personal Finance

t/f a major purpose of personal financial planning is future economic security True
t/f personal financial planning starts by creating a plan of action False : determine current. develop goals. identify alternatives. evaluate. create and implement. review and revise
t/f inflation reduces the buying power of a dollar true
t/f saving and investment programs are the main method for achieving financial goals true
t/f a financial plan is a list of a family’s spending for the month. false: the managing of your money to achieve personal economic satisfaction
opportunity cost refers to trade offs when a decision is made
the final step in the financial planing process is to evaluate and revise your actions
financial goals should be realistic. be stated in specific , measurable terms. have a time orientation
career planning is the ______ component of financial planning planning
financial strategies refer to courses of action to achieve financial goals
t/f education level is a major influence on a persons potential earning power true
t/f aptitude tests measure a person’s interests related to different types of work true
t/f an informational interview has the purpose of obtaining employment in a specific job position false: a selection interview has the purpose of obtaining employment in a specific job position
t/f a chronological resume is most appropriate for individuals with a continuous school and work record leading to a specific career area true
t/f the purpose of a screening interview is to reduce the number of candidates for a job to a workable number true
an interest inventory is designed to measure aptitudes
an example of a social influence on career opportunities would be longer life expectancy
networking refers to the process of making and using contacts for career development
cafeteria style employee benefits means allowing employee flexible selection among a variety of potential employee benefits
a _________ interview is designed to judge the potential of final candidates for a job position a selection interview
t/f most financial records should be kept in a safe deposit box false: a home file should be where the majority of financial records should be kept
t/f a personal balance sheet reports the financial position of a person or family on a given date true
t/f assets represent amounts owed to others that must be paid within the next year false: assets represent cash and other property with a monetary value
t/f spending less than your income will increase your net worht ture
t/f a budget deficit exists when actual spending exceeds projected spending true
a _______ is a specified plan for spending budget
an example of a liquid asset would be a checking account
________ represents amounts owed to others liabilities
a personal cash flow statement presents income and payments
definite financial obligations are referred to as fixed expenses
t/f real estate property tax is based on the appraised value of the property true
t/f taxable income refers to the amount deducted from a person pay false :taxable income is the net amount of income after allowable deductions on which income tax is computed
t/f a deduction is an amount subtracted from gross income to arrive at taxable income true
t/f most people mail the full amount owed in federal income tax each april false
enrolled agents are IRS auditors who visit people’s homes to verify deductions false
_______ is fully deductible as an itemized deduction mortgage interest
the difference between the standard deduction and itemized deductions is the standard deduction is a set amount which the taxpayer may deduct from adjusted gross income. and itemized deductions are specific expenses which the tax payer may identify and deduct from adjusted gross income
a significant tax strategy to reduce current federal income taxes include contributing to a retirement plan IRA
when an IRS agent visits your home or office to verify tax records, this is referred to as an field audit
an example of tax exempt income is interest from municipal bonds
t/f a quick source of cash is to liquidate savings true
t/f demand deposits refer to money deposited in savings accounts false: time deposits are money in savings accounts and certificates of deposits and demand deposits are checking accounts which give one the ability to transfer money to other parties
t/f a credit union usually offers a wider range of financial services than a commercial bank false
t/f a savings account with daily compounding will have higher earnings than an account with quarterly compounding true
t/f a cd account is a checking account that earns interest false: a CD is a savings account that a certain amount be left on deposit for a state time period to earn a specific interest rate
the fewest financial services would probably be offered by a investment company
the rate of return on a savings account may also be referred to as yield
the savings plan that is likely to have a set rate of return is a certificate of deposite
a personal check with guaranteed payment is a certified check
a _______ endorsement is most useful when depositing checks by mail restrictive endorsment
t/f your credit report includes information regarding your salary level and savings account balances false: your name, address, social security, birhtdate, employer, position, and spouses info are included on a credit report
t/f if you find an error in your credit file, there is little you can do about it since the information did not originate with you false
t/f information which will likely impact negatively on your credit report includes late payments, accounts turned over to collection, judgments, liens, and bankruptcies. true
t/f a credit score is number that indicates how likely you are to pay on a loan or credit card as agreed true
in the article A Breadwinner’s Tale the author’s father was not aware he owed money on credit cards false- actually i don’t know i never read it
in the article A Bread Winners Tale the authors father incurred debt to support a standard of living well above his income level
in the article A Bredwinners Tale the author responded to his fathers predicament by trying to get his dad to communicate the debt problem as the first step in possible resolving it
the best FICO score to have is 850
the key determinant of your FICO score accounting for 35% of the total number is whether you’ve paid your bills on time
the fair credit reporting act gives ________ the authority to enforce its provisions federal trade commission ?
t/f parents or family members are often the source of the least expensive loans true
t/f consumer finance companies specialize in personal installment loans and second mortages ture
t/f the finance charge is the total dollar amount paid to use credit true
t/f the most basic method of calculating interest is the simple interest formula. it is the interest computed on principal only and without compounding true
t/f the Federal Trade Commission enforces the fair Debt Collection Practices act true
the best method of comparing credit cost is is the finance charge and the APR.
Which consumer credit source has been viewed historically as a lender of last resort? finance company
you can often obtain medium priced loans from commercial banks and credit unions
some creditors add finance charges after subtracting payments made during the billing period, this is called the adjusted balance method
a consumer credit counseling service is a local non, profit organization affiliated with the nation foundation for consumer credit . it is not a lending institution
t/f the first phase in a purchasing decision is preshopping activities, which include defining your shopping problem and planning your course of action true
t/f consumer information from businesses is usually the most objective type of data available to help in buying decision false
t/f brand name products usually cost more than store brands or generics true
t/f an express warranty is usually in a written form true
t/f most consumer compliants are resolved with the use of a government agency false
_______ would be an example of social buying influence lifestyle
the least objective type of consumer information is likely to be from a sales brochure
the widest variety of products is usually available at a department store
a non profit organization created to save money for its members-owners when buying certain products or services is a cooperative
_______are publicly supported community law offices that provide legal assistance to consumers who cannot afford their own attorney legal aid societies
t/f several financial benefits are associated with renting your place of residence false: when you rent there are no tax deduction available
t/f a lease is mainly designed to protect the rights of the landlord false: the lease defines conditions of rental
t/f cooperative housing involves the purchase of an individual living unit in a multiunit complex or building false: a form of housing in which a building containing a number of housing units is owned by a nonprofit organization whose members rent the units
t/f financial risks are associated with the purchase of a home ture
t/f most mortgage rates are established by government agencies false
a common advantage associated with home ownership is financial benefits
most real estate professionals believe that the most important factor in selecting a home location
the major factor that affects a person’s qualification for a mortgage is the applicants credit rating
most lending institutions believe that a person can afford a monthly payment of about _______ percent of gross income less any long term debts 30
a ______ mortgage allows a person to borrow on the paid-up value of a home second mortgage
t/f every liability lawsuit involves an act of negligence false
t/f homeowners insurance covers the cost of living elsewhere while your home is being repaired from a fire true
t/f the special form of homeowners insurance includes all risks such as loss or damage from floods or earthquakes false: endorsement is a form of homeowers insurance that allows an addition of coverage to standard insurance
t/f in the event of an accident bodily injury liability coverage protects the people in other cars for medical expenses, lot wages and other expenses associated with injuries true
t/f a higher deductible will reduce the amount paid for collision and comprehensive physical damage coverage true
a situation in which a person is held responsible for the actions of another person is vicarious liability
renters property insurance would include coverage for personal belongings
coverage that pays for the current replacement cost of a stolen or damaged item is called replacement value coverage
losses caused by damage to your car by another person who is at fault in the accident are covered by property damage liability
driver classification includes information on a person’s ______ and is used to set auto insurance rates driving habits, sex marital status, driving record,
t/f most people buy life insurance to protect someone who depends on them for financial losses caused by their death true
t/f there is a rule of thumb that is good target is life insurance totaling nine to ten times you annual income false
t/f a participating policy is sold by stock life insurance companies owned by stockholders false stock companies sell non participating policies. mutual companies specialize in participating policy
t/f a term insurance policy pays a benefit only if you die during the period that the policy covers true
t/f universal life insurance is the answer to the “buy term and invest the difference? philosophy true
one of the following is not a method of estimating your life insurance requirements Hard is not a method , DINK, family need, and easy are a method
which life insurance provision allows you not to forfeit all accrued benefits non forfeiture clause
which life insurance provision permits the owner of the policy to borrow any amount up to the cash value of the policy policy loan provision
among the riders which may be attached to a life insurance policy is waiver of premium disability benefit, accidental death benefit, a guaranteed insurability option are all potential riders
a settlement option that provides for payment of life insurance proceeds in equal periodic installments for a specified number of years after your death is called limited installment payment
t/f long term objectives are defines as objectives that can be accomplished within one year false
t/f an emergency fund is a certain amount of money that can be obtained quickly in case of immediate needs true
t/f a line of credit is a loan that is approved before the money is actually needed true
t/f there is no relationship between safety and risk when choosing an investment false
t/f a speculative investment is usually defined as one that is made in the hope of earning a relatively large profit in a short time true
bonds issued by corporations must be repaid at maturity
which of the following investments would have the greatest potential for safety government bonds
which of the following investments would have the greatest potential for risk options
which of the following statements is true the holding period for short term capital gains is 12 months or less
which source of investment information provides the most current data newspapers
t/f corporations sell common stock to finance their business start up costs and help pay for their ongoing business activities true
t/f a corporation must pay dividends to stockholders false
t/f the record date is the date when a stockholder must be registered on the corporation’s books in order to receive dividends true
t/f the most important priority that an investor in preferred stock enjoys is receiving cash dividends before common stockholders are paid any cash dividends true
t/f the book value for a share of stock is determined by deducting all liabilities from the corporations books in order to receive dividends true
a corporation whose stock is owned by relatively few people and is not traded openly in stock markets is called a ________ corporation private
a stock split enables management to bring a stock’s price into an “ideal” price range
a feature that enables preferred stock investors to receive omitted dividends is called a ________ feature cumulative
a stock that follows the business cycle of advances and declines in the economy is called_________ stock cyclical
when stocks are traded between investors they are traded in the _________ market secondary
t/f a bond indenture is a legal document that details all of the conditions relating to a bond issue true
t/f corporations sell corporate bonds to help finance their ongoing business activities true
t/f a mortgage bond is sometimes referred to as a secured bond true
t/f a sinking fund is a fund to which deposits are made each year for the purpose of redeeming a bond issue true
t/f a revenue bond is a bond backed by the full faiht, credit and unlimited taxing power of the government that issued it false :
a governemnt security issued in minimum units of $1,000 within maturities that are 13 weeks, 26 weeks, 52 weeks, is called a treasury bill
a bond that provides tax free interest income is called a municipal bond
the current yield for a bond is determined by dividing the dollar amount of annual interest by its current market price
which of the following statements is true bonds may be purchased in either the primary or secondary market
a bond that is sold at a price far below its face, makes no interest payments, and is redeemed for its face value at maturity is called a _______ bond zero coupon
T/f generally there are a number of purchase options and withdrawal options for investors that purchase mutual funds true
t/f the major reasons why investors purchase mutual funds are the professional management, diversification, and accounting services, and liquidity true
t/f shares in a closed end mutual fund are issued by the investment company from time to time when investors purhcased the fund false : in a closed end mutual fund shares are issued by the investment company only when the fund is organized
t/f shares ina mutual fund are bought and sold at their net asset value – NAV . is typically calculated at the end of each trading day true
a family of funds exists when each member of a investors family purchase the same mutual fund. false : a family fund is managed by one investment company
some mutual funds charge 12B-1 fees to defray the cost of marketing and distribution of the mutual fund
a document that prospective mutual fund investors receive is called prospectus
payments made to a fund’s shareholders that result from the sales of securities in the fund’s portfolio which have risen in value since they were purchased are called capital gain distributions
an investor who wants a tax free investment would choose an __________ fund municipal bond
a mutual fund in which new shares are issued and redeemed by the investment company at the request of investors is called open end
t/f home prices have generally climbed steadily over the years true
t/f a passive activity is a business or trade in which you do not materially participate such as rental activity true
t/f a limited partnership or sydicate is formed by limited partners who assume unlimited financial liability false: sydicate is a temporary association of individuals or firms organized to perform a specific task that requires a large amount of capital
t/f the purchase of real property does not provide protection against inflation false : the purpose of real property is a hedge against inflation
t/f gold prices tend to fall by such factors as fear of war, political instability and inflation false
direct real estate investments include single family dwellings
which type of REIT invest in properties mortgage
if you want a risk proof real estate investment, invest in a participation certificate- it is an equity investment in a pool of mortages that have been purchased by government agencies such as Ginnie Mae.
according to a federal law, REITs must distribute what percentage of their net annual earnings to shareholders 95%
which one of the following is a disadvantage of investing in realestate illiquidity
t/f the ground rules for retirement planning are rapidly changing true
t/f due to pensions and social security, most people do not suffer any decline in income after retirement false
t/f social security is the most widely used source of retirement income true it covers 97% of the U.S. workers, retirement, survivors, and disability benefits
t/f at age 65 social security benefits are paid automatically true
t/f ERISA sets minimum standards for pension plans in private industry true
at age 65 what is the average life expectancy of a woman 19 years
what is considered the “point of no return” in preparing for a comprehensive retirement age 45
the first step in retirement planning is to begin buying annuities to insure cash flow analyze your assets and liabilies
under what retirement plan does your employer make nontaxable contribution sot the plan for your benefit and reduce your salary by the same amount 401K
in what type of annuity is the money you pay invested in common stocks or other equities, and the income you receive dependent on the investment results variable annuity
T/f every adult should have a written will true
t/f in a simple will ( i love you will) you leave everything to your spouce true
t/f an executor cannot be a family member or a friend false : any person over the age of 18 without being convicted of a felony
t/f a trustee is person who assumes the responsibilities of providing the children with personal care and managing the estate for them false a GUARDIAN is the person who assumes the responsibilities of proving the children with personal care and managing the estate for them
t/f a living trust is a trust established by your will that becomes effective upon your death false a testementary trust is established by your will and a living trust is created and provides benefits during the trustors lifetime
which type of will has been gainign popularity due to the increased exemption – 600,000 since 1987 exemption trust- everything passes to spouse with exemption of amount equal to exemption which would pass into trust
a handwritten will that you prepare yourself is called a holographic will
trusts can be revocable- terms the trustor retains the rights to changeor irrevocable- cannot be altered or ended by its creator
which type of trust is perhaps the most common estate planning trust credit shelter- allows married couples to leave everything to each other tax free
probate and administration costs of your estate may run between ______% of your estate 5 to 8 % this covers fees for attorneys, accountants, appraisers, executors, administrators, trustees, court costs. % decreases as size of estate increases

Leave a Reply

Your email address will not be published. Required fields are marked *