Question 1

Recent college graduates, Jason and Elizabeth, are newlyweds. Although they acquired a significant amount of debt during college, both recently got good-paying jobs and appear to have promising careers. Given their situation, down the road Jason and Elizabeth

Accepted Answer

A)  are almost certain to be able to retire comfortably when the time comes, given the high level of income they are likely to earn. 
B)  could be able to retire comfortably, but doing so will take planning and discipline on their part. 
C)  have little chance of enjoying a comfortable retirement because the college debts will take years to repay and become a major burden. 
D)  will probably find that Social Security will provide an adequate retirement, but that they may need to supplement this with a modest pension if they really want to enjoy the fine life in their golden years.

Question 2

One of the keys to financial success is never to apply for a credit card.

Accepted Answer

A) True 
 B)False

Question 3

Earnings of Keogh plans are not taxed until the funds are withdrawn from the retirement account.

Accepted Answer

A) True 
 B)False

Question 4

Multiyear level-premium insurance is a form of term insurance with fixed premiums for the life of the policy.

Accepted Answer

A) True 
 B)False

Question 5

Serena is attending her local community college with the goal of getting a good job someday. She knows that financial planning begins first with making money.

Accepted Answer

A) True 
 B)False

Question 6

Financial planners encourage individuals to borrow only to cover immediate expenses.

Accepted Answer

A) True 
 B)False

Question 7

The value of education is often exaggerated when searching for a good job.

Accepted Answer

A) True 
 B)False

Question 8

The best financial planners are actually insurance salespeople.

Accepted Answer

A) True 
 B)False

Question 9

The earnings on a traditional IRA are

Accepted Answer

A)  never taxed, in order to encourage people to invest for their retirement. 
B)  tax-free until the Social Security system is improved. 
C)  taxed as income when they are withdrawn after retirement. 
D)  available to the investor without a penalty.

Question 10

Earnings from traditional IRA investments are taxable at the time they are earned.

Accepted Answer

A) True 
 B)False

Question 11

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 12

A retirement plan where employers often match part of an employee's contribution is known as a

Accepted Answer

A)  simple IRA. 
B)  Roth IRA. 
C)  Keogh plan. 
D)  401(k) plan.

Question 13

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

Question 14

The money a worker invests in a 401(k) retirement account reduces that worker's present taxable income.

Accepted Answer

A) True 
 B)False

Question 15

Borrowing money for ordinary expenses is a necessary part of life.

Accepted Answer

A) True 
 B)False

Question 16

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 17

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 18

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 19

Buying an attached home and living in one side, while renting the other side, generally turns out to be more trouble than it is worth, since you have to satisfy not only your own needs, but also the needs of the renters.

Accepted Answer

A) True 
 B)False

Question 20

Even though they are in debt, most of today's college graduates are capital-rich.

Accepted Answer

A) True 
 B)False

Exam 24: Appendix: Managing Personal Finances

Recent college graduates, Jason and Elizabeth, are newlyweds. Although they acquired a significant amount of debt during college, both recently got good-paying jobs and appear to have promising careers. Given their situation, down the road Jason and Elizabeth

One of the keys to financial success is never to apply for a credit card.

Earnings of Keogh plans are not taxed until the funds are withdrawn from the retirement account.

Multiyear level-premium insurance is a form of term insurance with fixed premiums for the life of the policy.

Serena is attending her local community college with the goal of getting a good job someday. She knows that financial planning begins first with making money.

Financial planners encourage individuals to borrow only to cover immediate expenses.

The value of education is often exaggerated when searching for a good job.

The best financial planners are actually insurance salespeople.

The earnings on a traditional IRA are

Earnings from traditional IRA investments are taxable at the time they are earned.

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

A retirement plan where employers often match part of an employee's contribution is known as a

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.

The money a worker invests in a 401(k) retirement account reduces that worker's present taxable income.

Borrowing money for ordinary expenses is a necessary part of life.

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.

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

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

Buying an attached home and living in one side, while renting the other side, generally turns out to be more trouble than it is worth, since you have to satisfy not only your own needs, but also the needs of the renters.

Even though they are in debt, most of today's college graduates are capital-rich.