1) It is possible to still owe money after an item of collateral is repossessed for
nonpayment on the debt.
2) When a stockbroker sells securities owned by the firm for which he or she works, the
investor must be informed of that fact.
3) Experian, Equifax, and TransUnion are the three largest national groups of credit
bureaus.
4) The front-end ratio compares the total annual expenditures for housing to the loan
applicant’s gross annual income.
5) A limited management account allows workers saving for retirement through an
employer-based plan to have the benefits of asset allocation without doing the
reallocations themselves.
6) You should use key terms such as honesty and teamwork in your rsum.
7) Insurance companies often limit or deny coverage if a loss occurs as a result of a
moral hazard.
8) U.S. government bonds are debentures.
9) An addition to a standard insurance policy is called an endorsement.
10) Some real estate brokers work for a flat fee rather than a commission based on the
price of the house.
11) Compound interest is the calculation of interest on interest as well as on the original
investment.
12) Generally, older investors should have a larger proportion of their assets in bonds
than younger investors.
13) Under the Fair Credit Reporting Act, the law requires
a. accurate, relevant, and recent information
b. investigation of disputed information
c. access to the information in your credit file
d. all of these
14) It is possible to deduct some types of transportation expenses with all of the
following itemized deductions except
a. medical expenses
b. job expenses
c. charitable contributions
d. home buying
15) Buying ____ is a way to immunize a conservative investor’s portfolio against severe
price declines because they set up a “collar” to safeguard profits.
a. calls
b. puts
c. futures
d. commodities
16) A debt-payments-to-disposable-income ratio with monthly nonmortgage debt
repayments of $470 and a disposable income of $3,615 would be ____ percent.
a. 13
b. 20
c. 8
d. 87
17) The term used to evaluate the profitability of a firm on a common-stock per-share
basis is
a. price/earnings ratio
b. earnings per share
c. dividend payout ratio
d. cash dividends per share
18) When comparing the buying power of a salary offer of $50,000 in Boston with a
$53,000 offer in Los Angeles, the Los Angeles salary offer could buy ____ of goods
and services in Boston assuming the index was 130.6 for Boston and 114.9 for Los
Angeles.
a. $46,628
b. $56,832
c. $60,241
d. $43,989
19) The disability income insurance feature that provides a reduced level of benefit
when you suffer a partial disability is called a
a. Social Security rider
b. residual clause
c. elimination clause
d. benefit period rider
20) Negative aspects of using credit include which of the following?
a. The use of credit allows you to own expensive products sooner
b. The use of credit results in the loss of financial flexibility in personal money
management
c. The use of credit often leads to overspending
d. Negative aspects of using credit include both loss of financial flexibility as well as
overspending
21) Retirement investments can easily be made with
a. after-tax dollars
b. unearned income
c. pretax income
d. tax refunds
22) ____ is (are) the portion of a company’s earnings that the firm pays out to its
shareholders.
a. Rent
b. Dividends
c. Interest
d. Net income
23) Which of the following is a measure of the relative price of owned housing that
shows the average home price divided by annual rent in a community?
a. rent-to-own indicator
b. loan-to-value ratio
c. price-to-rent indicator
d. price-to-rent ratio
24) The declining-balance method is widely used to calculate interest on installment
loans made by
a. savings and loan associations
b. credit unions
c. consumer finance companies
d. both savings and loan associations and credit unions
25) Single-payment, open-ended, and service credit are lumped together under the
category of
a. installment credit
b. closed-end credit
c. noninstallment credit
d. revolving credit
26) You are legally required to include which of the following in gross income?
a. Alimony received
b. Lottery winnings
c. Illegal income
d. All of these
27) The dealer cost of new cars averages about ____ percent lower than the sticker
price.
a. 10
b. 12
c. 15
d. 20
28) ____ provide the basic descriptive information about the insured person or property,
the premium to be paid, the time period of the coverage, and the policy limits.
a. Insuring agreements
b. Endorsements
c. Declarations
d. Conditions
29) A retirement savings account that is designed to automatically rebalance the
portfolio periodically to reflect the chosen allocation pattern is called a
a. limited managed account
b. balanced mutual fund
c. Monte Carlo account
d. buy-and-sell mutual fund
30) When purchasing an annuity for retirement purposes,
a. there will generally be no commissions
b. a series of payments will be received at stated intervals
c. the investment should be made through your IRA account
d. the decision should be made early in life
31) ____ insurance is required in many states.
a. Homeowner’s
b. Automobile
c. Health
d. Umbrella liability
32) ____ is not part of the steps in the investment planning process.
a. Determine current amount of investment assets
b. Change asset allocations monthly
c. Identify what could stop you from succeeding
d. Rebalance investment portfolio regularly
33) With a decreasing term policy, the face value amount ____ annually and the
premiums ____ annually.
a. decreases; decrease
b. decreases; remain constant
c. remains constant; decrease
d. remains constant; remain constant
34) In an average year, the price of a typical stock fluctuates up and down by about
____ percent.
a. 66
b. 10
c. 30
d. 50
35) Translating your current required annual retirement savings amount into a
percentage of total income and then investing that same percentage throughout your
working life will help you build a retirement nest-egg that keeps up with
a. inflation
b. taxes
c. recessions
d. Social Security
36) The hospitalization portion of Medicare (Part A) requires a monthly premium from
the insured.
37) More than ____ percent of all adults do not have a will.
a. 25
b. 30
c. 50
d. 75
38) Before searching for a house to buy, you should
a. prequalify for a mortgage
b. adjust your budget accordingly
c. obtain a copy of your credit report
d. all of these
39) Investors who have to depend on cash dividends to supplement their living
expenses should invest in ____ stocks.
a. income and blue-chip
b. income and well-known growth
c. blue-chip and lesser-known growth
d. well-known growth and speculative
40) The out-of-pocket limits for a high-deductible health care plan are ____ per
individual and ____ per family.
a. $1,100 / $2,200
b. $3,650 / $7,300
c. $3,000 / $9,950
d. $5,950 / $11,900
41) A retirement savings goal can also be called a
a. financial nest egg
b. defined-contribution retirement plan
c. basic retirement benefit
d. pension
42) ____ bonds are particularly advantageous to investors when utilized in an IRA or a
(k) tax-deferred investment.
a. Zero-coupon
b. U.S. Treasury
c. Municipal
d. Federal agency
43) The best use of credit is probably to
a. consume expensive products earlier
b. obtain discounts
c. consolidate debts
d. obtain an education
44) ____ is not a prerequisite to starting an investment program.
a. Living within your means
b. Establishing a line of credit
c. Starting an estate plan
d. Carrying adequate insurance
45) The major financial loss resulting from premature death is the
a. readjustment-period expenses
b. lost income of the deceased
c. necessary final expenses
d. debt-repayment expenses
46) Disability income policies can be written on ____ basis.
a. an own-occupation
b. an any-occupation
c. a split-definition
d. all of these
47) Negative credit information (excluding bankruptcy) can generally be included on a
credit file for ____ years.
a. three
b. five
c. seven
d. ten
48) As a result of the health care reform Patient Protection and Affordable Health Care
Act a child may stay on a parents health care plan until age
a. 18
b. 21 or graduating from college whichever comes sooner
c. 21 or graduating from college whichever comes later
d. 26
49) The older you are the more risk you should take when investing your retirement
funds.
50) Premiums paid by a worker for disability and long-term care insurance are often
more expensive when purchased through one’s employer.
51) Property insurance does not take effect until after the application has been accepted
by the insurance company even if payment has been made to an agent.
52) If one can itemize deductions, all of his or her qualifying unreimbursed medical
expenses will be deductible.
53) If you were born in 1991, your full-benefit retirement age for Social Security is 65 .
54) A securities market in which prices have declined in value 20 percent or more from
the previous high is called a bull market.