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Exam 24: Appendix: Managing Personal Finances

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Question 101

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The increase in the number of retirement plans approved by the federal government likely indicates that

A) the government budget is approaching a surplus.
B) most people have faith in the troubled Social Security system.
C) Social Security cannot be counted on to provide an individual with ample funds for retirement.
D) as a nation our values have shifted so that we now enjoy the value of saving more and consuming less.

E) A) and B)
F) A) and C)

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Question 102

Multiple Choice

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During her sophomore year in college Carrie received an email from First Bank telling her she was eligible for a credit card along with a free gift. Carrie was excited until she remembered that any cash she has usually "burns a hole" in her pocket, and she spends it quickly. Carrie would likely not be successful with a credit card because

A) she has difficulty in getting access to credit.
B) she would use it to make impulse purchases that she could not afford.
C) she would not spend up to the limit immediately.
D) her dad would not agree to cosign for her.

E) A) and D)
F) A) and C)

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Question 103

Multiple Choice

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For a young person, one of the worst places to invest money for the long-term is:

Most financial experts will tell you to save about one month's earnings for contingency purposes.

A ________ is a document that names a guardian for your children, states how you want your assets distributed, and names an executor to handle your estate when you die.

As an employee of Marshall Manufacturing, Sherry has an opportunity to invest pre-tax income in an employer-sponsored retirement plan. Her employer will contribute 50 cents for every dollar that Sherry contributes to this fund. What is this an example of?

Recent demographic trends suggest that the financial condition of the Social Security program soon will begin to improve.

Which of the following is a benefit unique to buying two attached homes, as opposed to the purchase of a single-family home?

One benefit of a simple IRA is that it allows

Historically, the best place to invest has been in U.S. government savings bonds.

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.

One of the first things the financial planner is likely to have them do would be to

Once you have set up a budget and handled your ordinary expenses, the first thing to do with any extra money you have is to

Guaranteed replacement cost insurance coverage provides the insured with the depreciated cost of assets.

The path to success in a capitalist system is to

On your personal balance sheet, your assets should include anything of value that you own.

One drawback to buying a home compared to renting is that your monthly mortgage payments will increase, while rental payments are fixed.

A simple IRA, which allows workers to contribute larger amounts than a regular IRA, is available to employees who work for firms with fewer than 100 employees.

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

Dylan and Wyatt are good friends who have similar jobs that pay them well. Both have established budgets that allow them to invest several hundred dollars each month. Dylan has a strategy of putting most of his money in bank CDs and a savings account. Wyatt has opted for a strategy of investing in the stock market. According to the evidence of the past 50 years, it is likely that over the long run