Part A: Answer each of the following questions. Be sure to show all of your work and calculations.

Personal Finance

Question 1

5.0 Points

With a __________, you, and usually your employer, pay funds into your retirement plan.

	A. contributory retirement plan
	B. deducted-benefit plan
	C. noncontributory retirement plan
	D. None of the above

Question 2

When planning the retirement payout, there are several options from which to choose. With the __________ option the annuity provides payments over the life of both you and your spouse.

	A. lump sum annuity
	B. single life annuity
	C. annuity for life
	D. combination annuity
Question 3				5.0 Points

Note: none of these - the answer should be “joint or survivor annuity”
An attachment to a will that alters or amends a portion of the will is called a:

	A. proxy.
	B. revocation.
	C. letter of last instructions.
	D. codicil.

Question 4

All of the following are commonly used estate planning tools EXCEPT:

	A. gifts and trusts.
	B. durable power of attorney and joint ownership of assets.
	C. life insurance.
	D. All of the above are commonly used estate planning tools.
Question 5		5.0 Points

A trust that gives the individual establishing the trust the ability to direct income from the trust to his or her spouse over the spouse's life, and then, at the spouse's death, to choose to whom the assets go is called a:

	A. unified credit trust.
	B. sprinkling trust.
	C. Q-TIP.
	D. A-B trust.
Question 6				5.0 Points

How is the size of a person's Social Security retirement benefits determined?

	A. It depends on the number of credits earned in a person's lifetime.
	B. It depends on the average level of earning over a person's lifetime.
	C. It depends on the number of years a person has paid Social Security taxes.
	D. Both B and C are correct.
Question 7		5.0 Points

Carey is a widow with two teenagers, Brenda age 13 and Terry age 15. Her health has declined and she knows that a will should be drafted. Which of the following statements is NOT a reason to have a will?

	A. Without a will the court will appoint an administrator for the estate.
	B. Without a will, the estate administration fees will be lower.
	C. Without a will the court will choose Brenda's and Terry's guardian(s).
	D. The children's best interests may not be served without a will.
Question 8 5.0 Points Which of the following is a typical cash need of the estate? A. estate and inheritance taxes B. funeral expenses C. outstanding debt D. All of the above

Question 9

If a mutual fund's NAV is $50 and its expense ratio is 2.0 percent, what are the total expenses per share?

		A. $2
		B. $10
		C. $5
		D. $1
Question 10				5.0 Points

To calculate the NAV, the market value of the portfolio less liabilities is divided by the __________ to arrive at a per-share basis.

	A. shares currently issued by the fund
	B. maximum shares to be issued
	C. average number of shares in comparable funds
	D. original number of shares
Question 11		5.0 Points

What would be the tax consequence of owning a mutual fund that made distributions of $600 resulting from short-term gains and $800 resulting from long-term gains assuming a 30% tax bracket and a 10% capital gains rate?

	A. $420
	B. $140
	C. $260
	D. $300

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