Final Personal Finance Chap 16-18

Real estate does not include Furniture – C
Which is NOT an example of indirect ownership in real estate? Raw land – B
An effective way to estimate the value or asking price of a real estate investment is by using the … discounted cash flow method – A
____________ is a repair expense for rental property rather than a capital improvement Painting the Kitchen – A
The advantages of real estate to NOT include… A high level of liquidity – D
Andrew deacon paid $15000 and borrowed $90000 for an investment worth $105000. What was the loan to value ratio? 86% – C90000/105000 = 0.8571
Denny Fitzgerald has a duplex with operating income of $30000 before depreciation …… $21273 – D240000/29 = 8276300000 – 8276 = 21724
Paul Kidd’s marginal tax bracket is 28% he has taxable income of %5000 on his real estate investment. His tax liability on this income is … $1400 – B
When one trades equity in one property for the equity in a similar property, he or she pays … no income taxes in the year of the exchange – A
__________would NOT be included in a list of speculative investments. Treasury securities – C
The prudent investor limits high risk investments to less than ____________ percent of his or her overall investment mix. 10% – A
When an option writer does NOT own the asset, it is called a … Naked option – B
An option is a contract that … Gives the holder the right to buy or sell a specific asset.Specifies a predetermined price.Specifies a time period.ALL OF THESE – D
Aggressive investors take a particularly speculative position when they DO NOT OWN the underlying asset, as when they buy ________ or sell _____________- naked options; naked puts – C
The wealth of all investors remaining the same is known as a … zero sum game – A
Women need to save more money fore retirement than men because they … Get less from Social SecurityGet fewer retirement benefits from employer planslive longerALL OF THESE – D
Lina ears $75000 a year, while Christine earns $60000 a year. Lina pays ___________ Social Security taxes than (as) Christine. somewhat higher – A
To collect Social Security retirement benefits based on an ex-spouses’s earnings, both must be at least 62 years old – C
When estimating retirement needs, you should estimate…. Your retirement ExpensesYour sources of retirement incomeAdditional retirement savings to meet your goalsALL OF THESE – D
The best known defined contribution plan is the … 401 (K) – D
The salary reduction pension plan specifically designed for employers with 100 or fewer employees is called a … SIMPLE IRA – A
The type of employer pension plan in which the benefit is determined by a formula that generally includes the worker’s average pay and the number o years worked for the company is called a ___________ plan. defined – benefit – B
A qualified joint and survivor benefit is an annuity whose payments continue to the surviving spouse after the participants death, equal to at least ___________ percent of the participant’s benefit. 50 – C
When no employer-sponsored retirement plan is offered, you should contribute to a(n)… Roth IRA or a traditional IRA – D
When an IRA is used to shelter lump-sum distributions from employer-sponsored retirement accounts, there… is no immediate tax liability or penalty on the funds put in the IRA – D
Maria and James Arias (26 and 30) withdrew $10000 from their IRA accounts to pay for a new car when their old car was destroyed in a fire…. They will pay a $1000 penalty, and they will pay taxes on the $10000 withdrawal. – D
In ______________ plans, employees control the assets in their accounts. Defined contribution – B
For individuals age 50 and above, the largest permissible yearly IRA contribution is … $6000 – D
When deciding which money to draw down during retirement, the following order applies: Taxable assets, tax deferred assets, and tax free assets – A
A(n) _________________- annuity provides monthly payments for as long as one of the two people – usually husband and wife– is alive. Joint and survivor – C
The marital deduction allows an estate to pass on an unlimited amount of assets to a surviving spouse free of estates taxes. True
Some states of have passed laws that allow parents to set aside money in a trust specifically …… Special needs – C
The truster gives up the following right(s) under an irrevocable living trust: Control of propertyChange of the beneficiariesCharge of the trusteesALL OF THESE -SD
When one dies without a will, this is called dying…. Intestate – B
More than _____________ percent of all adults do not have a will 50 – C
_______________ is NOT a community property state. New York – D
In a community property state ___________ could be separable property. Both property acquired by a gift or inheritance and property owned before marriage – D
A(n) ___________ is created under the terms of a will and becomes effective on the death of the grantor according to the terms of the grantor’s will or revocable living trust. Testamentary Trust – A
A __________________ is designed to take effect only when the grantor is unable to manage his or her own financial affairs owing to incapacitation. Durable power of attorney – C
A legal document that directs life support measures, such as a respirator, to be removed is called a … living will – D
Federal estate and gift taxes affect fewer than ________ percent of the wealthiest Americans each year. 1 percent – A
The initial step in estate planning is to … Inventory everything you own and owe – B
You man not disinherit a spouse unless that person’s right to inheritance was voluntarily given up in a signed agreement True
An irrevocable trust cannot be changed or undone by the grantor during his or her lifetime. True

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