ALLIED FIN202 MODULE 8 CHECK YOUR UNDERSTANDING

Question Points
1. As of
2010, what is the maximum yearly amount that an individual can give as a gift
without incurring gift tax liability or having to report the gift to the IRS?
a. $5,000
b. $13,000
c. $15,000
d. $25,000
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2. Which
retirement plan is specifically designed for self-employed individuals and
their employees?
a. Roth IRA
b. Traditional IRA
c. Keogh plan
d. Defined-benefit
plan
3. You can
get a reverse mortgage annuity if:
a. you are willing
to sell your house immediately.
b. you buy a new
home and pay only a minimal down payment.
c. you owe more in
monthly mortgage interest than the annuity amount.
d. your mortgage is
largely or completely paid off.
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4. Estate
planning has two parts. The second part of estate planning consists of:
a. building your
estate through savings.
b. transferring your
estate in the manner you have specified.
c. deciding who
should be your attorney.
d. evaluating your
assets and liabilities.
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5. Which one
of the following is a true statement about retirement planning?
a. I should wait
until at least age 40 to start saving for retirement.
b. My pension
benefits will increase to keep pace with inflation.
c. I should update
my retirement plan periodically.
d. My employer’s
health insurance plan will cover my medical expenses.
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6. Your
first step in retirement planning is to:
a. estimate you
spending needs.
b. analyze your
current assets and liabilities.
c. adjust your
spending needs for inflation.
d. evaluate your
planned retirement income.
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7. Gerald
Wilkins owns a home worth $250,000, a car worth $15,000, various investments
worth $600,000, and other personal assets worth $25,000. What are these things
to Gerald?
a. Estate
b. Will
c. Trust
d. Liabilities
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8. Which one
of the following expenditures for retirees is most likely to decrease?
a. Clothing expenses
b. Insurance
expenses
c. Medical expenses
d. Housing expenses
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9. Which
type of will allows you to pass to your spouse any amount that satisfies your
family objective?
a. Simple
b. Traditional
marital share
c. Exemption trust
d. Stated dollar
amount
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10. When a
lender uses your house as collateral to buy an annuity for you from a life
insurance company, it is called:
a. an obverse
annuity mortgage.
b. a reverse annuity
mortgage.
c. mortgage life
insurance.
d. a level-premium
annuity.
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11. Nancy
Moore is planning for her retirement. She guesses that by the time she retires,
her mortgage will be paid off on her home. She expects she will pay $600 a
month on food and that her medical expenses will be $400 a month. She also
estimates that she will spend $400 a month on things that she enjoys like
traveling, going to concerts, reading, and other similar activities. What step
in the retirement planning process is Nancy completing?
a. Analyzing her
current assets and liabilities
b. Estimating her
spending needs
c. Evaluating her
planned retirement income
d. Developing a
balanced budget based on her retirement income
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12. Under what
type of ownership is the property considered owned 50-50 for estate tax
purposes and passed automatically to your spouse at your death?
a. Tenants in common
b. Tenancy by the
entirety
c. Joint tenants
with the right of survivorship
d. Tenancy by
default
13. A will is:
a. the legal
declaration of a person’s mind as to the disposition of his or her property
after his or her death.
b. a synonym for a
prenuptial agreement.
c. a legal document
authorizing someone to act on your behalf.
d. a synonym for a
letter of last instruction.
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14. Under what
type of will is half of your estate taxed at your death and half at your
spouse’s death?
a. Simple
b. Exemption trust
c. Traditional
marital share
d. Stated dollar
amount
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15. Which one
of the following is the most widely used source of retirement income?
a. IRAs
b. Keogh plans
c. Social Security
d. Union pension
plans
.
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16. Which will
is sufficient for most smaller estates?
a. Simple
b. Traditional
marital share
c. Exemption trust
d. Stated dollar
amount
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17. The people
who are in the best position to save are:
a. teenagers.
b. middle-aged.
c. elderly.
d. people in their
30s.
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18. Which one
of the following statements is correct regarding wills?
a. Only married
people need a will.
b. Only married
people with dependents need a will.
c. Only the rich with
considerable estates need a will.
d. Every adult
should have a will.
.
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19. If you are
married, your estate planning involves:
a. the interest of
at least two people.
b. fewer legal
requirements.
c. fewer financial
responsibilities.
d. seeking the
services of a securities broker.
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20. Which one
of the following statements is true about estate planning?
a. Estate planning is only for the rich.
b. It is always easy
to plan for your family’s financial security in the event of your death.
c. Most people give
meticulous attention to estate planning.
d. Many people do
little to financially prepare for death.