Question 1

One step toward the goal of taking control of your finances is to keep track of all your expenses.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following accounting statements would assist an individual in taking inventory of personal assets and liabilities?

Accepted Answer

A)   income statement
B)   balance sheet
C)   budget
D)   statement of cash flowsE) A) and C)
F) B) and C)

Question 3

Most families only need to buy enough life insurance to replace about three years of income.

Accepted Answer

A) True 
 B)False

Question 4

Mortgage interest payments and property taxes are:

Accepted Answer

A)   tax deductible for homeowners.
B)   expenses that make home ownership less attractive than renting.
C)   both likely to increase each year at a faster rate than your income.
D)   both likely to decline the longer you own the home.E) All of the above
F) A) and B)

Question 5

The younger you are when you buy term life insurance, the lower the premiums tend to be.

Accepted Answer

A) True 
 B)False

Question 6

Most homeowner's insurance policies do not cover certain types of expensive items unless you purchase a rider for the additional coverage.

Accepted Answer

A) True 
 B)False

Question 7

The total cost of purchasing a stereo or television with cash is ________ the cost when using credit cards to finance the same assets.

Accepted Answer

A)   the same as
B)   greater than
C)   less than
D)   less stable thanE) A) and B)
F) A) and C)

Question 8

During the most recent drop in stock prices, Homer took the opportunity to buy a wide variety of stocks even though many of his friends and relatives were selling. Homer's investment strategy appears to be consistent with contrarian views.

Accepted Answer

A) True 
 B)False

Question 9

Regardless of potential changes, you can count on Social Security to provide you with a comfortable retirement.

Accepted Answer

A) True 
 B)False

Question 10

Real estate people agree that the key to getting the optimum return on the purchase of a home is:

Accepted Answer

A)   construction quality.
B)   location.
C)   tax advantages.
D)   design features.E) C) and D)
F) B) and C)

Question 11

The earnings on a traditional IRA are:

Accepted Answer

A)   never taxed, in order to encourage people to invest for their retirement.
B)   tax-free until the Social Security system is improved.
C)   taxed as income when they are withdrawn after retirement.
D)   available to the investor without a penalty.E) A) and C)
F) A) and B)

Question 12

More than half of all debtors seeking help at the National Consumer Counseling Service were between the ages of 18 and 32.

Accepted Answer

A) True 
 B)False

Question 13

Funds deposited into an IRA cannot be withdrawn until you retire.

Accepted Answer

A) True 
 B)False

Question 14

Romeo and Juliet are experiencing marriage difficulties regarding money. One technique to help them control and forecast their future financial situation, as well as allow them to achieve their financial goals, would be to prepare a(n) :

Accepted Answer

A)   income statement.
B)   balance sheet.
C)   budget.
D)   asset inventory.E) A) and C)
F) A) and B)

Question 15

For someone with a family that includes young children, the first step in estate planning should be to:

Accepted Answer

A)   establish a will.
B)   set up a trust fund for each child.
C)   select a guardian for the children.
D)   give each child his or her own savings account.E) A) and D)
F) A) and C)

Question 16

Financial planning begins with:

Accepted Answer

A)   spending money wisely.
B)   earning money.
C)   insuring your assets against an unexpected loss.
D)   saving money.E) B) and C)
F) None of the above

Question 17

After marriage, one great financial strategy is to live on one income and to save the other.

Accepted Answer

A) True 
 B)False

Question 18

A contrarian would advise you to buy stock when stock prices are falling and most other people are selling.

Accepted Answer

A) True 
 B)False

Question 19

The best way to invest in a 401(k) plan is to use all of the money to buy stock in the company where you work.

Accepted Answer

A) True 
 B)False

Question 20

One of the keys to financial success is never to apply for a credit card.

Accepted Answer

A) True 
 B)False

Exam 25: Extension: Managing Personal Finances

Which of the following accounting statements would assist an individual in taking inventory of personal assets and liabilities?

Correct AnswerverifiedShow Answer

Romeo and Juliet are experiencing marriage difficulties regarding money. One technique to help them control and forecast their future financial situation, as well as allow them to achieve their financial goals, would be to prepare a(n) :

Correct AnswerverifiedShow Answer

The younger you are when you buy term life insurance, the lower the premiums tend to be.

Correct AnswerverifiedShow Answer

Mortgage interest payments and property taxes are:

Correct AnswerverifiedShow Answer

One step toward the goal of taking control of your finances is to keep track of all your expenses.

Correct AnswerverifiedShow Answer

Real estate people agree that the key to getting the optimum return on the purchase of a home is:

Correct AnswerverifiedShow Answer

More than half of all debtors seeking help at the National Consumer Counseling Service were between the ages of 18 and 32.

Correct AnswerverifiedShow Answer

After marriage, one great financial strategy is to live on one income and to save the other.

Correct AnswerverifiedShow Answer

The best way to invest in a 401(k) plan is to use all of the money to buy stock in the company where you work.

Correct AnswerverifiedShow Answer

One of the keys to financial success is never to apply for a credit card.

Correct AnswerverifiedShow Answer

Funds deposited into an IRA cannot be withdrawn until you retire.

Correct AnswerverifiedShow Answer

Financial planning begins with:

Correct AnswerverifiedShow Answer

The earnings on a traditional IRA are:

Correct AnswerverifiedShow Answer

Most families only need to buy enough life insurance to replace about three years of income.

Correct AnswerverifiedShow Answer

The total cost of purchasing a stereo or television with cash is ________ the cost when using credit cards to finance the same assets.

Correct AnswerverifiedShow Answer

During the most recent drop in stock prices, Homer took the opportunity to buy a wide variety of stocks even though many of his friends and relatives were selling. Homer's investment strategy appears to be consistent with contrarian views.

Correct AnswerverifiedShow Answer

Most homeowner's insurance policies do not cover certain types of expensive items unless you purchase a rider for the additional coverage.

Correct AnswerverifiedShow Answer

For someone with a family that includes young children, the first step in estate planning should be to:

Correct AnswerverifiedShow Answer

A contrarian would advise you to buy stock when stock prices are falling and most other people are selling.

Correct AnswerverifiedShow Answer

Regardless of potential changes, you can count on Social Security to provide you with a comfortable retirement.

Correct AnswerverifiedShow Answer

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