Question Details

1.	Most of the bonds that are bought and sold are not transacted on the organized exchanges. They bought and sold through bond dealers who do not sell many ________ bonds but do trade many ________ bonds in the secondary market.
A.	Corporate; government
B.	Government; corporate
C.	Government; low par value
D.	Corporate; low par value
2.	Which of the following financial documents would you use to create a financial plan?
A.	Balance sheet
B.	Income statement
C.	Budget
D.	Cash budget
E.	All of the above
3.	What are the ways investors can make money investing in common stocks?
A.	They can potentially receive a stock split on their shares
B.	They can potentially earn capital gain
C.	They can potentially receive dividends on their shares
D.	All of the above is correct 
E.	Both b and c are correct
4.	Kendra always thought the grace period feature of her credit card was such a wonderful idea. Why, in essence she is getting her purchases interest free during this time. After taking Dr. Art Keown- personal finance course she learned a starting truth about grace periods.
A.	Grace periods are actually beneficial to the credit card company
B.	There are higher fees associated with grace periods
C.	Most banks eliminate their grace period on new purchases if you don’t pay your balance in full
D.	All credit cards carry a grace period
E.	None of the above
5.	What are good ways to keep the cost of Homeowners insurance down?
A.	Pay your premiums once per year
B.	Be self insured for the smaller losses
C.	Maintain a good credit  score
D.	All of the above are correct
E.	All but c are correct
6.	The first step in evaluating your financial health consists of
A.	Preparing a personal balance sheet
B.	Determining what your worth
C.	Preparing a personal income statement
D.	Determining where your money comes from and where it goes
E.	All of the above
7.	What is the main difference between replacement cost coverage and actual cash value coverage?
A.	Replacement cost coverage does not consider depreciation
B.	Actual cash value is based on the cost to replace lost or damaged items
C.	Replacement cost coverage requires an endorsement to your policy
D.	All of the above are correct
E.	Both a and c are correct
8.	Why might someone choose to use itemized deductions instead of taking the standard deduction offered by the IRS?
A.	It is easier to calculate your itemized deductions versus the standard deductions
B.	You may have to lower tax liability if you itemized instead of using the standard deductions
C.	Married taxpayers must use the itemized deductions only
D.	Most computer tax software automatically itemizes deductions
E.	Both b and c are correct
9.	Which questions do financial ratios help you answer?
A.	Do I have adequate liquidity to meet emergencies
B.	Do I have the ability to meet debt obligations
C.	Am I saving as much as I think I am?
D.	All of the above
E.	Both a and b above
10.	What do traditional IRA, the Roth IRA, and the Coverdell Education Savings Accounts all have in common?
A.	Income limits determine the tax averages
B.	Friends and family members can make contributions to them for us
C.	They give us more choices in our retirement years
D.	All of the above are correct
E.	Both a and c are correct
11.	When comparing which mutual fund to invest in, which of the following would be important to consider?
A.	Load
B.	Net asset value
C.	Expense ratio
D.	All of the above are correct
E.	Both a and c are correct
12.	You are nearing “golden” years and have insured yourself well. You are happy to discover that the proceeds of the life insurance policies  that you own, but for which you have designated beneficiaries, do not _________.
A.	Go through probate
B.	Come under the control of your executor
C.	Get taxed as the same rate as your real property 
D.	Go to the heirs without being probated
E.	A and B above
13.	Money market mutual funds provide attractive competition for bank deposits because 
A.	Their low fees are affordable for almost anyone
B.	They are convenient to purchase and use
C.	Their short term, higher returns are generally regarded as practically risk free
D.	They are fully insured
E.	None of the above
14.	Tran purchased a house for a rental property for $100,000 five years ago. During the time owned this rental, his net rent was a total of $4,000. He just sold the property for $120,000. What was his average annual return on this investment?
A.	4.0%
B.	4.8%
C.	24%
D.	Not enough information available
15.	Over the past decade, the number of new car sales are down and the number of new car leases are up. What is probably the main reason why this is true?
A.	The salesman make higher commission when cars are leased
B.	The manufacturers prefers it when people lease instead of purchase
C.	New cars are getting so expensive that the average person can’t afford to buy them
D.	Both a and b are correct
E.	None of the above
16.	The loan contract is a formal contract called a ____________ that specifies who retains control over the item being purchased in a ___________. The rights of both the lender and the borrower are stated in case of ________. 
A.	Agreement, insurance clause, bankruptcy
B.	Indenture, disclosure statement, default
C.	Note, security agreement, default 
D.	Agreement, collateral statement, default
E.	Binder, legal transaction, bankruptcy
17.	Latisha invested $1,000 in XYZ stock. Two years later she sold the stock for $1,200. During the time she owned the stock, she received a total of $80 in dividends. What was her total return on the investment?
A.	8%
B.	20%
C.	28%
D.	Not enough information available
18.	Which of the following starts off with the highest risk bond and ends with the lowest risk bond?
A.	Municipal; corporate, treasury, junk
B.	Corporate, junk, treasury, municipal
C.	Junk, corporate, municipal, treasury
D.	Corporate, junk treasury, municipal
19.	Which of the following characteristics will determine how expensive your life insurance policy will be?
A.	Your marital status
B.	Your medical history
C.	Your age
D.	 Your sex
E.	All but A are correct
20.	Suppose that you placed $500 in a bank account at the end of each year for the next 10 years. How much would be on deposit at the end of the tenth year if the deposits earned 8% each year? There is nothing in the account today.
A.	8,079.46
B.	5400.00
C.	7,243.38
D.	6,355.04
E.	7,774.51
21.	Part of life event number 1, getting started is laying the groundwork for your financial goals. Which of the following are part of laying the groundwork?
A.	Establishing a budget
B.	Checking a credit score
C.	Establishing an emergency fund
D.	All of the above are correct
E.	Both a and b are correct
22.	Richard Harris wants to elect the single life annuity option for retirement. His mother lived to age 92 and his dad lived to be 89. This annuity will pay Richard a set monthly payment for as long as he lives. However, what possible disadvantages will he face?
A.	There will be no inflation protection
B.	There will be no flexibility for withdrawals in case of emergencies
C.	The balance of the money left over upon death will not be passed on to his heirs
D.	All of the above are correct
E.	Both a and c are correct
23.	Laticia is twenty-two years old and she has all of her savings in a Certificate of Deposit at the bank that currently pays 3 percent. She hopes to use her savings for a down payment on a new house in a ten years. Inflation in house prices in her area has averaged 5 percent per year. What financial principle from Chapter one does she need to pay better attention to?
A.	Nothing happens without a plan
B.	Waste not, want not, smart spending matters
C.	Risk and return go hand in hand
D.	All of the above are correct
E.	None of the above
24.	Donel is investing in a mutual fund that really is not as diversified as other funds. It may enjoy good capital gains but is much riskier when it comes to unsystemic risk. This fund is called a _____ fund
A.	Aggressive growth
B.	Sector
C.	Life cycle
D.	Asset allocation
E.	Bond
25.	Your firm has contributed company stock into your retirement account instead of cash. This is  called a(n)_______.
A.	ESOP
B.	ELOP
C.	EFLP
D.	Stock-contributed plan
E.	None of the above