Question 1

Your computer and car should both be listed on the asset side of your personal balance sheet.

Accepted Answer

A) True 
 B)False

Question 2

In the future, the Social Security system is likely to

Accepted Answer

A)  raise taxes and reduce benefits. 
B)  increase cost-of-living adjustments. 
C)  establish a younger retirement age. 
D)  adequately provide for all the retirement income the typical retiree needs to live comfortably. 
A)  raise taxes and reduce benefits. 
B)  increase cost-of-living adjustments. 
C)  establish a younger retirement age. 
D)  adequately provide for all the retirement income the typical retiree needs to live comfortably.

Question 3

Many financial experts advise that you set up a contingency fund equal to about ________ of your earnings and keep these funds in highly liquid accounts.

Accepted Answer

A)  two months 
B)  six months 
C)  one year 
D)  three years 
A)  two months 
B)  six months 
C)  one year 
D)  three years

Question 4

House payments tend to rise at a faster rate than do rent payments on a similar sized house.

Accepted Answer

A) True 
 B)False

Question 5

Term life insurance offers pure insurance with no savings feature.

Accepted Answer

A) True 
 B)False

Question 6

A comparison of variable life insurance to a standard whole life plan would reveal that

Accepted Answer

A)  they are essentially identical. 
B)  variable life offers only pure insurance but does so at a very low cost, while a standard whole life plan costs more but offers both insurance and a savings plan. 
C)  both a standard whole life and variable life insurance offer both life insurance and savings, but variable life invests the savings more aggressively than whole life. 
D)  variable life is only available to people who want at least $1 million in coverage-and are willing to pay for it. 
A)  they are essentially identical. 
B)  variable life offers only pure insurance but does so at a very low cost, while a standard whole life plan costs more but offers both insurance and a savings plan. 
C)  both a standard whole life and variable life insurance offer both life insurance and savings, but variable life invests the savings more aggressively than whole life. 
D)  variable life is only available to people who want at least $1 million in coverage-and are willing to pay for it.

Question 7

One danger of a credit card is that consumers often buy items they wouldn't normally buy if they had to pay cash.

Accepted Answer

A) True 
 B)False

Question 8

In order to accumulate enough wealth to get started toward achieving their goals, many people have to make significant sacrifices in their standard of living for several years.

Accepted Answer

A) True 
 B)False

Question 9

Carlton owns a small sports memorabilia shop. He can participate in a Keogh plan to save for his retirement.

Accepted Answer

A) True 
 B)False

Question 10

Nancy has been following the stock market, and has noticed that it has been declining for the last several weeks. While many of her friends and family have sold stock, Nancy looks at this situation as a good opportunity to buy. Nancy's views are consistent with the ________ approach to investing in the stock market.

Accepted Answer

A)  contrarian 
B)  revisionist 
C)  arbitrarian 
D)  negativist 
A)  contrarian 
B)  revisionist 
C)  arbitrarian 
D)  negativist

Question 11

The person who is named in your will to assemble the assets in your estate, handle taxes, and distribute the assets is called your proxy.

Accepted Answer

A) True 
 B)False

Question 12

About ________ of all U.S. households own stock in corporations.

Accepted Answer

A)  16 percent 
B)  30 percent 
C)  half 
D)  three-fourths 
A)  16 percent 
B)  30 percent 
C)  half 
D)  three-fourths

Question 13

Thomas contributed $2,800 to a Roth IRA. He is currently in the 25% tax bracket. How will his contribution affect his income tax for the current year?

Accepted Answer

A)  It will reduce the amount of taxes he owes in the current tax year by $700. 
B)  It will increase the amount of taxes he owes in the current year by $700. 
C)  It will reduce the amount of taxes he owes in the current year by $2,100. 
D)  It will have no effect on the amount of taxes he owes this year. 
A)  It will reduce the amount of taxes he owes in the current tax year by $700. 
B)  It will increase the amount of taxes he owes in the current year by $700. 
C)  It will reduce the amount of taxes he owes in the current year by $2,100. 
D)  It will have no effect on the amount of taxes he owes this year.

Question 14

The goal of accumulating capital is to allow an individual to

Accepted Answer

A)  buy the things that satisfy present wants and needs. 
B)  have funds available to invest. 
C)  buy now, pay later. 
D)  establish a good credit rating. 
A)  buy the things that satisfy present wants and needs. 
B)  have funds available to invest. 
C)  buy now, pay later. 
D)  establish a good credit rating.

Question 15

If you use a credit card to make purchases, you should make a strong effort to pay off the balance in full each month.

Accepted Answer

A) True 
 B)False

Question 16

An annuity is a contract to make regular payments to a person for life or for a fixed period.

Accepted Answer

A) True 
 B)False

Question 17

Managing the finances of a household is similar to managing the finances of a small business.

Accepted Answer

A) True 
 B)False

Question 18

The three keys that have the greatest influence on how the value of your home increases over time are: (1) size (square feet), (2) age, and (3) design features.

Accepted Answer

A) True 
 B)False

Question 19

Denny plans to start his business program this semester at a local university. Denny will likely find that

Accepted Answer

A)  his time would be better spent pursuing a career after high school. 
B)  he will have more fun and excitement than his friends that don't attend college. 
C)  his choice of a business major will virtually guarantee him a comfortable retirement income if he sticks with it. 
D)  his investment in his education will be important in his future. 
A)  his time would be better spent pursuing a career after high school. 
B)  he will have more fun and excitement than his friends that don't attend college. 
C)  his choice of a business major will virtually guarantee him a comfortable retirement income if he sticks with it. 
D)  his investment in his education will be important in his future.

Question 20

Mike is young and newly married. He and his wife plan to have children in the near future, and Mike wants to get a significant amount of life insurance coverage at as low a cost as possible. He would be well advised to purchase a term insurance policy.

Accepted Answer

A) True 
 B)False

Exam 24: Managing Personal Finances

Your computer and car should both be listed on the asset side of your personal balance sheet.

In the future, the Social Security system is likely to

Many financial experts advise that you set up a contingency fund equal to about ________ of your earnings and keep these funds in highly liquid accounts.

House payments tend to rise at a faster rate than do rent payments on a similar sized house.

Term life insurance offers pure insurance with no savings feature.

A comparison of variable life insurance to a standard whole life plan would reveal that

One danger of a credit card is that consumers often buy items they wouldn't normally buy if they had to pay cash.

In order to accumulate enough wealth to get started toward achieving their goals, many people have to make significant sacrifices in their standard of living for several years.

Carlton owns a small sports memorabilia shop. He can participate in a Keogh plan to save for his retirement.

The person who is named in your will to assemble the assets in your estate, handle taxes, and distribute the assets is called your proxy.

About ________ of all U.S. households own stock in corporations.

Thomas contributed $2,800 to a Roth IRA. He is currently in the 25% tax bracket. How will his contribution affect his income tax for the current year?

The goal of accumulating capital is to allow an individual to

If you use a credit card to make purchases, you should make a strong effort to pay off the balance in full each month.

An annuity is a contract to make regular payments to a person for life or for a fixed period.

Managing the finances of a household is similar to managing the finances of a small business.

The three keys that have the greatest influence on how the value of your home increases over time are: (1) size (square feet), (2) age, and (3) design features.

Denny plans to start his business program this semester at a local university. Denny will likely find that

Mike is young and newly married. He and his wife plan to have children in the near future, and Mike wants to get a significant amount of life insurance coverage at as low a cost as possible. He would be well advised to purchase a term insurance policy.

Taking Risks and Making Profits Within the Dynamic Business Environment

Understanding Economics and How It Affects Business

Doing Business in Global Markets

Demanding Ethical and Socially Responsible Behavior

How to Form a Business

Entrepreneurship and Starting a Small Business

Management and Leadership

Structuring Organizations for Todays Challenges

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Employeemanagement Issues

Marketing: Helping Buyers Buy

Developing and Pricing Goods and Services

Distributing Products

Using Effective Promotions

Understanding Accounting and Financial Information

Financial Management

Using Securities Markets for Financing and Investing Opportunities

Money, Financial Institutions, and the Federal Reserve

Working Within the Legal Environment

Using Technology to Manage Information

Managing Risk

Filters