Question 1.1. (TCO 1) Which aspect of financial planning deals with the purchase of long-term growth funds such as stocks? (Points : 4)

Borrowing Spending Managing risk Investing Retirement and estate planning

Question 2.2. (TCO 1) Vicky Pryce wants to purchase a new home, but she is not sure if she should apply for a loan with a fixed or variable rate. While the variable rate is lower, she is concerned that this will change in the future. What type of risk is Vicky worried about? (Points : 4)

Inflation risk Interest rate risk Income risk Personal risk Liquidity risk

Question 3.3. (TCO 1) Which step in the financial planning process is demonstrated by a decision in which Royanne must choose between working additional hours beyond 40 a week to earn money for a European vacation and have money left over versus continuing to work full time with the possibility of not getting any time off to travel? (Points : 4)

Determining her current financial situation Developing her financial goals Identifying alternative courses of action Evaluating her alternatives Implementing her financial plan

Question 4.4. (TCO 1) When you only have to pay taxes on an investment at a future point in time, this is referred to as a(n) (Points : 4)

cafeteria-style benefit. vesting. tax-deferred benefit. tax-exempt benefit. exclusion.

Question 5.5. (TCO 1) When you take the time to review a variety of job search websites and find 10 potential employment opportunities that fit your skills and abilities, which step in the career planning process have you completed? (Points : 4)

Assess and research personal goals and abilities. Evaluate the employment market to identify specific employment opportunities. Develop a resume and cover letter to apply for specific positions. Interview for specific positions and assess the interview performance. Evaluate financial and other factors of positions offered.

Question 6.6. (TCO 1) This month, Ken Grossman has cash inflows of $3,500 and cash outflows of $2,350, resulting in a (Points : 4)

balanced budget. surplus of $1,150. deficit of $1,150. surplus of $3,500. deficit of $2,350.

Question 7.7. (TCO 1) The best example of a current liability would be which of the following? (Points : 4)

Monthly balance due on a credit card Total amount of a mortgage Balance of a student loan Total of a home improvement loan Balance of an auto loan

Question 8.8. (TCO 1) The Zarnella family formulated a budget in which it would spend $450 a month on groceries. If the family spent $436 last month, then we could classify this difference as a (Points : 4)

variance. deficit. fixed living expense. budget reduction. contribution to net worth.

Question 9.9. (TCO 2) An example of _____ would involve a situation in which Judy Smith and Tom Smith each write their daughter a check for $12,500 for graduation, instead of giving her one $25,000 check, so they will not have to pay a gift tax. (Points : 4)

fraud tax evasion tax exclusion tax avoidance tax-deferred income

Question 10.10. (TCO 2) Megan McMillan has just won a Mega Millions lottery. This income would be classified as (Points : 4)

earned income. investment income. passive income. other income. deferred income.

Question 11.11. (TCO 2) The Federal Deposit Insurance Corporation insures deposits up to $250,000 per person per financial institution. Joyce has $198,000 in an individual account and $404,000 in a joint account with her husband, Dan. How much of Joyce's money is not covered by FDIC insurance? (Points : 4)

$198,000 $250,000 $602,000 $150,000 $0

Question 12.12. (TCO 2) The account in which you would expect to obtain the poorest yield and return would be a (Points : 4)

certificate of deposit. passbook savings account. money market account. money market fund. CD.

Question 13.13. (TCO 3) All of the following are examples of closed-end credit except a(n) (Points : 4)

home mortgage. installment loan to purchase new furniture. line of credit from your bank. automobile loan. single lump sum credit loan due in 90 days.

Question 14.14. (TCO 3) If Jerry Rickland is applying for a loan and the bank determines that he owns a home worth $175,000 and a vacation home worth $125,000, the bank is examining which of the five Cs? (Points : 4)

Character Capacity Capital Collateral Conditions

Question 15.15. (TCO 3) When Matthew Lee reviews his credit report, he should be able to find (Points : 4)

the address of the house where he lived in as a child. a loan for furniture he paid off 12 years ago. the outstanding balance on the Visa card he has today. the names and addresses of his grown children. the fact that he was late paying his electric bill 8 years ago.

Question 16.16. (TCO 3) An example of a _____ is General Motors Acceptance Corporation. (Points : 4)

credit union payday advance company finance company department store commercial bank

Question 17.17. (TCO 3) If Anthony Fontain makes a decision to accept a variable-rate loan instead of a fixed-rate loan, he is _____ with the lender and reducing the lender's risk.(Points : 4)

sharing the interest rate risk increasing his monthly payments taking a larger stake in the asset he is purchasing repaying the loan over a faster period of time pledging collateral

Question 18.18. (TCO 3) _____ is/are the primary reason(s) why consumers default on their debts. (Points : 4)

Medical expenses Defective goods and services Excessive use of credit Fraudulent use of credit Consumer fraud

Question 19.19. (TCO 5) All of the following statements are false but which? (Points : 4)

When establishing an investment program, you should begin by monitoring your investments. When you are choosing an investment, you should examine only the interest rate risk factor associated with each investment. When establishing an investment program, you should examine the potential return offered by different investment alternatives. Leave the financial planning to the professionals. There is no need to monitor your investments after you have made your investment decision.

Question 20.20. (TCO 5) If Robert is concerned about the location of an investment, most likely he is interested in purchasing (Points : 4)

common stock. preferred stock. a corporate bond. real estate. a mutual fund.

Question 21.21. (TCO 5) The purpose of asset allocation is to (Points : 4)

reduce risk. increase growth. lower liquidity. provide a high return. increase income.

Question 22.22. (TCO 5) _____ involves the analysis of charts and historical data in order to make stock purchasing decisions. (Points : 4)

Fundamental Technical Efficient market Chart Plot

Question 23.23. (TCO 5) A(n) _____ market is one in which previously issued financial securities are traded among investors. (Points : 4)

technical fundamental efficient secondary primary

Question 24.24. (TCO 5) Masterworks Manufacturing has after-tax profits that total $825,000. If the firm has 250,000 shares, what is the amount of earnings per share? (Points : 4)

$0.30 $1.00 $3.00 $3.30 $33.00

Question 25.25. (TCO 5) Scott Turner has a bond with 10 years to maturity, a face value of $1,000, a 7% interest rate, and a market price of $800. What is the yield to maturity on this bond? (Points : 4)

8.00% 11.00% 7.00% 10.00% 11.11%

Question 26.26. (TCO 5) A characteristic of serial bonds is that they (Points : 4)

will pay no interest payments. will have varying issue dates. will have a series of maturity dates. cannot be called. will all mature 10 years from the date of issue.

Question 27.27. (TCO 5) What is the current yield for a $1,000 corporate bond that pays 7.5% and has a current market value of $900? (Points : 4)

7.5% 8.0% 8.3% 9.0% 9.5%

Question 28.28. (TCO 3) If Damian Clowder has researched the price of a car online and then decides to go negotiate with a local dealership, Damian is involved in which step of the purchasing process? (Points : 4)

Problem identification Information gathering Evaluating alternatives Determining the purchase price Postpurchase activities

Question 29.29. (TCO 1) Melba Anderson has a document that allows her new microwave to be repaired or replaced within a certain time frame if it stops working. She has a (Points : 4)

coupon. rebate. warranty. rain check. class action suit.

Question 30.30. (TCO 3) A credit purchase with 24 monthly payments of $80 and a down payment of $125 would have a total cost of (Points : 4)

$2,000. $1,795. $2,045. $1,920. $1,085.

Question 31.31. (TCO 3) The _____ is considered to be the assessed value of your home. (Points : 4)

value used to calculate property taxes estimated current market value price you paid to purchase the home amount of money a buyer has offered to purchase the home cost basis assigned to your home by your insurance company

Question 32.32. (TCO 4) Your home insurance policy has a $500 deductible. If a windstorm causes $2,500 of damage to your home, what amount of the claim would the insurance company pay? (Points : 4)

$2,000 $1,000 $1,500 $500 $2,500

Question 33.33. (TCO 4) If Sheila's family's home is damaged by a fire, the _____ part of the family's homeowners insurance policy would cover the cost of temporary housing. (Points : 4)

buildings and other structures additional living expenses personal property personal liability specialized coverage

Question 34.34. (TCO 4) Angela has a policy that includes a $250 deductible and a coinsurance provision requiring her to pay 20% thereafter. Her medical bills total $5,500. What amount is she required to pay personally? (Points : 4)

$1,050 $300 $5,500 $5,500 $1,300

Question 35.35. (TCO 4) If Mark Wright obtains a permanent disability as a result of an injury on the job, most likely he will receive _____ as a source of disability income. (Points : 4)

his employer Social Security worker's compensation an individual insurance policy his health insurance policy

Question 36.36. (TCO 4) A(n) _____ is an addendum to a life insurance policy that can add additional benefits, such as an accidental death benefit payable to a beneficiary. (Points : 4)

accelerated benefits clause policy dividend guaranteed insurability clause second-to-die rider double indemnity rider

Question 37.37. (TCO 4) If Larry has a term life insurance policy that is _____, this means that the payments to his beneficiaries would become smaller over time. (Points : 4)

straight renewable convertible decreasing accelerated

Question 38.38. (TCO 6) The Capitalist Mutual Fund's net asset value is $27.25. The fund has liabilities of $1.4 million and 1,600,000 shares have been issued. What is the value of the fund's portfolio? (Points : 4)

$43.6 million $45 million $38.2 million $40 million $16 million

Question 39.39. (TCO 6) Tracey Patterson would need to purchase a(n) _____ if she desires federally tax-exempt income. (Points : 4)

junk bond fund intermediate corporate bond fund municipal bond fund short-term government bond world bond fund

Question 40.40. (TCO 6) One disadvantage associated with real estate investments is that an investor must face (Points : 4)

lack of involvement in property maintenance. a hedge against inflation. illiquidity. lack of financial risk. possible high capital requirements for total venture.

Question 41.41. (TCO 6) Judith recently inherited several pieces of diamond jewelry from her aunt. This jewelry is an example of (Points : 4)

a direct investment in real estate. an indirect investment in real estate. an investment in precious metals. an investment in collectibles. an investment in gems.

Question 42.42. (TCO 6) All of the following present characteristics of a defined benefit plan except (Points : 4)

employer contributions. formula-based benefits. investments managed by plan officials. limited government-guaranteed benefits. employee-required contributions.

Question 43.43. (TCO 6) Randall owns a condo worth $240,000, a car valued at $25,000, and miscellaneous assets worth $7,500. He owes $185,000 on the condo and $15,000 on the car and has no other debts. His retirement account, in which he is fully vested, contains $27,500 in mutual funds. He is insured with a $500,000 term life insurance policy. What is his net worth? (Points : 4)

$92,500 $115,000 $100,000 $592,500 $600,000

Question 44.44. (TCO 7) The benefits of establishing a trust include the fact that (Points : 4)

it can reduce or provide payment for estate taxes. it can allow you to avoid probate and transfer assets immediately to beneficiaries. it can free you from managing your assets, while providing you a regular income. it can ensure that your property serves a desired purpose after you die. All of the above

Question 45.45. (TCO 7) Samantha has been designated as the recipient of her sister's assets in the event of her death. This means that Samantha is her sister's (Points : 4)

executor. trustee. guardian. beneficiary. agent.