1) Market efficiency reflects the speed at which new information is reflected in market
prices for investments.
2) More than one-half of all whole life policies lapse within ten years of being issued.
3) A coordination-of-benefits clause designates the order in which plans will pay
benefits if multiple plans are applicable to a loss.
4) The Stock and Sym column of the stock quotes gives the name of the stock and its
abbreviated trading symbol.
5) Investment-grade bond investments are lower risk than stock investments.
6) Deflation involves falling prices.
7) The face value of an insurance policy is never received by the beneficiary when the
interest income settlement option is chosen.
8) All states have enacted new-vehicle lemon laws.
9) Open-enrollment periods are common in group health care plans.
10) Keeping track of all income and expenses is very important to achieving your
financial objectives.
11) Most auto dealers will provide a vehicle history report at no cost to a prospective
buyer.
12) Comprehensive health insurance plans provide coverage for hospital, surgical, and
medical expenses into one policy.
13) Electronic funds transfers (EFTs)
a. can transfer funds electronically
b. can be used in place of checks
c. are paperless
d. all of these
14) While worldwide demand for precious metals and stones certainly exists, the ones
who make the profits on these investments are
a. miners
b. professional traders
c. department store owners
d. black-market traders
15) During expansion, which of the following is high?
a. Unemployment
b. Inflation
c. Interest rates
d. Retail sales
16) Social Security disability benefits are payable to covered workers who
a. are totally disabled
b. are expected to be disabled one year
c. are expected to die within one year
d. all of these
17) From simply a financial perspective the best way to buy vehicles is to buy
a. a new car every three years
b. buy one or two year-old used cars and sell them within two years
c. buy one or two year-old used cars and drive them for five or more years
d. buy five to seven year-old used cars
18) John Davis took his friend Jennifer Petru out for her 21st birthday. He paid for the
dinner with his Visa card and purchased a dozen red roses using his American Express
green card. John will have to pay his ____ bill on receiving the statement, but he will
have the option of paying his ____ bill over several months.
a. American Express; Visa
b. Visa; American Express
c. He can make extended payments on both Visa and American Express
d. He will have to pay both Visa and American Express in full on billing
19) Cash-value buildup is relatively slow in ____ life policies.
a. limited-pay
b. endowment
c. universal
d. modified
20) Arvi, a college teaching assistant, received a raise of $650 from $13,000 to $13,650
this year. If inflation was 2 percent over the same period, which of the following is
true?
a. Arvi’s increase in real income was $650
b. Arvi’s increase in real income was 7 percent
c. Arvi’s increase in real income was $382
d. Arvi’s increase in real income was 3.3 percent
21) Which of the following should be the easiest for a person to forecast?
a. Income
b. Inflation
c. Interest rates
d. Economic growth
22) A person who wants to continue health insurance coverage through the COBRA
provisions must
a. apply within 30 days of losing group status
b. pay the full premiums plus a 2 percent administrative fee
c. agree to pay for the coverage for at least 18 months
d. take a six-month waiting period
23) Figure 14-1
Rosa’s is a small chain of Mexican food restaurants that features five delicious varieties
of salsa. The business has grown over the past ten years from a hobby to a small
corporation with 200,000 shares of common stock outstanding. The corporation has not
issued any preferred stock. The following is Rosa’s latest financial data:
Refer to Figure 14-1. On the basis of Rosa’s price-to-sales ratio, would market analysts
generally be positive toward this stock?
24) The collection of securities and other investments owned by a mutual fund is called
a(n)
a. investment company
b. portfolio
c. mutual fund family
d. prospectus
25) All of the following are key steps to successful career planning except
a. targeting preferred employees
b. identifying your values
c. taking advantage of networking
d. aligning yourself with historical employment trends
26) Preshopping research for new cars should focus on
a. prices
b. trade-in value
c. financing
d. all of these
27) VA-guaranteed mortgages are very much like FHA-insured mortgages except they
a. have higher interest rates
b. have higher required down payments
c. can only be granted to military veterans
d. have shorter processing time for loan approval
28) Installment purchase agreements are also called
a. collateral installment loans
b. chattel mortgage loans
c. conditional sales contracts
d. collateral installment loans or chattel mortgage loans
29) A(n)____ guarantees the owner a fixed or floating interest rate for predetermined
period of time with full return of the initial amount invested.
a. guaranteed investment contract (GIC)
b. unit investment trust
c. index fund
d. mortgage-backed fund
30) Interest on bonds must be paid
a. monthly
b. according to the bond indenture
c. only on secured bonds
d. at maturity
31) Sue is a single mom who is currently going to school as a full-time student. Her
son, Billy, is in daycare, which costs $3,500 annually. How much will Sue’s dependent
care credit be if she qualifies for a 20 percent credit?
a. $3,500
b. $2,400
c. $700
d. $480
32) Lee Tran’s 1996 Camaro is pretty old now, and its resale value is low. Since he is
always interested in saving insurance premium dollars when appropriate, which of the
following types of insurance should he consider dropping?
a. Property damage liability
b. Uninsured motorist
c. Collision
d. All of these
33) Bobby is a 35-year-old pharmacist who is changing jobs. He has decided to
personally accept a check from his $30,000 retirement account and to roll it over into an
IRA within 60 days. In this case, the check will be for ____, and to avoid taxes and
penalties he will need to deposit ____ in the IRA.
a. $24,000; $24,000
b. $30,000; $30,000
c. $30,000; $24,000
d. $24,000; $30,000
34) ____ investors consider investments in new companies, collectibles, and limited
real estate partnerships.
a. Ultraconservative
b. Conservative
c. Moderate
d. Aggressive
35) ____ are typically characteristic of older homes.
a. Lower ceilings
b. Larger rooms
c. Modern kitchens
d. Better insulation
36) If you want to receive periodic, regular income from your mutual fund account you
would set up a
a. systematic withdrawal plan
b. closed-end withdrawal plan
c. guaranteed investment contract
d. beneficiary designation contract
37) A borrower who has failed to make a payment of principal or interest when due or
meet any other requirement of a credit agreement is said to be in
a. arrears
b. foreclosure
c. rescission
d. default
38) How much would one pay in points on a $145,000 loan if 2 points were charged?
a. $2,842
b. $2,000
c. $2,900
d. $2,320
39) Connie and Sam’s detached garage was recently destroyed by a tornado. Their
house was insured for $135,000, and the detached structures coverage was 10 percent of
the insured value of the home. The loss to the garage was valued at $15,000. The
insurance company would pay ____ less the deductible on this loss.
a. $15,000
b. $14,250
c. $12,000
d. $13,500
40) Which of the following statements is not correct regarding Chapter 7 of the
Bankruptcy Act?
a. The debtor submits a debt repayment plan to the court that is designed to repay as
much of the debt as possible
b. Chapter 7 provides for an immediate liquidation of assets
c. Petitioners seeking to file Chapter 7 must pass a “means” test
d. Most of the bankrupt person’s assets are given over to the bankruptcy trustee
41) Which “rule” says to compare at least three alternatives before making a major
purchase decision?
a. Rule of comparison
b. Rule of three
c. Rule of negotiation
d. Rule of data gathering
42) The liquidity ratio reveals how many months it would take to convert all assets into
cash.
43) You should discuss salary during the job interview, but you should not offer a
definitive dollar amount.
44) People receiving either survivor’s or disability benefits from an employer are
entitled to an amount equal to the full retirement amount.
45) With a graduated vesting schedule, an employee is not vested at all during the first
six years but becomes fully vested at the end of the sixth year.
46) Bonds are shares of ownership in a corporation.
47) Federal estate tax would be paid by the beneficiary of the estate.
48) You should avoid using specific abilities such as using MicroSoft Office in your
rsum.