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Exam 24: Managing Personal Finances

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Question 121

Multiple Choice

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The earnings of a traditional individual retirement account (IRA) are

A) taxed at the time they are earned.
B) not taxed.
C) taxed when the funds are withdrawn.
D) subject to the double taxation of all dividends.

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

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Question 122

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Before getting married, a couple should discuss and agree upon a financial strategy.

A) True
B) False

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Question 123

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

Brad and Tori 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)

Due to the high cost of the insurance premiums, many people have found that it makes financial sense to carry medical insurance only if their employer provides it.

What advice might a personal financial advisor offer a recent college graduate desiring to become financially secure?

Casey wants to obtain life insurance at the lowest possible cost, but is leery of term insurance because she has heard the premiums tend to go up every few years. One way for her to avoid this concern would be to purchase multiyear level-premium insurance.

Borrowing money for ordinary expenses is a necessary part of life.

Throughout history an investment in ________ has yielded an excellent return, regardless of the state of the economy or political changes.

If you are in the 25 percent tax bracket and your home mortgage interest is $1,000 per month, then your after-tax mortgage interest cost is $750 per month.

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.

Which of the following deductible levels would result in the lowest premium for automobile insurance?

One problem with the Social Security system is that the number of people retiring and living longer is declining dramatically.

You should never borrow to cover regular expenses, but it makes perfectly good sense to use credit to cover unexpected expenses such as car or home repairs.

If possible, it is almost always better to buy a single home rather than an attached home.

Although he has a good health insurance policy, Shaun is concerned that a serious accident or lengthy illness would still be devastating to his family because of the lost income and other expenses not covered by his policy. Shaun would probably be interested in obtaining

The U.S. government provides several types of financial incentives to encourage people to attend college.

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

Many employers offer health insurance coverage for their full-time employees.

Alvin's credit card charges him 18% interest on his unpaid balance. His bank is offering him 1% interest on a savings account. The first thing Alvin should do with any extra money he may have is to