| 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 |
