FIN 200 EXAM QUESTIONS AND
ANSWERS ALL CORRECT
Which form of homeowners' policy provides coverage for the most risk exposures? -
Answer- special
Georgette Valentine has expensive photography equipment for use in her hobby. Which
coverage would pay for damage or theft of this equipment? - Answer- a personal
property floater
Not smoking or not walking through a high-crime neighborhood are examples of
_______________ risk. - Answer- avoiding
An organization that provides financial counseling is... - Answer- Consumer Credit
Counseling Service
A prime reason for buying an annuity is to... - Answer- give you retirement income for
the rest of your life
Which of the following statements is correct for term insurance?
-term insurance is protection for a specified period of time
-premiums for term insurance remain constant
-term insurance builds up cash values
-term insurance is usually more expensive than whole life insurance - Answer- Term
insurance is protection for a specified period of time
The grace period in life insurance allows _____ days to elapse, during which time the
premium may be paid. - Answer- 28-31
Which type of insurance is sometimes called temporary insurance? - Answer- term
insurance
Subject to certain minimums, which life insurance is designed to let you pay premiums
at any time in virtually any amount? - Answer- universal life insurance
Which statement is correct regarding retirement living expenses?
-The exact amount of money you will need can be accurately estimated
-The exact amount of money you will need is impossible to predict
,-Your spending patterns will probably not change
-You will use a smaller amount of money for food, housing, and medical care
-It is impossible to estimate your spending needs - Answer- The exact amount of money
you will need is impossible to predict
Which type of annuity gives more income per dollar of outlay than any other type? -
Answer- Straight life annuity
Which of the following expenditures for retirees is likely to increase?
-state income taxes
-work-related expenses
-federal income taxes
-clothing expenses
-health insurance - Answer- health insurance
Which federal law sets minimum standards for pension plans in private industry and
protects more than 50 million workers? - Answer- The Employee Retirement Income
Security Act
Which of the following is the most widely used source of retirement income?
-union pension plans
-Keogh plans
-company pension plans
-IRAs
-social security - Answer- social security
Which retirement plan is specifically designed for self-employed individuals and their
employees? - Answer- Keogh plan
Which employer retirement plan specifies the benefit promised to the employee at the
normal retirement age? - Answer- a defined benefit plan
Your first step in retirement planning is to... - Answer- analyze your current assets and
liabilities
What type of annuity is purchased by people of retirement age? - Answer- immediate
Reduced Social Security benefits are available to the retiree at age... - Answer- 62
You can determine your net worth by... - Answer- subtracting your liabilities from your
assets
The main responsibility of "The Fed" is to...
-determine illegal business activities
-approve spending by Congress
-set federal income tax rates
, -maintain a balanced budget for the federal government
-regulate the money supply - Answer- regulate the money supply
Higher consumer prices are likely to be accompanied by...
-higher interest rates
-higher exports
-lower production costs
-lower interest rates
-lower union wages - Answer- higher interest rates
Elaine Romberg prepares her own income tax return each year. A tax preparer would
charge her $60 for this service. Over a period of ten years, how much does Elaine gain
from preparing her own tax return? Assume she can earn 6 percent with a savings
certificate. - Answer- $790.86
If you borrow $100 at 10% simple annual interest and repay it in one lump sum at the
end of one year, you will have to pay... - Answer- $110
The stages that an individual goes through based on age, financial needs, and family
situation is called the... - Answer- adult life cycle
If you could buy an annuity of $5,000 to be received at the end of each of the next four
years and you required an 8% interest rate on your investment, how much would you be
willing to pay for it today? - Answer- $16,560
n=4
i=8
pmt=5,000
solve for pv
Ben plans to buy a house for $65,000. If that real estate is expected to increase in value
by 5% each year, what will its approximate value be seven years from now? - Answer-
91,461
pv=65000
i=5
n=7
solve for fv
With an inflation rate of 9 percent, prices would double in ____ years. - Answer- 8
[Rule of 72=72 divided by interest=time]
If you invest $1,000 in a savings account that pays 6 percent interest compounded
annually and make no additional deposits or withdrawals, your account balance at the
end of four years will be... - Answer- $1,262.48
ANSWERS ALL CORRECT
Which form of homeowners' policy provides coverage for the most risk exposures? -
Answer- special
Georgette Valentine has expensive photography equipment for use in her hobby. Which
coverage would pay for damage or theft of this equipment? - Answer- a personal
property floater
Not smoking or not walking through a high-crime neighborhood are examples of
_______________ risk. - Answer- avoiding
An organization that provides financial counseling is... - Answer- Consumer Credit
Counseling Service
A prime reason for buying an annuity is to... - Answer- give you retirement income for
the rest of your life
Which of the following statements is correct for term insurance?
-term insurance is protection for a specified period of time
-premiums for term insurance remain constant
-term insurance builds up cash values
-term insurance is usually more expensive than whole life insurance - Answer- Term
insurance is protection for a specified period of time
The grace period in life insurance allows _____ days to elapse, during which time the
premium may be paid. - Answer- 28-31
Which type of insurance is sometimes called temporary insurance? - Answer- term
insurance
Subject to certain minimums, which life insurance is designed to let you pay premiums
at any time in virtually any amount? - Answer- universal life insurance
Which statement is correct regarding retirement living expenses?
-The exact amount of money you will need can be accurately estimated
-The exact amount of money you will need is impossible to predict
,-Your spending patterns will probably not change
-You will use a smaller amount of money for food, housing, and medical care
-It is impossible to estimate your spending needs - Answer- The exact amount of money
you will need is impossible to predict
Which type of annuity gives more income per dollar of outlay than any other type? -
Answer- Straight life annuity
Which of the following expenditures for retirees is likely to increase?
-state income taxes
-work-related expenses
-federal income taxes
-clothing expenses
-health insurance - Answer- health insurance
Which federal law sets minimum standards for pension plans in private industry and
protects more than 50 million workers? - Answer- The Employee Retirement Income
Security Act
Which of the following is the most widely used source of retirement income?
-union pension plans
-Keogh plans
-company pension plans
-IRAs
-social security - Answer- social security
Which retirement plan is specifically designed for self-employed individuals and their
employees? - Answer- Keogh plan
Which employer retirement plan specifies the benefit promised to the employee at the
normal retirement age? - Answer- a defined benefit plan
Your first step in retirement planning is to... - Answer- analyze your current assets and
liabilities
What type of annuity is purchased by people of retirement age? - Answer- immediate
Reduced Social Security benefits are available to the retiree at age... - Answer- 62
You can determine your net worth by... - Answer- subtracting your liabilities from your
assets
The main responsibility of "The Fed" is to...
-determine illegal business activities
-approve spending by Congress
-set federal income tax rates
, -maintain a balanced budget for the federal government
-regulate the money supply - Answer- regulate the money supply
Higher consumer prices are likely to be accompanied by...
-higher interest rates
-higher exports
-lower production costs
-lower interest rates
-lower union wages - Answer- higher interest rates
Elaine Romberg prepares her own income tax return each year. A tax preparer would
charge her $60 for this service. Over a period of ten years, how much does Elaine gain
from preparing her own tax return? Assume she can earn 6 percent with a savings
certificate. - Answer- $790.86
If you borrow $100 at 10% simple annual interest and repay it in one lump sum at the
end of one year, you will have to pay... - Answer- $110
The stages that an individual goes through based on age, financial needs, and family
situation is called the... - Answer- adult life cycle
If you could buy an annuity of $5,000 to be received at the end of each of the next four
years and you required an 8% interest rate on your investment, how much would you be
willing to pay for it today? - Answer- $16,560
n=4
i=8
pmt=5,000
solve for pv
Ben plans to buy a house for $65,000. If that real estate is expected to increase in value
by 5% each year, what will its approximate value be seven years from now? - Answer-
91,461
pv=65000
i=5
n=7
solve for fv
With an inflation rate of 9 percent, prices would double in ____ years. - Answer- 8
[Rule of 72=72 divided by interest=time]
If you invest $1,000 in a savings account that pays 6 percent interest compounded
annually and make no additional deposits or withdrawals, your account balance at the
end of four years will be... - Answer- $1,262.48
