Question 1

Whole life insurance is insurance where some part of the money you pay goes toward pure insurance and another part goes toward savings,so you are buying both insurance and a savings plan.

Accepted Answer

This is a correct definition of whole life insurance.

Question 2

Home ownership is a wise investment.

Accepted Answer

Home ownership is typically considered a wise investment due to the potential for appreciation in value over time and the potential for building equity. It can also provide long-term financial stability and the freedom to personalize and make improvements to your living space.

Question 3

The first step to controlling your assets is to take an inventory of them.

Accepted Answer

Taking an inventory of your assets is an essential first step to properly managing and controlling them.

Question 4

Your budget is your financial plan.

Accepted Answer

A budget is a plan for managing your finances by allocating your income towards expenses, savings, and investments.

Question 5

Another name for Social Security is Old-Age,Survivors and Disability Insurance Program.

Accepted Answer

Social Security is also known as the Old-Age, Survivors, and Disability Insurance (OASDI) program.

Question 6

A Keogh retirement plan is designed for those who work for the government.

Accepted Answer

A Keogh retirement plan is actually designed for self-employed individuals and small business owners. It is a type of tax-advantaged retirement savings plan that allows for higher contribution limits than traditional Individual Retirement Accounts (IRAs).

Question 7

Living frugally (not participating in unnecessary spending)is easy for the average person.

Accepted Answer

While living frugally may be possible for some people, it can be difficult for many due to various financial constraints and societal pressures to constantly consume.

Question 8

Full coverage auto insurance means that the insurance would pay for both your car and the other person's car if you hit someone else with your car.

Accepted Answer

Full coverage auto insurance typically includes liability coverage, which would cover damages to the other person's car if you are at fault in an accident, as well as collision and comprehensive coverage for your own vehicle.

Question 9

Mortgage payments should not amount to more than 28% of your net income.

Accepted Answer

This is a general guideline used by lenders to determine if a borrower can afford a mortgage payment. It is recommended to not exceed 28% of your net income to avoid being overburdened with debt. However, this is not a hard and fast rule and individual circumstances may vary. It's important to consider other expenses and debts before determining what you can afford to pay towards a mortgage.

Question 10

An IRA is a tax-deferred investment plan that enables a person to save part of his or her income for retirement.

Accepted Answer

This statement is true. An IRA, or individual retirement account, allows someone to save money for their retirement while also deferring taxes on the contributions and earnings until withdrawal in retirement.

Question 11

To take inventory of your financial assets you need to develop an income statement for yourself.

Accepted Answer

Taking inventory of financial assets involves creating a balance sheet, not an income statement. An income statement shows your income and expenses over a certain period of time, while a balance sheet lists your assets, liabilities, and net worth at a specific point in time.

Question 12

Almost all of the U.S.population has accumulated enough money by retirement age to live comfortably.

Accepted Answer

According to various studies and surveys, a significant portion of the U.S. population has not accumulated enough savings for retirement and may face financial insecurity in their senior years.

Question 13

Insurance is a written contract between the party being insured and the insurer where the financial responsibility for losses transfers to the insurer up to a specified limit.

Accepted Answer

This is the definition of insurance.

Question 14

A variable contract is a contract to make regular payments to a person for life or for a fixed period.

Accepted Answer

A variable contract is an insurance or annuity contract in which the amount of the periodic payments can vary depending on the performance of the investment options chosen by the policyholder, rather than guaranteeing a fixed payment.

Question 15

A fixed rate home loan has a fixed interest rate,but the payment increases throughout the life of the loan.

Accepted Answer

A fixed rate home loan has a fixed interest rate and the payment remains the same throughout the life of the loan.

Question 16

A contrarian approach to investing means purchasing stock when others are selling.

Accepted Answer

A contrarian approach involves going against the popular sentiment and buying stocks that are being sold by others.

Question 17

Liability auto insurance means that if you hit someone else with your car,your insurance would pay to repair both cars.

Accepted Answer

Liability auto insurance covers the damages to the other party's vehicle and medical expenses if you are at fault in an accident, but it does not cover repairs to your own car.

Question 18

The least expensive and simplest form of life insurance is whole life insurance.

Accepted Answer

Term life insurance is typically less expensive and simpler than whole life insurance.

Question 19

Present value is the worth of an investment at some future point in time.

Accepted Answer

Present value is the worth of an investment at the current point in time, not at some future point in time. Future value is the worth of an investment at some future point in time.

Question 20

A Roth IRA is an investment that gets tax deductions when the money is deposited in the account.

Accepted Answer

A Roth IRA is an investment that does not get tax deductions when the money is deposited in the account. Instead, qualified distributions from a Roth IRA are tax-free.

Quiz 13: Using Technology to Manage Information Lf-Test Scoring Guidelines