Exam2 FIN474 Spring 2011 Key
1. (p. 253) The most common risks are
A. Personal risks
B. Property risks
C. Liability risks
D. All of these are common risks
E. None of these are common risks
Bloom's: Knowledge
Difficulty: Medium
Kapoor - Chapter 08 #44
Learning Objective: 1
Topic: Risk management
2. (p. 253) If you choose to wear your seatbelt, you are using
A. Risk avoidance
B. Risk reduction
C. Risk assumption
D. Risk shifting
E. Risk increasing
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 08 #50
Learning Objective: 1
Topic: Risk management
3. (p. 253) Anything that pay possibly cause a loss is called a
A. Hazard
B. Negligence
C. Peril
D. Premium
E. Speculation
Bloom's: Knowledge
Difficulty: Medium
Kapoor - Chapter 08 #45
Learning Objective: 1
Topic: Risk management
4. (p. 272) Which of the following should reduce your auto insurance premium?
A. Celebrate your 70th birthday
B. Get a speeding ticket
C. Get good grades in college
D. Move from a farm to a city
E. Start smoking
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 08 #95
Learning Objective: 5
Topic: Insurance costs
5. (p. 251) An individual who purchases insurance is
A. The insurance company
B. A policyholder
C. An insurer
D. A victim
E. An employer
Bloom's: Knowledge
Difficulty: Easy
Kapoor - Chapter 08 #38
Learning Objective: 1
Topic: Risk management
6. (p. 258) Homeowner's insurance covers all except
A. Three months in a hotel after a house fire
B. A diamond necklace valued at $25,000
C. A three year old television
D. A fire that damages your neighbor's roof that was caused by a spark from your grill
E. Medical costs for a visitor who slipped on your steps and broke his ankle
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 08 #60
Learning Objective: 2
Topic: Property insurance
7. (p. 269) Sammy was driving on the highway and drove over a piece of metal that was on the highway. The
metal punctured her gas tank. This damage would be covered under her
A. Uninsured motorist's protection
B. Property damage liability
C. Collision
D. Comprehensive physical damage
E. Bodily injury liability
Bloom's: Comprehension
Difficulty: Hard
Kapoor - Chapter 08 #86
Learning Objective: 4
Topic: Auto coverage
8. (p. 261) If you have a loss due to a flood
A. Your homeowner's insurance should cover the loss.
B. You need to have purchased special coverage if you live in an area that has frequent floods in order to be
covered.
C. FEMA (Federal Emergency Management Agency) will automatically provide coverage if this is your second
flood loss.
D. You need an umbrella policy for coverage.
E. Your additional living expenses coverage will apply if you move to an area that has not flooded in one year.
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 08 #68
Learning Objective: 2
Topic: Property insurance
9. (p. 253) Insurance allows someone to
A. Reduce risk
B. Assume risk
C. Shift risk
D. Avoid risk
E. Eliminate risk
Bloom's: Knowledge
Difficulty: Easy
Kapoor - Chapter 08 #40
Learning Objective: 1
Topic: Risk management
10. (p. 264) Andrew is applying for insurance for his new home. Which of the following is correct?
A. He should base the amount of insurance on the price he paid for it.
B. He should insure the building for 75 percent of the replacement.
C. He should use the replacement value method for settling claims to receive the full cost of repairing or
replacing his personal belongings.
D. His personal belongings should automatically be covered with his home at 125 percent of his home's insured
amount.
E. His insured amount should remain the same as long as he lives in his house.
Bloom's: Comprehension
Difficulty: Hard
Kapoor - Chapter 08 #75
Learning Objective: 3
Topic: Cost factors
11. (p. 290) Nancy is studying the health insurance plan options offered by her employer. She wants a policy that
will have the insurance pay a percentage of her medical expenses. She should review the
A. Deductible
B. Coinsurance
C. Stop-loss provision
D. Hospital indemnity policy
E. Dread disease policy
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 09 #48
Learning Objective: 2
Topic: Health insurance coverage
12. (p. 290) The type of health insurance coverage that may cover routine doctor visits, X-rays, and lab tests is
A. Dental expense
B. Surgical expense
C. Hospital expense
D. Physician expense
E. Major medical expense
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 09 #42
Learning Objective: 2
Topic: Health insurance coverage
13. (p. 296) The set amount that you must pay toward medical expenses before the insurance company pays
benefits is called
A. Reimbursement
B. Out-of-pocket limit
C. Deductible
D. Internal limit
E. Indemnity
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 09 #59
Learning Objective: 3
Topic: Trade-offs
14. (p. 298) Which of the following is most likely to use a health maintenance organization?
A. A healthy young adult who travels around the world for his job
B. A family with teenagers who need annual check-ups for sports at school
C. An neighbor who has seen the same specialists for the last 15 years
D. A low-income elderly relative
E. All of the above would be likely to use a health maintenance organization
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 09 #68
Learning Objective: 4
Topic: Health care programs
15. (p. 304) Which of the following is INCORRECT?
A. Disability income insurance provides regular cash income when you're unable to work because of a
disability.
B. Disabilities can include pregnancy, a non-work-related accident, or an illness.
C. The definition of disability varies from insurer to insurer.
D. A bad disability policy pays you if you cannot work at your regular job.
E. Disability can cause even greater financial problems than death.
D - A GOOD policy pays you if cannot work at your regular job. A BAD policy will not pay unless you cannot
work at any job.
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 09 #78
Learning Objective: 5
Topic: Disability
16. (p. 295) A policy that pays you back for actual expenses is called
A. A coinsurance plan
B. A reimbursement plan
C. A deductible plan
D. An indemnity plan
E. A reasonable and customary plan
Bloom's: Knowledge
Difficulty: Easy
Kapoor - Chapter 09 #57
Learning Objective: 3
Topic: Trade-offs
17. (p. 292) The insurance that helps pay extensive hospital, surgical, medical, and other bills with a low
deductible is known as a
A. Basic health insurance policy
B. Individual policy
C. Comprehensive major medical policy
D. Hospital indemnity policy
E. Dread disease policy
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 09 #49
Learning Objective: 2
Topic: Health insurance coverage
18. (p. 290) Jenny wants health insurance that limits the amount that she must pay before the insurance starts
paying benefits. She is concerned about a
A. Deductible
B. Coinsurance
C. Stop-loss provision
D. Hospital indemnity policy
E. Dread disease policy
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 09 #46
Learning Objective: 2
Topic: Health insurance coverage
19. (p. 306) Disability income insurance plans offer benefits
A. For only a few years
B. Until age 65
C. For life
D. All of the above are possibilities
E. None of the above is correct
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 09 #85
Learning Objective: 5
Topic: Disability
20. (p. 296) A quality health insurance plan should do all of the following except
A. Offer basic coverage for hospital and doctor bills
B. Impose no unreasonable exclusions
C. Limit out-of-pocket expenses to more than no $5,000 per year
D. Provide at least 120 days' hospital room and board in full
E. Provide a lifetime maximum level of coverage of up to $50,000
Bloom's: Knowledge
Difficulty: Medium
Kapoor - Chapter 09 #62
Learning Objective: 3
Topic: Trade-offs
21. (p. 336) The settlement option that pays the life insurance proceeds to the beneficiary for as long as she or he
lives is called
A. Lump-sum payment
B. Limited installment payment
C. Final life payment
D. Life income option
E. Proceeds left with the company
Bloom's: Comprehension
Difficulty: Easy
Kapoor - Chapter 10 #70
Learning Objective: 3
Topic: Buying life insurance
22. (p. 332) Fred bought life insurance when he was 47, although he told the insurance company that he was 42.
He has since died. Which of the following provisions will affect the amount of money his beneficiaries will
receive?
A. Incontestability clause
B. Misstatement of age provision
C. Naming a beneficiary
D. Policy reinstatement
E. The grace period
Bloom's: Comprehension
Difficulty: Easy
Kapoor - Chapter 10 #54
Learning Objective: 3
Topic: Provisions
23. (p. 328) What is the most positive feature of whole life insurance listed below?
A. You must pay interest on any loans
B. You pay premiums each year for the rest of your life
C. It is more expensive than term insurance
D. It builds cash value
E. It is permanent life insurance
Although all are true about whole life insurance, the most positive feature is that it builds cash value.
Bloom's: Analysis
Difficulty: Medium
Kapoor - Chapter 10 #46
Learning Objective: 2
Topic: Life insurance policies
24. (p. 333) Frank, age 38, was hit by a car and died. Which of the following riders provided an additional benefit
for his heirs?
A. Waiver of premium disability benefit
B. Accidental death benefit
C. Guaranteed insurability option
D. Cost-of-living protection
E. Accelerated benefits
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 10 #61
Learning Objective: 3
Topic: Waivers
25. (p. 323) Stephanie is the wage earner in a "typical family" with $30,000 gross annual income. Use the Easy
Method to determine how much insurance she should carry.
A. $30,000
B. $147,000
C. $210,000
D. $300,000
E. $490,000
The Easy Method uses the calculation of: Current Income  7  70 percent = $30,000  7  70% = $147,000
Bloom's: Application
Difficulty: Medium
Kapoor - Chapter 10 #80
Learning Objective: 1
Topic: Life insurance needs
26. (p. 339) Which of the following allows an individual to receive a fixed amount of income over a certain period
of time, or over his or her life?
A. Fixed annuity
B. Term insurance
C. Whole insurance
D. Variable annuity
E. 401(k)
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 10 #75
Learning Objective: 4
Topic: Annuities
27. (p. 328) Which of the following is NOT a type of permanent insurance?
A. Whole life
B. Straight life
C. Ordinary life
D. Term life
E. Cash value life
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 10 #35
Learning Objective: 2
Topic: Life insurance policies
28. (p. 327) Which of the following is NOT temporary insurance?
A. Whole life
B. Renewable term
C. Convertible term
D. Decreasing term
E. Multiyear level
Bloom's: Knowledge
Difficulty: Easy
Kapoor - Chapter 10 #37
Learning Objective: 2
Topic: Life insurance policies
29. (p. 334) Which of the following is NOT important when buying life insurance?
A. Buying from a financially strong company
B. Buying from professionally qualified representatives
C. Ignoring the reputations of local agencies
D. Working with a representative who will help you select the proper kind of protection within your financial
boundaries
E. Asking family or friends for recommendations to choose an insurance company
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 10 #65
Learning Objective: 3
Topic: Buying insurance
30. (p. 339) Which of the following statements is correct?
A. A deferred annuity allows an individual to receive payments from an annuity immediately.
B. A deferred annuity allows an individual to receive payments from a life insurance policy immediately.
C. A life insurance policy allows an individual to receive payments from an annuity at once.
D. A deferred annuity allows an individual to receive payments from a life insurance policy at some future date.
E. An immediate annuity allows an individual to receive payments from an annuity beginning at once.
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 10 #73
Learning Objective: 4
Topic: Annuities
31. (p. 359) If your main focus is to be able to buy or sell an investment quickly without substantially affecting the
investment's value, you are most concerned with
A. Income
B. Growth
C. Liquidity
D. Business failure risk
E. Market risk
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 11 #79
Learning Objective: 2
Topic: Investments
32. (p. 370) Which of the following statements is true?
A. Convertible corporate bonds are more secure than government bonds.
B. Convertible bonds often pay 1 to 2 percent more interest than nonconvertible bonds.
C. Because of the conversion feature, it is not necessary to evaluate convertible, corporate bonds.
D. In reality, there is no guarantee that bondholders will convert to common stock even if the market value of
the common stock does increase in value.
E. Even after convertible bondholders convert their investment to common stock, the bondholders still receive
interest payments.
Bloom's: Comprehension
Difficulty: Hard
Kapoor - Chapter 11 #122
Learning Objective: 5
Topic: Corporate bonds
33. (p. 358) All of the following can be factors that influence business failure risk except:
A. Bad management
B. Unsuccessful products
C. Competition
D. All of the above can affect business failure risk
E. None of the above can affect business failure risk
Bloom's: Comprehension
Difficulty: Hard
Kapoor - Chapter 11 #72
Learning Objective: 2
Topic: Risk
34. (p. 372) Bond funds
A. Allow investors to purchase individual corporate bonds.
B. Are an indirect way of owning bonds issued by the governments and corporations.
C. Are not as diversified as individual bond purchases.
D. Do not have professional management because they do not include stocks in the funds.
E. Should be the primary investment for investors who have a very aggressive portfolio.
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 11 #127
Learning Objective: 5
Topic: Corporate bonds
35. (p. 365) Which of the following is NOT a U.S. Treasury security?
A. Treasury note
B. Treasury bond
C. Treasury Inflation-Protected Securities (TIPS)
D. Treasury stock
E. Treasury bill
Bloom's: Knowledge
Difficulty: Medium
Kapoor - Chapter 11 #100
Learning Objective: 4
Topic: Government debt
36. (p. 376) Which of the following securities are rated at various agencies?
A. Treasury bills
B. Treasury notes
C. Corporate bonds
D. Treasury bonds
E. TIPS
Municipal and corporate bonds are rated. U.S. government securities are not because they are risk free for
practical purposes.
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 11 #133
Learning Objective: 6
Topic: Bond rating
37. (p. 373) The IRS requires that an investor in a zero-coupon bond report interest
A. Only in the first year
B. Every year as it is earned
C. When it is received
D. At maturity
E. Never since it is a zero-coupon
Bloom's: Comprehension
Difficulty: Hard
Kapoor - Chapter 11 #131
Learning Objective: 5
Topic: Corporate bonds
38. (p. 368) You are considering an investment in a municipal bond that has a yield of 5.2 percent. Your tax rate is
25 percent. What is your taxable equivalent yield?
A. 1.3 percent
B. 3.9 percent
C. 5.2 percent
D. 6.5 percent
E. 6.9 percent
Taxable equivalent yield = tax-exempt yield/(1.0 - tax rate) = .052/(1.0 - .25) = .0693 = 6.93%
Bloom's: Application
Difficulty: Medium
Kapoor - Chapter 11 #141
Learning Objective: 4
Topic: Taxable equivalent yield
39. (p. 367) A bond backed by the full faith, credit, and unlimited taxing power of the government that issued it is
called a ____________ bond.
A. debenture
B. mortgage
C. secured
D. general obligation
E. revenue
Bloom's: Knowledge
Difficulty: Medium
Kapoor - Chapter 11 #108
Learning Objective: 4
Topic: Government debt
40. (p. 358) Which of the following risks deals with fluctuations due to political or social conditions?
A. Inflation
B. Interest rate
C. Business failure
D. Market
E. Stock
Bloom's: Comprehension
Difficulty: Easy
Kapoor - Chapter 11 #68
Learning Objective: 2
Topic: Risk
41. (p. 408) Abe was contacted by XYZ's ____________ when XYZ wanted to sell new securities to the general
public for the first time.
A. Initial public offering
B. Investment bank
C. Primary market
D. Secondary market
E. Securities exchange
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 12 #91
Learning Objective: 4
Topic: Buying and selling stocks
42. (p. 414) If you bought stock using dollar cost averaging as listed below, what is your average cost?
A. $27.50
B. $27.78
C. $27.96
D. $28.57
E. $30.00
Average cost = (total investment cost)/(total number of shares purchased) = ($50  3)/(1.75 + 1.65 + 2.0) =
$150/5.4 shares = $27.78/share
Bloom's: Application
Difficulty: Hard
Kapoor - Chapter 12 #139
Learning Objective: 5
Topic: Investing strategies
43. (p. 400) Which of the following is true?
A. Mergent's Handbook of Common Stocks is a misnomer because it only analyzes industries.
B. Standard & Poor's reports are available only in the Internet.
C. Stock advisory services include printed detailed financial reports.
D. Value Line is the only reliable stock advisory service used by investors.
E. All of the above are correct.
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 12 #74
Learning Objective: 2
Topic: Evaluating stocks
44. (p. 411) Tanya understands the "how to" of researching stocks and likes to make her own decisions. However,
she is not comfortable using the Internet to trade stocks. She should use a(n)
A. Discount broker
B. Full-service broker
C. Market Maker
D. Online broker
E. All of the above are correct
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 12 #106
Learning Objective: 4
Topic: Buying and selling stocks
45. (p. 414) Brenda purchases stock and never plans to sell them. She could be considered to be using a ______
A. Buy-and-hold technique
B. Direct investment plan
C. Direct reinvestment plan
D. Dollar cost averaging technique
E. Margin technique
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 12 #114
Learning Objective: 5
Topic: Investing strategies
46. (p. 407) This calculation includes the annual dividends in dollars and the increase in the purchase price of the
investment.
A. Book value
B. Capital gain
C. Market value
D. Price-earnings
E. Total return
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 12 #87
Learning Objective: 3
Topic: Financial evaluation
47. (p. 416) Rebecca owns stock that pays a dividend. She does not want the cash now; instead, she would prefer
to have more shares of stock. She should use a ______
A. Buy-and-hold technique
B. Direct investment plan
C. Dividend reinvestment plan
D. Dollar cost averaging technique
E. Margin technique
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 12 #116
Learning Objective: 5
Topic: Investing strategies
48. (p. 398) A stock issued by a company that has a capitalization of $250 million or less is called a _______
stock.
A. Blue chip
B. Income
C. Micro Cap
D. Midcap
E. Penny
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 12 #69
Learning Objective: 2
Topic: Evaluating stocks
49. (p. 405) Which of the following is based on historical numbers?
A. Earnings
B. Earnings per share
C. Price-earnings ratio
D. All of the above
E. None of the above
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 12 #80
Learning Objective: 3
Topic: Financial evaluation
50. (p. 408) Jake wanted to buy and sell various stocks on the NYSE. He was using one of the largest
_______________ in the world.
A. Initial public offerings
B. Investment banks
C. Primary markets
D. Secondary markets
E. Securities exchanges
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 12 #95
Learning Objective: 4
Topic: Buying and selling stocks
51. (p. 450) Payments to investors related to the sale of securities in the fund's portfolio are
A. Capital gain distributions
B. Income dividends
C. Capital gains
D. Mutual fund money
E. Fund taxes
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 13 #67
Learning Objective: 4
Topic: Mutual fund transactions
52. (p. 439) Thomas wants to invest in a fund that invests in stock, bonds and money market instruments. Which of
the following will meet his needs?
A. Asset allocation funds
B. Aggressive growth funds
C. Junk bond funds
D. Midcap funds
E. Short-term corporate bond funds
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 13 #53
Learning Objective: 2
Topic: Fund classifications
53. (p. 435) Which class of shares charges a commission when shares are purchased?
A. A
B. B
C. C
D. K
E. Q
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 13 #44
Learning Objective: 1
Topic: Characteristics of funds
54. (p. 439) Which of the following types of stock funds invests in stock issued by companies with a long history
of paying dividends?
A. Equity income funds
B. Growth funds
C. Index funds
D. International funds
E. Regional funds
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 13 #47
Learning Objective: 2
Topic: Fund classifications
55. (p. 434) A fee charged to defray the costs of advertising and marketing for a mutual fund is called a ____ fee.
A. 3c
B. 12b-1
C. 14c-2
D. 401(k)
E. 403(b)
Bloom's: Knowledge
Difficulty: Medium
Kapoor - Chapter 13 #42
Learning Objective: 1
Topic: Characteristics of funds
56. (p. 453) All of the following are valid ways to purchase mutual funds except
A. Regular account transaction
B. Voluntary savings plan
C. Contractual savings plan
D. Reinvestment plan
E. All of the ways listed are valid
Bloom's: Comprehension
Difficulty: Easy
Kapoor - Chapter 13 #72
Learning Objective: 4
Topic: Mutual fund transactions
57. (p. 454) Melinda wants to withdraw some money from her mutual fund. Which of the following is NOT an
option available?
A. Write a check
B. Sell a certain number of shares each investment period
C. Withdraw a fixed percentage of asset growth
D. Withdraw all income dividend and capital gain distributions earned each investment period
E. Withdraw all principal and leave interest dividends and capital gain distributions in the account
Bloom's: Analysis
Difficulty: Medium
Kapoor - Chapter 13 #73
Learning Objective: 4
Topic: Mutual fund transactions
58. (p. 434) A contingent deferred sales load is known as all of the following except
A. Back-end load
B. B fund
C. Redemption fee
D. Only two of the above are correct
E. All of the above are correct
Bloom's: Comprehension
Difficulty: Hard
Kapoor - Chapter 13 #41
Learning Objective: 1
Topic: Characteristics of funds
59. (p. 431) Which type of fund has the prices determined by factors of supply and demand like a stock?
A. Closed-end funds
B. SEC government funds
C. Net asset value funds
D. No-load fund
E. Open-end funds
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 13 #30
Learning Objective: 1
Topic: Characteristics of funds
60. (p. 433) The Anderson Balanced mutual fund charges a sales load of 5.25 percent. If you invest $25,000, how
much of your investment will actually be used to purchase shares in the fund?
A. $20,238.10
B. $23,687.50
C. $24,868.75
D. $24,947.50
E. $25,000.00
Total commissions = investment  load = $25,000  .0525 = $1,312.50
Total purchased = investment - total commissions = $25,000 - $1,312.50 = $23,687.50
Bloom's: Application
Difficulty: Hard
Kapoor - Chapter 13 #77
Learning Objective: 1
Topic: Characteristics of funds
61. (p. 485) A codicil is
A. A document that explains, adds, or deletes provisions in an existing will
B. A handwritten will
C. Another name for the first will an individual writes
D. A will written in legal code
E. None of the above
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 14 #98
Learning Objective: 4
Topic: Legal aspects of estate planning
62. (p. 488) This is the best option if you or your beneficiaries are inexperienced in financial matters and if your
estate taxes will be high.
A. Revocable trust
B. Disclaimer trust
C. Irrevocable trust
D. Living trust
E. Testamentary trust
Bloom's: Comprehension
Difficulty: Hard
Kapoor - Chapter 14 #111
Learning Objective: 4
Topic: Legal aspects of estate planning
63. (p. 486) A legal arrangement that helps manage the assets of your estate for your benefit or that of your
beneficiaries is called a
A. Formal will
B. Trust
C. Holographic will
D. Guardian
E. Statutory will
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 14 #101
Learning Objective: 4
Topic: Legal aspects of estate planning
64. (p. 484) Darlene is updating her estate planning and wants to set up the legal document to leave $3.5 million to
her husband. She is writing a(n)
A. Exemption trust will
B. Guardian will
C. Simple will
D. Stated amount will
E. Traditional marital share will
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 14 #91
Learning Objective: 4
Topic: Legal aspects of estate planning
65. (p. 470) When you retire, you will probably spend less money on
A. Clothing
B. Health insurance
C. Medical care
D. Recreation
E. All of the above
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 14 #56
Learning Objective: 1
Topic: Planning for retirement
66. (p. 476) How is eligibility determined for receiving Social Security retirement benefits?
A. Marital status
B. Credits
C. Family size
D. Salary
E. All of the above
Eligibility is determined by earning a certain number of credits.
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 14 #72
Learning Objective: 2
Topic: Retirement income
67. (p. 475) In 1974, ERISA was passed. What does ERISA stand for?
A. Employee Retirement Income Security Act
B. Employer Retirement Income Security Act
C. Employee Retirement Investment Security Act
D. Employer Retiring Investment Stock Act
E. Entity Retirement Investment Security Act
Bloom's: Comprehension
Difficulty: Hard
Kapoor - Chapter 14 #69
Learning Objective: 2
Topic: Retirement income
68. (p. 479) If you have fully funded your 401(k) and profit-sharing plans, you may choose to enhance your
retirement savings by using this plan that allows you to withdraw money from the account tax-free and penaltyfree after five years.
A. Annuity
B. Keogh plan
C. Roth IRA
D. SEP plan
E. Spousal IRA
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 14 #80
Learning Objective: 2
Topic: Retirement income
69. (p. 488) When you die, this tax will be based on the fair market value of your investments, property, and bank
accounts less an exemption (of $3.5 million in 2009).
A. Estate tax
B. Gift tax
C. Inheritance tax
D. Trust federal income tax
E. Will tax
Bloom's: Comprehension
Difficulty: Easy
Kapoor - Chapter 14 #113
Learning Objective: 4
Topic: Legal aspects of estate planning
70. (p. 466) When thinking about retirement, which of the following is correct?
A. You'll spend less money when you retire.
B. Saving just a little bit won't help.
C. You can depend on Social Security and a company pension plan to pay your basic living expenses.
D. The earlier you start saving, the better.
E. Your pension benefits will increase to keep pace with inflation.
Bloom's: Comprehension
Difficulty: Medium
Kapoor - Chapter 14 #49
Learning Objective: 1
Topic: Planning for retirement
Exam2 FIN474 Spring 2011 Summary
Category
# of Questions
Bloom's: Analysis
2
Bloom's: Application
4
Bloom's: Comprehension
54
Bloom's: Knowledge
10
Difficulty: Easy
9
Difficulty: Hard
10
Difficulty: Medium
51
Kapoor - Chapter 08
10
Kapoor - Chapter 09
10
Kapoor - Chapter 10
10
Kapoor - Chapter 11
10
Kapoor - Chapter 12
10
Kapoor - Chapter 13
10
Kapoor - Chapter 14
10
Learning Objective: 1
13
Learning Objective: 2
19
Learning Objective: 3
10
Learning Objective: 4
18
Learning Objective: 5
9
Learning Objective: 6
1
Topic: Annuities
2
Topic: Auto coverage
1
Topic: Bond rating
1
Topic: Buying and selling stocks
3
Topic: Buying insurance
1
Topic: Buying life insurance
1
Topic: Characteristics of funds
5
Topic: Corporate bonds
3
Topic: Cost factors
1
Topic: Disability
2
Topic: Evaluating stocks
2
Topic: Financial evaluation
2
Topic: Fund classifications
2
Topic: Government debt
2
Topic: Health care programs
1
Topic: Health insurance coverage
4
Topic: Insurance costs
1
Topic: Investing strategies
3
Topic: Investments
1
Topic: Legal aspects of estate planning
5
Topic: Life insurance needs
1
Topic: Life insurance policies
3
Topic: Mutual fund transactions
3
Topic: Planning for retirement
2
Topic: Property insurance
2
Topic: Provisions
1
Topic: Retirement income
3
Topic: Risk
2
Topic: Risk management
5
Topic: Taxable equivalent yield
1
Topic: Trade-offs
3
Topic: Waivers
1