1 You decide that you want to save 2,168,419 dollars for retirement Assuming that you are 25 years old today, will retire at the age of 65, and can earn a 6 percent annual interest rate on your deposits, how much must you deposit each year to meet your retirement goal (your first deposit will be one year from now and your last deposit will be 40 years from today, i e 40 deposits) 3 57 points QUESTION 2 What should you do when deciding how to invest in a retirement account A Invest only in one asset, to avoid the risks of diversification B Assume you will live to be 58, as this is the point when social security will cover all your living expenses until your death C Diversify investments, estimate retirement needs, and gauge your level of risk tolerance 3 57 points QUESTION 3 Which of the following ratios are now being used by financial planners to assist in retirement planning for their customers A Debt to income B Savings rate to income C Savings to income D All of the above E None of the above 3 57 points QUESTION 4 Which factors should you consider when deciding to contribute to your retirement accounts A How many people will you be supporting B What can you expect prices to be like in your retirement, due to inflation C What is your expected life expectancy D All of the above, but the best we can do is guess 3 57 points QUESTION 5 You believe that you will need 136,217 dollars a year for 10 years in retirement If you are 20 today, how much must you save each year to meet your retirement goal if you plan to retire at 65 (Assume a 9 percent annual interest rate and that your 1st deposit will be 1 year from now and that your 1st withdrawal will be 46 years from today) 3 57 points QUESTION 6 If you are disabled, you can make early withdrawals from your 401(k) without penalty True False 3 57 points QUESTION 7 Which of these plans is NOT a defined benefit plan A 401(k) B None of the plans listed are defined benefit plans C SIMPLE D IRA 3 57 points QUESTION 8 Social Security is the government's way of providing all of your necessary retirement income True False 3 57 points QUESTION 9 True or false, the risk of the performance of a defined contribution plan is entirely on the employer True False 3 57 points QUESTION 10 Which of the following is the best choice for someone who is young and falls in a lower tax bracket A Roth IRA B Traditional IRA 3 57 points QUESTION 11 The benefits you can gain from having an Individual Retirement Account are completely independent of your income True False 3 62 points QUESTION 12 Who is ineligible to start an IRA A A self employed mother of two B A semi retired person still working who is 63 years old C A foreign national paying no US taxes D A convicted criminal who has done her time E None of the answers provided 3 57 points QUESTION 13 When is the right time to retire A At 65 years B At 68 years C At 50 years D There is no right age you can work as long as the health permits E At 70 years 3 57 points QUESTION 14 What does graded vesting mean A The percentage of a retirement account that an employee is entitled to follows a stair step progression (20 after 2 years, 40 after 4 years, etc B An employee's manager gives a grade for each year's performance and the employee's retirement account is funded at increasing levels with each improved grade C Neither of the above describes graded vesting 3 57 points QUESTION 15 The difference between someone starting their retirement account in the twenties and someone doing so in their thirties is what A It is hard to say that there will be a big difference between the two options B The former will end up with less in her retirement account at 65 than the latter C Retirement is for the birds D The former will have a lot more with a lot less contributions, at age 65, than the latter 3 57 points QUESTION 16 Traditionally in retirement planning, portfolio allocations A Are increasingly invested in bonds as retirement approaches B Are invested exclusively in index mutual funds C Are increasingly invested in growth stocks to increase the value of the retirement nest egg D Are equally distributed between stocks and bonds for diversification purposes 3 57 points QUESTION 17 What recourse do you have if you and your employer disagree about any aspect of your 401(k) account A You have no recourse but to agree to your employer B You will have to go to a Federal court C You may have to file a complaint with the plan administrator D The governement will have to be involved right away 3 57 points QUESTION 18 For many people, which of the following has become a fourth leg of the retirement stool A The family home B All of the answers provided are correct C Flexible spending accounts D Credit card rewards programs E Private health savings accounts 3 57 points QUESTION 19 Which of the following is not true of 401(k) accounts A All of the choices provided here are true B Contributions can be invested in a broad range of options C They are normally guaranteed by your employer D Deferred contributions are made on a pre tax basis E They are a type of defined contribution plan 3 57 points QUESTION 20 You believe that you will need 62,374 dollars a year for 5 years in retirement If you are 30 today, how much must you save each year to meet your retirement goal if you plan to retire at 65 (Assume a 14 percent annual interest rate The deposits and withdrawals are at the end of the year)Hint The number of years for PVIFA computation will be 5 years and FVIFA will be 35 years 3 57 points QUESTION 21 You believe that you will need 131,562 dollars a year for 10 years in retirement If you are 20 today, how much must you save each year to meet your retirement goal if you plan to retire at 65 (Assume a 10 percent annual interest rate and the deposits and withdrawalsare made at the end of the year) Hint The number of years for PVIFA computation will be 10 years and FVIFA will be 45 years 3 57 points QUESTION 22 What is the origin of the term 401(k) A The term comes from an old British phrase related to old age B The term comes from section 401 of the Immigration and Naturalization Services C The term comes from section 401 of the Canadian Penal System D The term comes from section 401 of the Internal Revenue Code 3 57 points QUESTION 23 What is the definition of a defined contribution plan A An arrangement in which an employee and or the employer can contribute to a retirement account and invest the funds as they wish B An arrangement in which an employer guarantees a specific amount of income during retirement, based on the employee's salary and years of employment C Anything under the umbrella of a Koch's Antecedent Plan in which beneficiaries are remunerated according to a vesting schedule 3 57 points QUESTION 24 Based on the book, the prescription to living is to take risks as you age and invest in securities A less, safe B more, risky C more, safe D less, risky 3 57 points QUESTION 25 What was the idea behind the 'Save More Tomorrow' campaign A Employee contributions to a retirement plan are automatically increased corresponding to each raise the employee is given, with an option to opt out if the employee chooses to do so B Subconsciously playing calming music to relax borrowers in retail shops, so that they will consume more than they will save C Employers were tasked with talking employees into deciding to wait to save for retirement until age 58 3 57 points QUESTION 26 In general, withdrawals from your 401(k) are limited to which of the following occasions A All of the answers provided are accepted reasons for withdrawal B Reaching the age of 59 1 2 C Disability D Termination from employment 3 57 points QUESTION 27 What does vesting mean A The determination that a company makes as to how much money an employee should have for soft purchases, such as suit vests, jackets, and slack trousers B The determination made as to when an employee has ownership of a retirement fund transferred over from the employer This determines how much of the retirement account is the employee's after they choose to leave the firm after X years C The strategy to use when determining how many times you should ask your boss for a raise before you decide to stop asking and begin to seek work elsewhere 3 57 points QUESTION 28 What are the benefits of a defined contribution plan A The money contributed by the employer is like extra income to the employee, that is given in a way that encourages the employee to save with tax deferred benefits B Participating results in employees investing funds directly into their retirement accounts, into a portfolio of their choosing C Both A and B 3 57 points QUESTION 29 You take out a car loan for 11,343 dollars If your loan has an annual interest rate of 8 12 percent, and you will make monthly payments for 5 years, how much of your first payment will go towards principal (go towards paying down the outstanding loan balance) 3 57 points QUESTION 30 You decide that you want to save 1,402,805 dollars for retirement Assuming that you are 25 years old today, will retire at the age of 65, and can earn a 7 percent annual interest rate on your deposits, how much must you deposit each year to meet your retirement goal (your first deposit will be one year from now and your last deposit will be 40 years from today, i e 40 deposits)Hint The number of years for FVIFA computation will be 40 years 3 57 points QUESTION 31 What happens to your 401(k) accound when you die A Only state inheritance taxes are due on it B Most plans call for full vesting of the plan to your beneficiary C None of the choices provided are true D The government takes taxes off the account E When you die your 401(k) is null and void 3 57 points QUESTION 32 What is the definition of a defined benefit plan A An arrangement in which an employer guarantees a specific amount of income during retirement, based on the employee's salary and years of employment B An arrangement in which an employee and or the employer can contribute to a retirement account and invest the funds as they wish C Anything under the umbrella of a 401k, or Roth IRA arrangement 3 57 points QUESTION 33 You believe that you will need 30,486 dollars a year for 5 years in retirement If you are 30 today, how much must you save each year to meet your retirement goal if you plan to retire at 65 (Assume a 9 percent annual interest rate and that your 1st deposit will be 1 year from now and that your 1st withdrawal will be 36 years from today) 3 57 points QUESTION 34 What has been the historic interest rate earned on deposits over the last 60 70 years A 0 B 8 C 10 3 57 points QUESTION 35 You decide that you want to save 1,456,352 dollars for retirement Assuming that you are 25 years old today, will retire at the age of 65, and can earn a 12 percent annual interest rate on your deposits, how much must you deposit each year to meet your retirement goal (your first deposit will be one year from now and your last deposit will be 40 years from today, i e 40 deposits) 3 57 points

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1 You decide that you want to save 2,168,419 dollars for retirement. Assuming that you are 25 years old today, will retire at the age

You decide that you want to save 2,168,419 dollars for retirement. Assuming that you are 25 years old today, will retire at the age of 65, and can earn a 6 percent annual interest rate on your deposits, how much must you deposit each year to meet your retirement goal? (your first deposit will be one year from now and your last deposit will be 40 years from today, i.e. 40 deposits)

3.57 points

QUESTION 2

What should you do when deciding how to invest in a retirement account?

A.	Invest only in one asset, to avoid the risks of diversification
B.	Assume you will live to be 58, as this is the point when social security will cover all your living expenses until your death.
C.	Diversify investments, estimate retirement needs, and gauge your level of risk tolerance.

3.57 points

QUESTION 3

Which of the following ratios are now being used by financial planners to assist in retirement planning for their customers?

A.
Debt to income

B.
Savings rate to income

C.
Savings to income

D.
All of the above

E.
None of the above

3.57 points

QUESTION 4

Which factors should you consider when deciding to contribute to your retirement accounts?

A.	How many people will you be supporting?
B.	What can you expect prices to be like in your retirement, due to inflation?
C.	What is your expected life expectancy?
D.	All of the above, but the best we can do is guess.

3.57 points

QUESTION 5

You believe that you will need 136,217 dollars a year for 10 years in retirement. If you are 20 today, how much must you save each year to meet your retirement goal if you plan to retire at 65? (Assume a 9 percent annual interest rate and that your 1st deposit will be 1 year from now and that your 1st withdrawal will be 46 years from today)

3.57 points

QUESTION 6

If you are disabled, you can make early withdrawals from your 401(k) without penalty.

True

False

3.57 points

QUESTION 7

Which of these plans is NOT a defined benefit plan?

A.
401(k)

B.
None of the plans listed are defined benefit plans

C.
SIMPLE

D.
IRA

3.57 points

QUESTION 8

Social Security is the government's way of providing all of your necessary retirement income?

True

False

3.57 points

QUESTION 9

True or false, the risk of the performance of a defined contribution plan is entirely on the employer.

True

False

3.57 points

QUESTION 10

Which of the following is the best choice for someone who is young and falls in a lower tax bracket?

A.
Roth IRA

B.
Traditional IRA

3.57 points

QUESTION 11

The benefits you can gain from having an Individual Retirement Account are completely independent of your income?

True

False

3.62 points

QUESTION 12

Who is ineligible to start an IRA?

A.	A self-employed mother of two
B.	A semi-retired person still working who is 63 years old
C.	A foreign national paying no US taxes
D.	A convicted criminal who has done her time
E.	None of the answers provided

3.57 points

QUESTION 13

When is the right time to retire ?

A.
At 65 years

B.
At 68 years

C.
At 50 years

D.
There is no right age you can work as long as the health permits

E.
At 70 years

3.57 points

QUESTION 14

What does graded vesting mean?

A.	The percentage of a retirement account that an employee is entitled to follows a stair step progression (20% after 2 years, 40% after 4 years, etc.
B.	An employee's manager gives a grade for each year's performance and the employee's retirement account is funded at increasing levels with each improved grade.
C.	Neither of the above describes graded vesting.

3.57 points

QUESTION 15

The difference between someone starting their retirement account in the twenties and someone doing so in their thirties is what?

A.	It is hard to say that there will be a big difference between the two options.
B.	The former will end up with less in her retirement account at 65 than the latter
C.	Retirement is for the birds
D.	The former will have a lot more with a lot less contributions, at age 65, than the latter.

3.57 points

QUESTION 16

Traditionally in retirement planning, portfolio allocations...

A.	Are increasingly invested in bonds as retirement approaches
B.	Are invested exclusively in index mutual funds
C.	Are increasingly invested in growth stocks to increase the value of the retirement nest egg
D.	Are equally distributed between stocks and bonds for diversification purposes

3.57 points

QUESTION 17

What recourse do you have if you and your employer disagree about any aspect of your 401(k) account?

A.	You have no recourse but to agree to your employer
B.	You will have to go to a Federal court.
C.	You may have to file a complaint with the plan administrator
D.	The governement will have to be involved right away

3.57 points

QUESTION 18

For many people, which of the following has become a fourth leg of the retirement stool?

A.
The family home

B.
All of the answers provided are correct

C.
Flexible spending accounts

D.
Credit card rewards programs

E.
Private health savings accounts

3.57 points

QUESTION 19

Which of the following is not true of 401(k) accounts?

A.	All of the choices provided here are true
B.	Contributions can be invested in a broad range of options
C.	They are normally guaranteed by your employer
D.	Deferred contributions are made on a pre-tax basis
E.	They are a type of defined-contribution plan

3.57 points

QUESTION 20

You believe that you will need 62,374 dollars a year for 5 years in retirement. If you are 30 today, how much must you save each year to meet your retirement goal if you plan to retire at 65? (Assume a 14 percent annual interest rate. The deposits and withdrawals are at the end of the year)Hint : The number of years for PVIFA computation will be 5 years and FVIFA will be 35 years

3.57 points

QUESTION 21

You believe that you will need 131,562 dollars a year for 10 years in retirement. If you are 20 today, how much must you save each year to meet your retirement goal if you plan to retire at 65? (Assume a 10 percent annual interest rate and the deposits and withdrawalsare made at the end of the year).

Hint :The number of years for PVIFA computation will be 10 years and FVIFA will be 45 years

3.57 points

QUESTION 22

What is the origin of the term 401(k)?

A.	The term comes from an old British phrase related to old age
B.	The term comes from section 401 of the Immigration and Naturalization Services
C.	The term comes from section 401 of the Canadian Penal System
D.	The term comes from section 401 of the Internal Revenue Code

3.57 points

QUESTION 23

What is the definition of a defined contribution plan?

A.	An arrangement in which an employee and/or the employer can contribute to a retirement account and invest the funds as they wish.
B.	An arrangement in which an employer guarantees a specific amount of income during retirement, based on the employee's salary and years of employment.
C.	Anything under the umbrella of a Koch's Antecedent Plan in which beneficiaries are remunerated according to a vesting schedule.

3.57 points

QUESTION 24

Based on the book, the prescription to living is to take ___________ risks as you age and invest in _______ securities.

A.
less, safe

B.
more, risky

C.
more, safe

D.
less, risky

3.57 points

QUESTION 25

What was the idea behind the 'Save More Tomorrow' campaign?

A.	Employee contributions to a retirement plan are automatically increased corresponding to each raise the employee is given, with an option to opt out if the employee chooses to do so.
B.	Subconsciously playing calming music to relax borrowers in retail shops, so that they will consume more than they will save.
C.	Employers were tasked with talking employees into deciding to wait to save for retirement until age 58.

3.57 points

QUESTION 26

In general, withdrawals from your 401(k) are limited to which of the following occasions?

A.
All of the answers provided are accepted reasons for withdrawal

B.
Reaching the age of 59 1/2

C.
Disability

D.
Termination from employment

3.57 points

QUESTION 27

What does vesting mean?

A.	The determination that a company makes as to how much money an employee should have for soft purchases, such as suit vests, jackets, and slack trousers.
B.	The determination made as to when an employee has ownership of a retirement fund transferred over from the employer. This determines how much of the retirement account is the employee's after they choose to leave the firm after X years.
C.	The strategy to use when determining how many times you should ask your boss for a raise before you decide to stop asking and begin to seek work elsewhere.

3.57 points

QUESTION 28

What are the benefits of a defined contribution plan?

A.	The money contributed by the employer is like extra income to the employee, that is given in a way that encourages the employee to save with tax-deferred benefits.
B.	Participating results in employees investing funds directly into their retirement accounts, into a portfolio of their choosing.
C.	Both A and B.

3.57 points

QUESTION 29

You take out a car loan for 11,343 dollars. If your loan has an annual interest rate of 8.12 percent, and you will make monthly payments for 5 years, how much of your first payment will go towards principal (go towards paying down the outstanding loan balance)?

3.57 points

QUESTION 30

You decide that you want to save 1,402,805 dollars for retirement. Assuming that you are 25 years old today, will retire at the age of 65, and can earn a 7 percent annual interest rate on your deposits, how much must you deposit each year to meet your retirement goal? (your first deposit will be one year from now and your last deposit will be 40 years from today, i.e. 40 deposits)Hint :The number of years for FVIFA computation will be 40 years

3.57 points

QUESTION 31

What happens to your 401(k) accound when you die?

A.	Only state inheritance taxes are due on it
B.	Most plans call for full vesting of the plan to your beneficiary
C.	None of the choices provided are true
D.	The government takes taxes off the account
E.	When you die your 401(k) is null and void

3.57 points

QUESTION 32

What is the definition of a defined benefit plan?

A.	An arrangement in which an employer guarantees a specific amount of income during retirement, based on the employee's salary and years of employment.
B.	An arrangement in which an employee and/or the employer can contribute to a retirement account and invest the funds as they wish.
C.	Anything under the umbrella of a 401k, or Roth IRA arrangement

3.57 points

QUESTION 33

You believe that you will need 30,486 dollars a year for 5 years in retirement. If you are 30 today, how much must you save each year to meet your retirement goal if you plan to retire at 65? (Assume a 9 percent annual interest rate and that your 1st deposit will be 1 year from now and that your 1st withdrawal will be 36 years from today)

3.57 points

QUESTION 34

What has been the historic interest rate earned on deposits over the last 60 - 70 years?

A.
0%

B.
8%

C.
10%

3.57 points

QUESTION 35

You decide that you want to save 1,456,352 dollars for retirement. Assuming that you are 25 years old today, will retire at the age of 65, and can earn a 12 percent annual interest rate on your deposits, how much must you deposit each year to meet your retirement goal? (your first deposit will be one year from now and your last deposit will be 40 years from today, i.e. 40 deposits)

3.57 points