Upload
daniel-bizzell
View
219
Download
1
Tags:
Embed Size (px)
Citation preview
When money earns interest on interest, it is said to be compounding.
• True
Since real estate brokers are licensed and bonded, they are required to give you
unbiased information about real estate purchases
• False
A personal loan is different from a credit card in that it is normally used
to finance one large purchase
• True
On an amortization schedule, more interest and less principle is paid each
month as the loan matures.
• False
Before you start an investment program, you should ensure liquidity by
having money in financial institutions or in money market securities.
• True
Long term liabilities are debts that will be paid at least three years into the
future.
• False
Goals with a time frame five or more years into the future are called intermediate-term goals
• False
The traditional IRA allows tax-deductible contributions of up to $4000 for
individual who are not covered by employer-sponsored retirement plans or meet income qualifications if they
have an employer plan.
• True
Defined contribution employer- sponsored retirement plans provide
you a specific amount of income when you retire, based on factors such as
your salary and years of employment.
• False
• In order to be valid, a will must be dated, signed, and witnessed.
• True
• The amount of income that you receive from Social Security when you retire is dependent on the number of years you earned income and your average level of income.
• True
• The most important element in FICO credit scoring is your payment history.
• True
• If no one else relies on your income, life insurance may not be necessary.
• True
• Advantages of whole life insurance policies are that they provide long-term coverage, the rates are fixed, and they have a savings or cash value feature.
• True
• A _________________ is established to transfer assets tax-free from a company retirement plan.
• Rollover IRA
• If you are about to invest in a stock that has excellent growth potential over the next few years and the investment is to be part of your retirement, the best place to do this would be in
• Roth IRA
• The bond par value or face value is the amount the investor will get paid when the bond matures.
• True
• A personal balance sheet summarizes
• Assets, liabilities, and net worth
• Another term for your wealth calculated by deducting money that you owe from the value of the things you own is
• Net worth
• Compounding is the process of obtaining present values; discounting is the process of obtaining future values.
• False
• Employers have an option of wheter or not to match an employees Social Security and Medicare taxes
• False
• Cash advances on credit cards normally cost you interest from the date of the advance and also a transaction fee of 1 to 2 percent
• True
• One of the disadvantages of credit cards is that they allow you to spend beyond your means
• True
• The term ARM stands for
• Adjustable rate mortgage
• Capital gains from mutual funds can be received if the mutual fund makes a profit on the shares it sells or if an individual investor realizes a gain on the sale of mutual fund shares
• True
• An example of a depository financial institution is an insurance company
• False
• Because interest is tax deductible and payments are deferred until you graduate, it is good advice to take out the maximum student loan for which you can qualify.
• False
• On the purchase of a home, one “point” is equal to
• 1 percent of the amount being financed
• An ordinary annuity can be defined as
• A series of equal payments at the end of each period
• The selection of a home’s school system is only applicable if you have or are likely to have school-aged children
• False
• The stock exchange with the most stringent listing requirements is the
• NYSE (New York Stock Exchange)
• In negotiating a price for the purchase of a home, you should do all except which of the following?
• Offer the highest price you can afford first to get it settled quickly
• Which is not a factor in the FICO credit scoring
• Marital status
• Social Security provides sufficient income to support the lifestyles of most individuals.
• False
• Your asset allocation should not be influenced by
• religion
• All of the following gains from investments are taxed as ordinary income except
• Long-term capital gains
• A ___________ is a document that provides financial information about a mutual fund, including expenses and past performance
• Prospectus
• The schedule that shows your monthly home payment and the amounts applied to principle an interest each month is called a depreciation table.
• False
• During the time the policy is in effect, term life insurance has a good savings and investment component.
• False
• Buying health insurance through employer-sponsored plans is somewhat more expensive than buying your own policy individually.
• False
• ____________ bonds are the least risky of all bonds, and, therefore, pay a lower rate of interest.
• Treasury
• It is good financial planning to pay only the minimum credit card payment and thus maintain a balance since interest rates are low on credit cards.
• False
• Two advantages of investing in mutual funds are diversification and professional management
• True
• Asset allocation is the process of allocating money across financial assets, such as stocks, bonds, and mutual funds, with the objective of eliminating risk altogether.
• False
• Which of the following can be deducted from your taxes even if you do not itemize.
• Student loan interest
• Budgeting helps set goals by estimating __________ on a monthly basis to determine how much to save and spend.
• Income and expense
• The annual percentage rate (APR) is useful because it allows you to easily compare financing costs among various possible creditors.
• True
• Bonds are certificates representing partial ownership of a firm.
• False
• Collision and comprehensive coverage is optional in most states except if you are financing your car in which case you must have this coverage to protect the lender.
• True
• Life insurance proceeds are generally not taxable to the
• Beneficiary
• A ___________ order is an order to execute a transaction to buy or sell a stock at its prevailing price.
• Market
• Since most workers have employer-sponsored disability coverage and are also eligible for Social Security and worker’s compensation, there is very little demands or need for individual disability insurance.
• False
Definitions to know
• Mutual Fund- an investment in which people pool their money to buy stocks, bonds, real-estate, or other assets selected by professional managers
• Liability- something that is owed or the borrowing of money
• Asset-what you own• Net worth- a measure of the level of your wealth.
It is determined by subtracting the level of your debt or borrowing from the value or your assets.
• Income statement- a statement that tells you where your money has come from and where it has gone over some period of time.
• Annuity- an investment that guarantees regular payments to the holder, usually beginning at retirement and continuing for a fixed number of years or until death
• Beneficiary- a person named to receive the benefits from an insurance policy
• Capital gain- the profit from the sale of assets such as stocks, bonds, or real estate
• Cash flow statement- a summary of receipts and payments for a given period of time; also called an income and expense statement
• Common stock- a stock whose owner has voting rights and receives dividends based on company profits
• 401(k) plan- a tax deferred retirement plan funded by regular contributions from the employee
• IRA- individual retirement account; a personal retirement plan that permits individuals to set aside money; with the contributions and earnings not taxed until the funds are withdrawn– Roth IRA- a personal retirement plan in which the
original contributions are not tax-deductible, but the earning are tax- free
• Liquidity- the ability of an asset to be quickly and easily converted into cash
• Opportunity cost- the cost of giving up one thing to get something else
• Social Security- the federal program that people pay into while they are working, that pays disability, retirement, and life insurance benefits to eligible recipients