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D/S Unit 4 Multiple Choice
Test Description: Multiple Choice questions for Unit 4 Financial Planning
Instructions: Answer all questions to get your test result.
1) Long-term investments, properly diversified, include the following mutual funds:
A
Growth, balanced, international, bond
B
Growth, growth and income, international, aggressive growth
C
Growth, growth and income, bond, aggressive growth
D
International, bond, aggressive growth, growth
2) Which of the following is a good investment option?
A
Mutual funds
B
Viaticals
C
Futures
D
Gold
3) Which statement is true about liquidity?
A
The less liquid the investment, the less return
B
The more liquid an investment, the more return
C
The more liquid an investment, the less return
D
All of these
4) A reason that people need to save and invest is to
A
Increase the money supply
B
Be able to get anything they want
C
Enable their money to make money
D
Have an opportunity to talk with financial service providers
5) Company X's board of directors had decided to issue a portion of its earnings to its shareholders. If you own stock in Company X, you can expect to receive a(n):
A
Dividend
B
Investment
C
Buy-out
D
Yield
6) Savings accounts and money-market accounts are most appropriate for:
A
Long-term investments like retirement
B
Earning a high rate of return
C
Savings accounts and money-market accounts should be avoided since they carry high risk
D
Emergency funds and short-term goals
7) The benefit of diversification in your investments is:
A
Increased return
B
Reduced risk
C
Reduced tax liability
D
Increased risk
8) To ensure that some of your retirement savings will not be subject to income tax upon withdrawal, you would contribute to:
A
401(k)
B
Roth IRA
C
Annuity
D
Traditional IRA
9) A young investor willing to take moderate risk for above-average growth would be most interested in:
A
Single stocks
B
Bonds
C
Mutual funds
D
Real estate
10) A retirement plan found in nonprofit organizations such as churches, hospitals and schools.
A
401(k)
B
403(b)
C
457
D
GIC
11) Which of the following would not be a huge financial risk (and, therefore would not require insurance) if you have a full emergency fund?
A
A car accident
B
Your identity gets stolen
C
You lose your cell phone
D
A medical emergency
12) The purpose of insurance is to:
A
Develop a savings plan
B
Provide an investment opportunity
C
Transfer financial risk
D
All of these
13) Which of the following is NOT a recommended way of lowering your car insurance premiums?
A
Shop around
B
Get good grades and take a driver education class
C
Drop your auto insurance all together
D
Increase your deductible
14) Which of the following types of insurance is NOT recommended for a young single adult?
A
Auto insurance
B
Health insurance
C
Identity theft protection
D
Life insurance
15) A person becomes self-insured when:
A
They own their own business
B
They have no debt
C
Everyone should have term life insurance regardless of age or financial well-being
D
Their kids are grown, they have no debt, and they have a fully funded retirement
16) Which of the following is true?
A
Any kind of duplicate insurance coverage is a bad idea
B
You can never be too safe-there is no bad insurance
C
Mortgage life insurance is necessary if you are a homeowner
D
Pet insurance is a good idea since pet emergencies can be very expensive
17) Which of the following statements about disability insurance is FALSE?
A
After college, short-term disability should be covered my your emergency fund of three to six months' worth of expenses.
B
Disability insurance is not necessary if you have a good health insurance policy.
C
A longer elimination period will lower your premium cost.
D
Your coverage should be for 65% of your income.
18) Which of the following is NOT a benefit of having a will?
A
You will can be an expression of your personal values
B
A will enables you to nominate the persons who will handle your estate
C
You only need a will if you have a large estate.
D
A well-drafted will can allow your family to minimize death taxes and other costs
19) Which of the following would be duplicate coverage for your health insurance policy?
A
Long-term care insurance
B
Disability insurance
C
Auto insurance
D
Cancer and hospital indemnity insurance
20) You are involved in a two-car accident in which you are at fault. The other driver is injured and your insurance covers the medical expenses of the victim. This type of insurance is called:
A
Uninsured motorist protection
B
Comprehensive
C
Liability
D
Collision
*select an answer for all questions
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