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Exam 24: Appendix: Managing Personal Finances

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Question 71

Multiple Choice

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Which of the following is an indication that the government recognizes Social Security money will not provide you with ample funds for retirement?

A) The government has provided cost-of-living adjustments to Social Security recipients.
B) The government has invested the contributions in high-yielding investment securities.
C) The government has established incentives for workers to save their own money for retirement.
D) The government has passed legislation to require Social Security to maintain a balanced budget.

E) C) and D)
F) None of the above

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Question 72

Multiple Choice

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Young married couples that find themselves running out of money at the end of the month might be well advised to

A) keep track of all of their expenses.
B) keep track of cash spent on major purchases.
C) prepare a balance sheet.
D) apply for additional credit cards.

E) B) and D)
F) A) and D)

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Question 73

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Nate and Audrey are married and have careers in business. If one of the two were to die, there would be a sudden drop in income. To provide protection from this risk the couple should purchase

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

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

Financial planners regularly suggest that you borrow money to pay for large purchases.

Most financial experts believe that the stock market is likely to grow more slowly in the future than it did in the last 50 years.

Mateo and Maya have decided to take out an umbrella policy from an insurance company. The main reason they would probably want to do this would be to

The first step in getting control of your finances is to prepare a budget.

Investments in IRA accounts

With respect to personal financial planning, the first thing to do with any extra money you have is to start a savings plan.

Excessive debt is as much a problem of young consumers as it is of other age groups.

A person using a credit card to make a purchase may end up paying much more than if he or she had paid cash.

Many financial experts advise that you set up a contingency fund equal to about ________ of your earnings and keep these funds in highly liquid accounts.

Your personal budget is the same thing as your personal income statement.

An individual retirement account (IRA) is a tax-deferred investment plan that encourages workers to save for retirement.

________ insurance provides protection from losses of furniture, appliances, and clothes.

MyRA is a Roth IRA-type retirement savings plan for low and middle-income individuals.

Shulei graduated from college two years ago. She has already accumulated enough money in her savings account and money market to meet her basic needs, and now wants to begin investing a portion of each paycheck to earn a high rate of return over the long run. Shulei's best choice as a young woman would be to put money into a bank savings account regularly.

Cynthia is trying to find a way to reduce her car insurance premium. She would be well advised to decrease her insurance policy's deductible.