Question 1

A good manager of personal finances, like a good businessperson, uses borrowed funds whenever possible.

Accepted Answer

A) True 
 B)False

Question 2

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 yearsE) A) and B)
F) None of the above B

Question 3

One strategy used to lower car insurance premiums is to choose a policy with a large deductible.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is least likely to result from the problems facing the Social Security system?

Accepted Answer

A)   an increase in the age at which full Social Security benefits are received
B)   cuts in benefits
C)   reductions in Social Security taxes
D)   reductions in cost-of-living adjustmentsE) None of the above
F) All of the above

Question 5

When young people decide to buy a house, the best approach is to buy a house in an inexpensive part of town so they can get a larger house for less money.

Accepted Answer

A) True 
 B)False

Question 6

Many insurance providers offer __________ policies that give a discount to families who buy several types of insurance coverage from them.

Accepted Answer

A)   umbrella
B)   universal
C)   multi-use
D)   rider-enhancedE) None of the above
F) All of the above

Question 7

About 35% of U.S. households do not have a retirement account.

Accepted Answer

A) True 
 B)False

Question 8

In order to qualify as a tax shelter, IRA saving plans must be invested in mutual funds.

Accepted Answer

A) True 
 B)False

Question 9

The benefit of opening an IRA while you're young is the compounding of the money invested tax-free over your working lifetime.

Accepted Answer

A) True 
 B)False

Question 10

________ insurance provides protection from losses of furniture, appliances, and clothes.

Accepted Answer

A)   Term
B)   Health
C)   Disability
D)   Homeowner'sE) None of the above
F) All of the above

Question 11

Don is young and newly married. He and his wife plan to have children in the near future and Don 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 12

Bonnie and Clyde are newly married college graduates. Both have jobs with bright futures. One strategy that they could use to accumulate capital for investment purposes, would be to:

Accepted Answer

A)   borrow heavily to buy a house.
B)   use their credit cards to acquire assets while prices are relatively low.
C)   live on just one of their incomes and save the other.
D)   quit their jobs and go back to college for a graduate degree.E) C) and D)
F) B) and D)

Question 13

Keogh plans are intended to help small business owners save for retirement.

Accepted Answer

A) True 
 B)False

Question 14

_________ is a form of life insurance that provides both a savings plan and pure insurance coverage.

Accepted Answer

A)   Term life insurance
B)   Growth-centered life insurance
C)   Whole life insurance
D)   Multiyear level-premium insuranceE) B) and C)
F) All of the above

Question 15

People who have health insurance seldom need disability insurance.

Accepted Answer

A) True 
 B)False

Question 16

Once you have evaluated your current financial situation and know your sources of income and expenses, you have reached the point where you can establish a personal budget.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is the best advice about the use of credit cards?

Accepted Answer

A)   Except for very small purchases, credit cards should always be used instead of cash.
B)   The best approach to credit cards is never even to apply for one.
C)   Credit cards are an important part of a personal financial system, but they should be used with care and discipline to avoid their high financial costs.
D)   Credit cards are most useful when making large purchases (over $500) , because they allow you to spread out the payments so they fit in your budget.E) None of the above
F) A) and D)

Question 18

Henri wants to get better control of his personal finances. He should begin by setting up a personal balance sheet and a personal income statement.

Accepted Answer

A) True 
 B)False  True

Question 19

Accumulating money through savings allows you to participate in the growth of a capitalist society.

Accepted Answer

A) True 
 B)False  True

Question 20

From a financial viewpoint, it is best to buy a:

Accepted Answer

A)   large home in a good neighborhood.
B)   very large home in a neighborhood where homes are relatively inexpensive.
C)   medium-sized home in a neighborhood where homes are the least expensive.
D)   small home in an excellent neighborhood.E) B) and D)
F) None of the above

Exam 25: Extension: Managing Personal Finances

A good manager of personal finances, like a good businessperson, uses borrowed funds whenever possible.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedB

One strategy used to lower car insurance premiums is to choose a policy with a large deductible.

Correct AnswerverifiedShow Answer

Which of the following is least likely to result from the problems facing the Social Security system?

Correct AnswerverifiedShow Answer

When young people decide to buy a house, the best approach is to buy a house in an inexpensive part of town so they can get a larger house for less money.

Correct AnswerverifiedShow Answer

Many insurance providers offer __________ policies that give a discount to families who buy several types of insurance coverage from them.

Correct AnswerverifiedShow Answer

About 35% of U.S. households do not have a retirement account.

Correct AnswerverifiedShow Answer

In order to qualify as a tax shelter, IRA saving plans must be invested in mutual funds.

Correct AnswerverifiedShow Answer

The benefit of opening an IRA while you're young is the compounding of the money invested tax-free over your working lifetime.

Correct AnswerverifiedShow Answer

________ insurance provides protection from losses of furniture, appliances, and clothes.

Correct AnswerverifiedShow Answer

Don is young and newly married. He and his wife plan to have children in the near future and Don 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.

Correct AnswerverifiedShow Answer

Bonnie and Clyde are newly married college graduates. Both have jobs with bright futures. One strategy that they could use to accumulate capital for investment purposes, would be to:

Correct AnswerverifiedShow Answer

Keogh plans are intended to help small business owners save for retirement.

Correct AnswerverifiedShow Answer

_________ is a form of life insurance that provides both a savings plan and pure insurance coverage.

Correct AnswerverifiedShow Answer

People who have health insurance seldom need disability insurance.

Correct AnswerverifiedShow Answer

Once you have evaluated your current financial situation and know your sources of income and expenses, you have reached the point where you can establish a personal budget.

Correct AnswerverifiedShow Answer

Which of the following is the best advice about the use of credit cards?

Correct AnswerverifiedShow Answer

Henri wants to get better control of his personal finances. He should begin by setting up a personal balance sheet and a personal income statement.

Correct AnswerverifiedTrue

Accumulating money through savings allows you to participate in the growth of a capitalist society.

Correct AnswerverifiedTrue

From a financial viewpoint, it is best to buy a:

Correct AnswerverifiedShow Answer

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