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Question 40 (0.8 points) For most students working more than 15 hours per week will substantially hurt academic performance and the odds of graduating. To avoid working excessive hours Professor Serlin advises: Taking out as much money in safe government student loans as possible. Selling your car and living close to campus. Living in a room in a house, or in an apartment with roomates. If nothing else works, it's better to take some terms at an inexpensive community college close to home than to work excessive hours and risk not graduating. All of the above. Question 44 (0.8 points) With regard to single stocks: They can easily go bankrupt, costing you 100% of your life savings. For this to happen with a well diversified portfolio of stocks like the Wilshire 5000, thousands of different stocks would have to go bankrupt at the same time. The Wilshire 5000 contains every stock in the United States that's actively traded on a major exchange. For you to lose all of your money would take every single one going bankrupt. This would take something like a nuclear war. Single stocks on the other hand go bankrupt all the time, and that includes some of the largest ones like General Motors (google this, and anything else, if you are unsure) and Enron. They are best; you should put all your eggs in one basket. a and b, but not c. Question 45 (0.8 points) Compound interest, or return: O a) Has been called the Eighth Wonder of the World. O b) Can allow anyone to grow wealthy if they save just a moderate amount of money steadily for decades. c) Causes money to grow in a ski slope way, so it really takes off over the long run. Od All of the above. Question 48 (0.8 points) According to Professor Warren in, "The Two Income Trap" O Most mothers tumble down the economic ladder after they divorce. The economic drop after divorce is hardest for women in the middle and upper classes, since they have farther to fall. Women should never get divorced no matter how bad the relationship is. O a and b above, but not c. Question 51 (0.8 points) Cornell economist Robert Frank makes a strong case that position, context, and prestige have a big effect on human happiness and wellbeing. But Professor Serlin believes that this can be kept in mind, and used, to make our lives better and increase our personal financial success. How? Always think of how nice what you have is, how there are many people in the world who would love to have your car, your home, your kitchen. Then you will enjoy what you have much more, and will not feel compelled to put yourself at risk keeping up with those who have more expensive things. You will not feel compelled to work yourself into the ground to try to keep up, or meet some standard that you feel you must have, even though what you have would be considered very high quality by many people, and by most families a generation or two ago who lived very happily. I believe this is true and very important, and I want to make sure everyone understands this. Thus, these are free points. The answer is True. True O False Question 63 (0.8 points) When we say that stocks have a very good risk-adjusted average return, we mean that: a) Although there is risk in investing in a well-diversified stock portfolio, even over the long run, that risk is not that high in exchange for the high average return. Ob) The average return is very good given the level of risk, making stocks the main long term investment. Oc) There is little or no risk, even in the short run. O d) a and b above. O e) a, b, and c above. Of) None of the above. Question 64 (0.8 points) According to Professor Serlin, one of the most powerful things you can do for your family's financial security is to pay your mortgage down to zero, and become completely debt free, from the credit card to the car loans - everything. Debt is not sexy or savvy. Sometimes it's unavoidable, but less often than most people think. An example is buying a used car for cash instead of taking out a big loan to buy a new one (or two). The bottom line is you can really improve your family's financial security and decrease your stress in life by trying hard and smart to bring your debt to zero. This includes things like buying a less prestige-related and large home and vehicles, and being proud of instead the security you provide for your family. O True O False Question 65 (0.8 points) With regard to mortgages: O a) Professor Serlin usually likes best the 15-year fixed. Ob) Professor Serlin usually likes best the 30-year variable. Oc) With the 15-year fixed mortgage, you own your home free and clear twice as fast as with the 30-year (assuming you don't make the grievous mistake of taking out home equity loans), yet the payments are not twice as high. Typically, they're only about 30- 40% higher. This is due to a lower interest rate, and the math of exponential interest rate growth over time, which you truncate with 15 years instead of 30. And it is due to the fact that there are fixed costs in your monthly house payment that are the same whether your mortgage is 15 years or 30. These include property taxes and insurance. d) a and c above. O e) b and c above. O f) None of the above. Question 40 (0.8 points) For most students working more than 15 hours per week will substantially hurt academic performance and the odds of graduating. To avoid working excessive hours Professor Serlin advises: Taking out as much money in safe government student loans as possible. Selling your car and living close to campus. Living in a room in a house, or in an apartment with roomates. If nothing else works, it's better to take some terms at an inexpensive community college close to home than to work excessive hours and risk not graduating. All of the above. Question 44 (0.8 points) With regard to single stocks: They can easily go bankrupt, costing you 100% of your life savings. For this to happen with a well diversified portfolio of stocks like the Wilshire 5000, thousands of different stocks would have to go bankrupt at the same time. The Wilshire 5000 contains every stock in the United States that's actively traded on a major exchange. For you to lose all of your money would take every single one going bankrupt. This would take something like a nuclear war. Single stocks on the other hand go bankrupt all the time, and that includes some of the largest ones like General Motors (google this, and anything else, if you are unsure) and Enron. They are best; you should put all your eggs in one basket. a and b, but not c. Question 45 (0.8 points) Compound interest, or return: O a) Has been called the Eighth Wonder of the World. O b) Can allow anyone to grow wealthy if they save just a moderate amount of money steadily for decades. c) Causes money to grow in a ski slope way, so it really takes off over the long run. Od All of the above. Question 48 (0.8 points) According to Professor Warren in, "The Two Income Trap" O Most mothers tumble down the economic ladder after they divorce. The economic drop after divorce is hardest for women in the middle and upper classes, since they have farther to fall. Women should never get divorced no matter how bad the relationship is. O a and b above, but not c. Question 51 (0.8 points) Cornell economist Robert Frank makes a strong case that position, context, and prestige have a big effect on human happiness and wellbeing. But Professor Serlin believes that this can be kept in mind, and used, to make our lives better and increase our personal financial success. How? Always think of how nice what you have is, how there are many people in the world who would love to have your car, your home, your kitchen. Then you will enjoy what you have much more, and will not feel compelled to put yourself at risk keeping up with those who have more expensive things. You will not feel compelled to work yourself into the ground to try to keep up, or meet some standard that you feel you must have, even though what you have would be considered very high quality by many people, and by most families a generation or two ago who lived very happily. I believe this is true and very important, and I want to make sure everyone understands this. Thus, these are free points. The answer is True. True O False Question 63 (0.8 points) When we say that stocks have a very good risk-adjusted average return, we mean that: a) Although there is risk in investing in a well-diversified stock portfolio, even over the long run, that risk is not that high in exchange for the high average return. Ob) The average return is very good given the level of risk, making stocks the main long term investment. Oc) There is little or no risk, even in the short run. O d) a and b above. O e) a, b, and c above. Of) None of the above. Question 64 (0.8 points) According to Professor Serlin, one of the most powerful things you can do for your family's financial security is to pay your mortgage down to zero, and become completely debt free, from the credit card to the car loans - everything. Debt is not sexy or savvy. Sometimes it's unavoidable, but less often than most people think. An example is buying a used car for cash instead of taking out a big loan to buy a new one (or two). The bottom line is you can really improve your family's financial security and decrease your stress in life by trying hard and smart to bring your debt to zero. This includes things like buying a less prestige-related and large home and vehicles, and being proud of instead the security you provide for your family. O True O False Question 65 (0.8 points) With regard to mortgages: O a) Professor Serlin usually likes best the 15-year fixed. Ob) Professor Serlin usually likes best the 30-year variable. Oc) With the 15-year fixed mortgage, you own your home free and clear twice as fast as with the 30-year (assuming you don't make the grievous mistake of taking out home equity loans), yet the payments are not twice as high. Typically, they're only about 30- 40% higher. This is due to a lower interest rate, and the math of exponential interest rate growth over time, which you truncate with 15 years instead of 30. And it is due to the fact that there are fixed costs in your monthly house payment that are the same whether your mortgage is 15 years or 30. These include property taxes and insurance. d) a and c above. O e) b and c above. O f) None of the above