Archives: Quiz

1) All adults should engage in the estate planning process. 2) Having both a checking and a savings account can help one get credit and at lower rates. Answer: T 3) The insured carries the burden of proof whenever a […]

1) A check with a blank endorsement contains only the payee’s signature on the back. 2) A stock with a beta of over 1 is considered more risky than the stock market as a whole. Answer: T 3) Under the […]

1) Numerous employee benefits are not included in gross income. 2) The multiple-of-earnings approach consists of multiplying one’s income by some factor to derive an estimate of the amount of life insurance needed. Answer: T 3) Credit is a term […]

1) Investing in mutual funds that are part of the same family of funds can simplify one’s finances. 2) A lien is a legal right to seize and dispose of (usually sell) property for payment of a claim. Answer: T […]

1) Implied warranties are in effect unless a product is sold as is. 2) Signing up for a “free” credit reporting service where you are automatically renewed on a fee basis unless you cancel at the end of the free […]

1) Vision care insurance is typically written on a group basis as an employee benefit. 2) Seller financing is generally a shorter-term arrangement than financing with a financial institution. Answer: T 3) A target-date retirement fund gives you a diversified […]

1) The ultimate authority of a fund’s track record is its current profile prospectus. 2) Present value is the current value of an asset (or stream of assets) that will be received in the future. Answer: T 3) Just like […]

1) To qualify for the earned income credit, taxpayers must have earned income. 2) Buying cash-value life insurance is a method of forced savings. Answer: T 3) When you buy shares in a mutual fund you are trusting that the […]

1) A fundamental decision to make when buying life insurance is whether to purchase term insurance or cash-value insurance. 2) Homeowners insurance can pay for additional expenses as well as for repairing or replacing property. Answer: T 3) Timesharing should […]

1) A default rate is a high APR that is assessed whenever a borrower fails to uphold certain rules of the account. 2) People who want to invest speculatively in currencies can do so on the forex exchange. Answer: T […]

1) Compounding serves as the basis of all time value of money considerations. 2) Your need for life insurance will change significantly over the course of your life cycle. Answer: T 3) A 12b-1 fee is actually a perpetual sales […]

1) If all the funds are removed or transferred from a retirement account at one time after changing employers or taking retirement, the disbursement is called a lump-sum distribution. 2) Whenever you request that someone write a reference letter you […]

1) When a loan is paid off over a shorter period of time, the total interest costs are reduced. 2) Flexible spending accounts are subject to a use-it-or-lose-it rule. Answer: T 3) The rule of 78s method, or sum of […]

1) Renters generally pay out less money in terms of cash flow than homeowners. 2) The Monte Carlo simulation estimates how much you need to save if your investments performed better or worse than expected. Answer: T 3) When an […]

1) The tax break for losses from passive investments begins to phase out for taxpayers higher incomes. 2) The back-end ratio compares all monthly debt payments and housing costs to gross monthly income. Answer: T 3) Comprehensive automobile insurance protects […]

1) During the comparison-shopping phase, you narrow the choices so you can begin negotiating for the best deal. 2) The yield on Treasury bills is commonly considered a zero real rate of return. Answer: T 3) The rate of interest […]

1) The initial minimum deposit on a super NOW account typically ranges from $1,000 to $2,500. 2) Term life insurance is frequently purchased in conjunction with investments to protect the lifestyle of dependents in the event of an investor’s death. […]

1) Investment risk is speculative risk rather than pure risk. 2) Both trailing and projected P/E ratios are of interest to investors. Answer: T 3) Auto insurance needs to be reviewed more frequently than life insurance. Answer: T 4) Completing […]

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. Answer: T 3) A coordination-of-benefits clause designates […]

1) New credit card accounts often come with a low introductory rate for the first few months. 2) The process in which the lender sues the borrower to prove default and asks the court to order the sale of the […]

1) Budgeting is narrower in scope than overall financial planning as it is primarily concerned with projecting future income and expenditures over a period of time. 2) When a college student saves all summer so that he or she has […]

1) Because the laws of most states do not recognize partners in cohabiting couples, estate planning is especially important if you are in such a relationship. 2) Credit cards allow repeated use of credit as long as you make the […]

1) Discretionary income is the money left over once the necessities of living are covered. 2) A buyer’s agent or broker serves as the buyer’s representative in the real estate negotiations and transaction. Answer: T 3) Employer-sponsored retirement plans have […]

1) Both collision and comprehensive coverage are usually written with deductibles. 2) There are a few situations in which the IRS imposes no penalty for early withdrawals from an IRA account. Answer: T 3) The average rate of return for […]

1) Any after-tax profit a company earns but does not pay out as dividends is called its retained earnings. 2) You should consider selling a bond before maturity when the bond rating has seriously slipped. Answer: T 3) If the […]

1) The market price of bonds are sensitive to interest rates. 2) If you die intestate, your state of residence will decide how your assets are divided. Answer: T 3) Commercial banks typically offer the widest variety of financial services. […]

1) One should assume risks that are affordable and insure against losses that would be unaffordable. 2) A retirement savings goal is the total amount of accumulated savings and investments needed to meet your living expenses after retirement. Answer: T […]

1) You should be contributing the maximum into any available tax-sheltered retirement plan before you consider cash-value life insurance as a retirement savings vehicle. 2) A long-term investor can purchase a small number of extra shares in a company in […]

1) Parents with minor children almost always need life insurance. 2) A fixed interest rate means that the rate will not change over the life of the loan. Answer: T 3) By using Monte Carlo simulations, investors can get a […]

1) It is less expensive to purchase stock shares in multiples of 100 shares. 2) For Social Security purposes, the full-benefit retirement age is 67 for those born in 1960 or later. Answer: T 3) Investors generally find it more […]

1) Independent research has found that over five-year periods, lower-cost funds always deliver returns better than those offered by higher-cost funds. 2) A survivorship joint life policy pays when the last person covered dies. Answer: T 3) Aggressive investors take […]

1) Title to real estate is transferred to a new owner through a deed. 2) Liquidity is the speed and ease with which an asset can be converted to cash. Answer: T 3) The fundamental approach presumes that current and […]

1) Under a tiered pricing system, creditors charge lower interest rates to lower-risk borrowers. 2) Marginal cost is the incremental cost of one more incremental unit of something. Answer: T 3) Whenever you make more than the minimum payment on […]

1) Dollar-cost averaging forces an investor to buy more shares when the price per share is low and fewer shares when the price per share is high. 2) When budgeting, recordkeeping is the process of recording the sources and amount […]

1) The Pension Benefit Guarantee Corporation provides an insurance program that guarantees certain retirement benefits for eligible retirees. 2) A disadvantage of first-to-die life insurance policies is that the survivor will have no coverage after the death of the first […]

1) A corporation is a state-chartered legal entity that can conduct business operations in its own name. 2) The concept of “pay myself first,” saving and investing before you pay other expenses, is a characteristic of successful financial managers. Answer: […]

1) Policyholders who have cash-value life insurance policies can obtain loans based on the cash values built up in their policies. 2) A progressive tax is one that demands a higher percentage of a person’s income as income increases. Answer: […]

1) A cafeteria plan, also known as a flexible benefit plan, is an employer-sponsored plan that gives the employee a choice of selecting either cash or one or more qualifying nontaxable benefits. 2) Being able to prove your deductions with […]

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 […]

1) Credit card blocking is the process whereby the merchant may notify the credit card issuer to put a hold on your account for the anticipated total amount of the charge. 2) Consumer installment loans typically are made with a […]

1) U.S. Government TIPS bonds guarantee that the investor’s return will outpace inflation. 2) Long-term care insurance premiums are lower for younger individuals. Answer: T 3) Capital gains on the sale of municipal bonds are taxable. Answer: T 4) One […]

1) The cost of replacing the household labor of a stay-at-home spouse should be included in life insurance planning. 2) Taking on excessive debts early in life may compromise your goal of being financially successful. Answer: T 3) A taxpayer […]

1) A housing unit that is detached from other units is called a single-family dwelling . 2) Electronic funds transfers (EFTs) can be used to make regular investments in mutual funds from a checking or savings account. Answer: T 3) […]

1) Fee-based financial planners/brokers charge up-front fees for providing services and charge commissions on any securities trades or insurance purchases that they conduct on your behalf. 2) With an assumable mortgage, the buyer generally pays a down payment equal to […]

1) The approximate compound yield formula provides a measure of the annualized compound growth of any long-term investment. 2) Umbrella liability insurance policies provide for high dollar amounts of coverage over and above the basic policies. Answer: T 3) Monetary […]

1) The profits made by selling a home can be tax-free. 2) When you sell your share in a mutual fund, you receive the NAV of the share at its current market price. Answer: T 3) Automobile physical damage insurance […]

1) A personal exemption is a legally permitted amount deducted from adjusted gross income based on the number of persons supported by the taxpayer’s income. 2) All bonds now issued are registered bonds rather than bearer bonds. Answer: T 3) […]

1) One is more likely to need to raise the standard 50 percent limit on personal property coverage when he or she selects contents replacement-cost protection rather than actual-cash-value protection. 2) A flexible spending account allows an employee to set […]

1) Interest is the price of borrowing money. 2) Life insurance is insurance that protects against financial losses resulting from death. Answer: T 3) Deposits in credit unions with federal charters are insured through the National Credit Union Share Insurance […]

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 […]