D/S Unit 4 Multiple Choice Question Preview (ID: 33707)

Multiple Choice Questions For Unit 4 Financial Planning.[print questions]

Long-term investments, properly diversified, include the following mutual funds:
a) Growth, growth and income, international, aggressive growth
b) Growth, balanced, international, bond
c) International, bond, aggressive growth, growth
d) Growth, growth and income, bond, aggressive growth

Which of the following is a good investment option?
a) Mutual funds
b) Gold
c) Viaticals
d) Futures

Which statement is true about liquidity?
a) The more liquid an investment, the less return
b) The more liquid an investment, the more return
c) The less liquid the investment, the less return
d) All of these

A reason that people need to save and invest is to
a) Enable their money to make money
b) Increase the money supply
c) Be able to get anything they want
d) Have an opportunity to talk with financial service providers

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

Savings accounts and money-market accounts are most appropriate for:
a) Emergency funds and short-term goals
b) Long-term investments like retirement
c) Earning a high rate of return
d) Savings accounts and money-market accounts should be avoided since they carry high risk

The benefit of diversification in your investments is:
a) Reduced risk
b) Increased return
c) Reduced tax liability
d) Increased risk

To ensure that some of your retirement savings will not be subject to income tax upon withdrawal, you would contribute to:
a) Roth IRA
b) 401(k)
c) Annuity
d) Traditional IRA

A young investor willing to take moderate risk for above-average growth would be most interested in:
a) Mutual funds
b) Single stocks
c) Bonds
d) Real estate

A retirement plan found in nonprofit organizations such as churches, hospitals and schools.
a) 403(b)
b) GIC
c) 457
d) 401(k)

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) You lose your cell phone
b) A medical emergency
c) Your identity gets stolen
d) A car accident

The purpose of insurance is to:
a) Transfer financial risk
b) Provide an investment opportunity
c) Develop a savings plan
d) All of these

Which of the following is NOT a recommended way of lowering your car insurance premiums?
a) Drop your auto insurance all together
b) Get good grades and take a driver education class
c) Increase your deductible
d) Shop around

Which of the following types of insurance is NOT recommended for a young single adult?
a) Life insurance
b) Auto insurance
c) Identity theft protection
d) Health insurance

A person becomes self-insured when:
a) Their kids are grown, they have no debt, and they have a fully funded retirement
b) They have no debt
c) Everyone should have term life insurance regardless of age or financial well-being
d) They own their own business

Which of the following is true?
a) Any kind of duplicate insurance coverage is a bad idea
b) Pet insurance is a good idea since pet emergencies can be very expensive
c) You can never be too safe-there is no bad insurance
d) Mortgage life insurance is necessary if you are a homeowner

Which of the following statements about disability insurance is FALSE?
a) Disability insurance is not necessary if you have a good health insurance policy.
b) A longer elimination period will lower your premium cost.
c) Your coverage should be for 65% of your income.
d) After college, short-term disability should be covered my your emergency fund of three to six months' worth of expenses.

Which of the following is NOT a benefit of having a will?
a) A will enables you to nominate the persons who will handle your estate
b) A well-drafted will can allow your family to minimize death taxes and other costs
c) You will can be an expression of your personal values
d) You only need a will if you have a large estate.

Which of the following would be duplicate coverage for your health insurance policy?
a) Cancer and hospital indemnity insurance
b) Long-term care insurance
c) Auto insurance
d) Disability insurance

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) Comprehensive
b) Collision
c) Liability
d) Uninsured motorist protection

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