.7182.
a. $633
b. $587
c. $317
d. $733
23) ____ publishes a list of recommended used cars in various price ranges each April.
a. Kiplinger’s Personal Finance
b. Consumer Reports
c. Money Magazine
d. Car and Driver
24) When you have a consumer complaint, it is important to deal with ____ before
moving to other channels.
a. a self-regulatory organization
b. the actual seller
c. a consumer action agency
d. the small claims court
25) ____ should be completed before interacting with sellers.
a. Distinguishing between needs and wants
b. Preshopping research
c. Fitting the budget
d. All of these
26) Which of the following sources of information about a corporation and its
profitability is issued most frequently?
a. 10-Q
b. 10-K
c. annual report
d. prospectus
27) A balance sheet includes ____, ____, and ____.
a. income; expenses; net worth
b. assets; expenses; liabilities
c. income; liabilities; net worth
d. assets; liabilities; net worth
28) To set the stage for financial success, one must
a. save money
b. start budgeting
c. identify financial values and goals
d. cut up all credit cards
29) A very small price drop can provide big profits for the short-term investor who
a. buys long
b. sells short
c. uses margin buying techniques
d. sells short and uses margin buying techniques
30) Which of the following continuation provisions is most desirable in a health
insurance policy?
a. Optionally renewable
b. Guaranteed renewable
c. Cancelable
d. Noncancelable
31) Which of the following is an example of a financial opportunity cost?
a. Time
b. Effort
c. Health
d. Interest
32) Millie Scotsdale purchased a $1,000, 52-week Treasury bill for $955. Assuming she
holds it to maturity, her discount yield will be ____ percent.
a. 4.50
b. 4.71
c. 5.50
d. 5.37
33) In ____ plans, employees control the assets in their accounts.
a. defined-benefit
b. defined-contribution
c. pension
d. cash-balance
34) Justin has FAP auto insurance coverage of 25/75/15 for his new Nissan. Being a
nice guy, Justin lets his friend use the car. The friend was involved in a major accident
and was at fault. Following are the damages:
How much will Justin’s auto insurance pay for the above damages?
a. $0
b. $53,000
c. $58,000
d. $61,000
35) To advance in your career, you should
a. volunteer for new assignments
b. stay alert to what is happening in your career field
c. avoid outside activities such as coaching your child’s soccer team
d. both volunteer for new assignments and stay alert to what is happening in your career
field
36) When reviewing an insurance policy, which is not considered a key policy
provision?
a. The deductible
b. Perils covered
c. Losses covered
d. Amount of coverage
37) ____ are received while one owns shares of a mutual fund.
a. Dividend distributions and capital gains distributions
b. Dividend distributions and capital growth
c. Capital gains distributions and capital growth
d. Dividend distributions only
38) Joe and Maria, a married couple with three young children, have a gross income of
$120,000, adjustments of $6,700, and itemized deductions totaling $16,900. If personal
exemptions for the year are $3,700 each and the standard deduction is $11,600 for
married couples, what is Joe and Maria’s taxable income if they file jointly?
a. $66,300
b. $77,900
c. $81,600
d. $83,400
39) Which of the following is (are) true regarding a re-enter provision in a
level-premium term policy?
a. It is common on a cash-value life insurance policy
b. It may require the insured to demonstrate proof of good health
c. It is a recommended provision on a life insurance policy
d. All of these
40) The process by which a decedent’s estate is settled and the assets distributed by the
courts to legal heirs is called
a. intestate
b. community property distribution
c. probate
d. estate planning
41) Matthew is concerned about his ability to save money regularly and has prepared a
budget. Which of the following budget classifications would be most appropriate for
Matthew’s budget?
a. Savings withheld from income and deposited directly to savings
b. Savings as a fixed expenditure
c. Savings as a variable expenditure
d. Saving whatever may be left over
42) Funds can be withdrawn without penalty from an IRA before reaching age 59
under which of the following conditions?
a. You are fired or laid off from your job
b. You are willing to receive annual distributions according to an IRS-approved annuity
method
c. You need the money for a down payment on a house or to fund your child’s college
education
d. None of these
43) The PITI acronym in mortgage lending stands for
a. principal, interest, taxes and insurance
b. principal, investment, taxes and interest
c. principal, interest, taxes and investment
d. principal, insurance, taxes and interest
44) Mortgage insurance protects
a. the borrower
b. the lender
c. the realtor
d. all of these
45) A legal document that directs life support measures, such as a respirator, to be
removed is called a
a. letter of last instructions
b. health care power of attorney
c. durable power of attorney
d. living will
46) Homeowner’s fees on condominiums do not include funds to pay
a. monthly mortgage payments of property owners
b. maintenance of the common areas
c. insurance covering the exterior of the building(s)
d. maintenance of the building(s)
47) Jonna Muntz purchased a $25,000 cash value policy with a guaranteed insurability
option that can be exercised a maximum of four times at $25,000, each over the next 12
years. Which of the following statements is false?
a. Jonna will be able to accumulate a total $125,000 in insurance over the next 12 years
b. Jonna will pay an extra premium amount for the guaranteed insurability option
c. The total premium for her coverage will increase each time she exercises a purchase
option
d. Jonna will have to prove she is still insurable each time she exercises a purchase
option
48) Which of the following types of coverage is (are) typically written on a group basis
as an employment benefit?
a. Dental expense insurance
b. Vision care insurance
c. Dread disease insurance
d. Dental expense insurance and vision care insurance
49) Which type of credit card allows the holder to make purchases almost anywhere?
a. Service accounts
b. Travel and entertainment accounts
c. Bank credit card accounts
d. Retail charge accounts
50) Grandmother Smith has just put $12,000 into an investment earning 6 percent a
year for her granddaughter’s college education. Approximately how much will be in the
account in ten years assuming all the interest is left in the account?
a. $19,200
b. $21,490
c. $16,320
d. $21,259
51) Persons who are either fully insured or currently insured are eligible to receive
Social Security retirement benefits.
52) A consumer that has nonmortgage debt repayments of 10 percent or more of annual
take-home pay is seriously in debt.
53) Credit scoring systems tend to ignore the degree to which you owe a high
percentage of the available credit limits on your credit cards.
54) A rsum in a chronological format would position the first of your previous three
jobs at the beginning of the document.
55) By writing a will, property can be distributed without going through probate.
56) As many as 75 percent of all job openings are listed in want ads.