Ch10 Planning For The Future Retirement And Full Test Bank

Introduction to Personal Finance, 2e (Grable)

Chapter 10 Planning for the Future: Retirement and Estate Planning

1) Which of the following provides retirees with a guaranteed payment from their employer for the remainder of the retiree’s life?

A) Pension plan.

B) Defined contribution plan.

C) Retirement plan.

D) Investment plan.

Diff: 2

LO: 10.1, Section 10.1

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

2) Which of the following refers to a plan that defines how much your employer will deposit into your retirement account?

A) Pension plan.

B) Defined contribution plan.

C) Defined benefit plan.

D) Long-term investment plan.

Diff: 1

LO: 10.1, Section 10.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

3) Which of the following offers no promise of what the money will be worth when you retire?

A) Pension plan.

B) Defined contribution plan.

C) Defined benefit plan.

D) Long-term investment plan.

Diff: 2

LO: 10.1, Section 10.1

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

4) Which of the following represents a consistent standard of living between pre- and postretirement?

A) Savings replacement rate.

B) Defined contribution rate.

C) Retirement savings rate.

D) Wage replacement rate.

Diff: 2

LO: 10.1, Section 10.1

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

5) What is the typical wage replacement rate?

A) Between 50% and 60%.

B) Between 60% and 70%.

C) Between 70% and 80%.

D) Between 80% and 100%.

Diff: 2

LO: 10.1, Section 10.1

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

6) Which of the following refers to the percent of your income that you are putting aside for retirement?

A) Wage replacement rate.

B) Retirement savings rate.

C) Savings rate.

D) Expense rate.

Diff: 1

LO: 10.1, Section 10.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

7) Which of the following refers to living longer than expected?

A) Longevity risk.

B) Market risk.

C) Liquidity risk.

D) Maturity risk.

Diff: 1

LO: 10.1, Section 10.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

8) How much is the median amount saved in retirement accounts for the U.S. household?

A) Less than $50,000.

B) $50,000-$75,000.

C) $75,000-$100,000.

D) More than $100,000.

Diff: 1

LO: 10.1, Section 10.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

9) How much is the median savings for those nearing retirement age?

A) Less than $100,000.

B) $100,000-$150,000.

C) $150,000-$250,000.

D) More than $250,000.

Diff: 1

LO: 10.1, Section 10.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

10) Which of the following refers to a retirement account that is funded primarily by the employee?

A) Pension plan.

B) Defined contribution plan.

C) Retirement plan.

D) Investment plan.

Diff: 2

LO: 10.1, Section 10.1

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

11) Which of the following is an example of a defined contribution plan?

A) 401(k).

B) 403(b).

C) 457(b).

D) All of the choices are correct.

Diff: 1

LO: 10.1, Section 10.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

12) Which of the following is a defined contribution plan designed for public education and not-for-profit entities?

A) 401(k).

B) 403(b).

C) 457(b).

D) All of the choices are correct.

Diff: 1

LO: 10.1, Section 10.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

13) Which of the following is a defined contribution plan normally open to all employees working for a state or local government?

A) 401(k).

B) 403(b).

C) 457(b).

D) All of the choices are correct.

Diff: 1

LO: 10.1, Section 10.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

14) Which of the following is an example of a defined contribution plan open to employees of the federal government?

A) 401(k).

B) 403(b).

C) 457(b).

D) Thrift Savings plan.

Diff: 1

LO: 10.1, Section 10.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

15) Which of the following means that you will owe taxes only when you begin to take distributions from the account?

A) Tax-deferred.

B) Tax-exempt.

C) Tax-deductible.

D) Tax-preferred.

Diff: 1

LO: 10.1, Section 10.1

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

16) Sherry just turned 72 years old and have not taken any distributions from her traditional IRA. What could happen if she does not take her required minimum distribution?

A) There is a 10% tax on undistributed RMD amounts.

B) There is a 50% tax on undistributed RMD amounts.

C) There is a 10% tax on IRA balance.

D) 50% of the IRA balance will be subject to ordinary income tax.

Diff: 2

LO: 10.1, Section 10.1

Bloom: Ap

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

17) Which of the following is a benefit of an individual retirement account (IRA)?

A) Tax benefits.

B) Asset protection from creditors.

C) Access to retirement savings in the event of certain emergencies.

D) All of the choices are correct.

Diff: 1

LO: 10.2, Section 10.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

18) Traditional IRAs allow you to claim a tax:

A) credit.

B) deduction.

C) exemption.

D) saving.

Diff: 1

LO: 10.2, Section 10.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

19) Where can you open a traditional IRA?

A) Bank or credit union.

B) Mutual fund company.

C) Brokerage firm.

D) All of the choices are correct.

Diff: 1

LO: 10.2, Section 10.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

20) How much of your IRA contribution may be deducted from your federal income tax return if you do not have access to an employer-provided retirement plan?

A) 50%.

B) 70%.

C) 90%.

D) 100%.

Diff: 1

LO: 10.2, Section 10.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

21) Jessie (19 years old) earned $4,000 from her summer job and $3,000 in capital gains from selling her Google stock. How much can she contribute to an IRA?

A) $4,000

B) $6,000

C) $7,000

D) Zero.

Diff: 3

LO: 10.2, Section 10.2

Bloom: Ap

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

22) Sally wants to transfer her 401(k) account from an old employer directly to a traditional IRA. How can she avoid any taxation?

A) Take a distribution and then deposit it to an IRA in same year.

B) Take a distribution and then deposit it to an IRA within 60 days.

C) Direct transfer of assets from 401(k) trustee to IRA trustee.

D) Cannot avoid taxation.

Diff: 3

LO: 10.2, Section 10.2

Bloom: Ap

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

23) Which of the following refers to a form of earnings from investments?

A) Interest.

B) Dividends.

C) Capital gains.

D) All of the choices are correct.

Diff: 1

LO: 10.2, Section 10.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

24) You will incur a penalty if you withdraw money from your IRA before what age, unless it meets an exception?

A) 50 ½.

B) 59 ½.

C) 60.

D) 72.

Diff: 1

LO: 10.2, Section 10.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

25) Which of the following is an exception for withdrawing money early from your IRA without penalty?

A) Purchase of a new home.

B) Qualified education expenses.

C) Death or disability.

D) All of the choices are correct.

Diff: 2

LO: 10.2, Section 10.2

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

26) How much is the penalty for withdrawing funds from your IRA early?

A) 10%.

B) 12%.

C) 15%.

D) 20%.

Diff: 1

LO: 10.2, Section 10.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

27) How is the money taxed that is withdrawn from a traditional IRA during your retirement?

A) It's taxed as ordinary income.

B) It's tax-deferred and not taxed in the year that it is withdrawn.

C) It's taxed as capital gains.

D) It's not taxed.

Diff: 1

LO: 10.2, Section 10.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

28) Rich has turned 65 years old and has decided to retire. How will distributions from his Roth IRA which was opened when he was 59 years old, be taxed?

A) It's taxed as ordinary income.

B) It's tax-deferred and not taxed in the year that it is withdrawn.

C) It's taxed as capital gains.

D) It's tax-free.

Diff: 2

LO: 10.2, Section 10.2

Bloom: Ap

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

29) Mia contributed $100,000 to a Roth IRA over the past 20 years. She retired at age 60 and would like to withdraw all the funds. She would be in the 24% federal marginal tax bracket. How much will she pay in income taxes on the funds?

A) $24,000.

B) $34,000.

C) $10,000.

D) $0.

Diff: 2

LO: 10.2, Section 10.2

Bloom: Ap

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

30) Mia contributed $5,000 to a Roth IRA in each of the past 3 years and its currently worth $20,000. She has just retired at age 60 and would like to withdraw all the funds. She is in the 12% federal marginal tax bracket. How much will she pay in income taxes on the funds?

A) $1,100.

B) $3,300.

C) $4,400.

D) $0.

Diff: 3

LO: 10.2, Section 10.2

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

31) Mia contributed $75,000 to a traditional IRA. She just retired at age 55 and would like to withdraw all the funds. She will be in the 24% federal marginal tax bracket. How much will she pay in income tax on the distribution?

A) $7,500.

B) $18,000.

C) $25,500.

D) $0.

Diff: 3

LO: 10.2, Section 10.2

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

32) The file cabinet approach to retirement investments suggests that each retirement account represents a drawer with hanging folders that represent different investments. The investment folders might contain all of the following EXCEPT

A) mutual funds.

B) stocks.

C) bonds.

D) mortgages.

Diff: 2

LO: 10.2, Section 10.2

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

33) Once you determine how much to save for retirement, your next step in reaching your retirement goal is to choose

A) how you want your money invested.

B) when you want to start investing.

C) how you want to retire.

D) when you want to stop investing.

Diff: 2

LO: 10.2, Section 10.2

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

34) All of the following are keys to reaching your retirement goals EXCEPT

A) starting early.

B) saving at least 12% of your income.

C) automating your savings.

D) investing passively.

Diff: 2

LO: 10.2, Section 10.2

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

35) Cyndy accepted a new job with a competitor and wishes to rollover her 401k savings to her new employer’s 401k. She has accumulated $250,345 in deferrals and $62,155 in employer matching contributions, of which 80 percent is vested. How much can be transferred?

A) $111,879

B) $250,345

C) $300,069

D) $312,500

Diff: 2

LO: 10.2, Section 10.2

Bloom: Ap

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

36) Which of the following refers to proof of property ownership?

A) Title.

B) Fee simple.

C) Tenancy by the entirety.

D) Community property.

Diff: 1

LO: 10.3, Section 10.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

37) Which of the following refers to owning a divided interest in property with another person?

A) Tenancy in common.

B) Fee simple.

C) Tenancy by the entirety.

D) Community property.

Diff: 2

LO: 10.3, Section 10.3

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

38) Which of the following refers to owning property as the sole owner?

A) Title.

B) Fee simple.

C) Tenancy by the entirety.

D) Community property.

Diff: 1

LO: 10.3, Section 10.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

39) Which of the following ways to title property is solely with a spouse?

A) Joint title.

B) Fee simple.

C) Tenancy by the entirety.

D) Joint tenancy with right of survivorship.

Diff: 2

LO: 10.3, Section 10.3

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

40) Which of the following ways to title spousal property is restricted by state law?

A) Tenancy in common.

B) Fee simple.

C) Joint tenancy with right of survivorship.

D) Community property.

Diff: 1

LO: 10.3, Section 10.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

41) Rob and Jim are brothers who wish to jointly purchase a vacation home together while assuring that the other automatically gets the home upon the other’s death. How should they title the property?

A) Joint tenancy with right of survivorship.

B) Fee simple.

C) Tenancy by the entirety.

D) Community property.

Diff: 2

LO: 10.3, Section 10.3

Bloom: Ap

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

42) Dolores wishes to give her adult daughter immediate access to her savings and checking account, only in the event of her death. How can she effect this outside of the probate process?

A) Will

B) Title account Fee simple.

C) Payable on death account.

D) Transfer on death account.

Diff: 2

LO: 10.3, Section 10.3

Bloom: Ap

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

43) Which of the following refers to an account that includes a designation of one or more beneficiaries who will receive the assets when the account owner dies for brokerage account assets?

A) Title.

B) Fee simple.

C) Payable upon death.

D) Transfer on death.

Diff: 1

LO: 10.3, Section 10.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

44) Which of the following refers to the court-supervised process of distributing assets and paying debts after someone's death?

A) Title.

B) Probate.

C) Payable upon death.

D) Transfer on death.

Diff: 1

LO: 10.3, Section 10.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

45) Which of the following refers to a legal entity that holds property and assets for someone or some group?

A) Title.

B) Probate.

C) Trust.

D) Tenancy by the entirety.

Diff: 2

LO: 10.3, Section 10.3

Bloom: Ap

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

47) Which of the following refers to a trust that is created through a will?

A) Testamentary trust.

B) Irrevocable living trust.

C) Revocable living trust.

D) Transfer on death.

Diff: 1

LO: 10.3, Section 10.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

48) Which of the following refers to a trust that once established cannot be changed?

A) Testamentary trust.

B) Irrevocable living trust.

C) Revocable living trust.

D) Transfer on death.

Diff: 1

LO: 10.3, Section 10.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

49) Which of the following refers to a trust that allows the grantor to do whatever he or she wants with the trust assets while alive?

A) Testamentary trust.

B) Irrevocable living trust.

C) Revocable living trust.

D) Transfer on death.

Diff: 1

LO: 10.3, Section 10.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

50) Which of the following refers to someone who establishes a trust?

A) Beneficiary.

B) Grantor.

C) Trustee.

D) Remainder beneficiary.

Diff: 1

LO: 10.3, Section 10.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

51) Rose is getting older and she realized that she will never outspend her assets. She wants to start gifting her grandchildren a substantial amount every year, however, she does not want to pay any taxes in doing so. How much can she gift every year?

A) $16,000 to each grandchild

B) $16,000 in total to all her grandchildren

C) $50,000 in total to all her grandchildren

D) She can give an unlimited amount to any relative

Diff: 2

LO: 10.3, Section 10.3

Bloom: Ap

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

52) Rose gave Charlie, her grandson, $20,000 for his high school graduation. How much will Charlie have to pay in taxes for the generous gift?

A) Nothing.

B) Ordinary income tax on $20,000.

C) Gift tax on $4,000

D) Inheritance tax on $16,000

Diff: 2

LO: 10.3, Section 10.3

Bloom: Ap

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

53) Which of the following refers to a document with the purpose of transferring property of a person who has died according to his or her wishes?

A) Title.

B) Fee simple.

C) Will.

D) Contract.

Diff: 1

LO: 10.4, Section 10.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

54) Which of the following refers to a way that property can change ownership when someone dies?

A) Title.

B) Contract.

C) Will.

D) All of the choices are correct.

Diff: 1

LO: 10.4, Section 10.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

55) Which of the following refers to a way that property transfers from one person to another after the owner dies?

A) Joint tenants with right of survivorship.

B) Payable upon death.

C) Transfer on death.

D) All of the choices are correct.

Diff: 1

LO: 10.4, Section 10.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

56) Peter and Mary would like to make sure that their primary residence will automatically be transferred to the other should one spouse die. How should the property be titled to ensure automatic transfer to the co-owner?

A) Joint tenants with right of survivorship.

B) Payable upon death.

C) Transfer on death.

D) All of the choices are correct.

Diff: 2

LO: 10.4, Section 10.4

Bloom: Ap

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

57) Charlie wishes that his grandson receives his certificates of deposit (CDs) should he die. How can he assure this happen without giving him access to the money now or changing his will?

A) Joint tenants with right of survivorship account.

B) Payable upon death account.

C) Transfer on death account.

D) All of the choices are correct.

Diff: 2

LO: 10.4, Section 10.4

Bloom: Ap

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

58) Patricia owns Apple stock that her long deceased husband had received as an executive at the company. She wishes her grandkids receive the stock; however, to avoid paying capital gains tax on the stock, they must receive it after her death to assume the stepped-up cost basis. Which would accomplish this without amending her will?

A) Joint tenants with right of survivorship.

B) Payable upon death.

C) Transfer on death.

D) All of the choices are correct.

Diff: 2

LO: 10.4, Section 10.4

Bloom: Ap

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

59) Which of the following refers to a document that is a legally enforceable agreement between two or more parties?

A) Agreement.

B) Declaration.

C) Codicil.

D) Contract.

Diff: 1

LO: 10.4, Section 10.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

60) Which of the following refers to someone who died with a will?

A) Testate.

B) Intestate.

C) Testamentary.

D) Probate.

Diff: 1

LO: 10.4, Section 10.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

61) Which of the following refers to someone who died without a will?

A) Testate.

B) Intestate.

C) Title.

D) Contract.

Diff: 1

LO: 10.4, Section 10.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

62) Which of the following refers to an irrevocable and a voluntary transfer of property to another person while alive?

A) Testate.

B) Gift.

C) Title.

D) Bequest.

Diff: 1

LO: 10.4, Section 10.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

63) Which of the following involves leaving property to another party after death through a will?

A) Testate.

B) Gift.

C) Title.

D) Bequest.

Diff: 1

LO: 10.4, Section 10.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

64) Which of the following is an element of a will?

A) Legal age.

B) Sound mind.

C) Intention.

D) All of the choices are correct.

Diff: 1

LO: 10.4, Section 10.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

65) Which of the following is the typical legal age to have a will?

A) 16.

B) 18.

C) 20.

D) 21.

Diff: 1

LO: 10.4, Section 10.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

66) Which of the following is an element of a will?

A) Signed.

B) Witnessed.

C) Properly executed.

D) All of the choices are correct.

Diff: 1

LO: 10.4, Section 10.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

67) Typically, how many adults must witness a will?

A) One.

B) Two.

C) Three.

D) Four.

Diff: 1

LO: 10.4, Section 10.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

68) A basic attorney-drafted will should cost between

A) $150 and $500.

B) $350 and $700.

C) $550 and $900.

D) $750 and $1,000.

Diff: 1

LO: 10.4, Section 10.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

69) A will that is created by a fill-in-the-blank, online legal form is called a

A) holographic will.

B) introductory clause.

C) statutory will.

D) will.

Diff: 1

LO: 10.4, Section 10.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

70) All of the following situations should prompt someone to draft a new will EXCEPT the

A) birth of a child.

B) acceptance of new job offer.

C) receipt of insurance proceeds.

D) death of a spouse.

Diff: 2

LO: 10.4, Section 10.4

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

71) Karl’s mother just passed away and her will has appointed him the personal representative in dealing with her estate at probate. What element does he represent of the will?

A) Grantor

B) Trustee

C) Executor

D) Beneficiary

Diff: 2

LO: 10.4, Section 10.4

Bloom: Ap

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

72) Which of the following refers to a legal document that is used to direct a physician or hospital about the types of medical treatment someone wants or does not want in case the person becomes incapacitated?

A) Title.

B) Living will.

C) Will.

D) Contract.

Diff: 1

LO: 10.5, Section 10.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

73) Which of the following is an example of life-sustaining treatment or lack thereof?

A) Only food.

B) No artificial support at all.

C) Only water and pain medication.

D) All of the choices are correct.

Diff: 2

LO: 10.5, Section 10.5

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

74) What is the youngest legal age to have a living will?

A) 16.

B) 18.

C) 20.

D) 21.

Diff: 1

LO: 10.5, Section 10.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

75) Which of the following refers to a person who could make sure your wishes are known to the medical team?

A) Healthcare proxy.

B) Family member.

C) Living will.

D) Advanced directive.

Diff: 1

LO: 10.5, Section 10.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

76) Which of the following is an example of when a living will come into effect?

A) You have had a car accident.

B) You are diagnosed as being in a persistent comatose condition or in a persistent vegetative state.

C) You have broken a bone.

D) You have had surgery.

Diff: 2

LO: 10.5, Section 10.5

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

77) Which of the following instructs doctors, hospitals, nursing care facilities, and other health professionals to withhold CPR and other measures that can facilitate breathing if a situation arises when these procedures are recommended?

A) Will.

B) Do-not-resuscitate declaration.

C) Resuscitate declaration.

D) Healthcare proxy.

Diff: 2

LO: 10.5, Section 10.5

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

78) Which of the following refers to legal documents that allow a named person, often an agent, to act on your behalf?

A) Will.

B) DNR.

C) POA.

D) Trust.

Diff: 1

LO: 10.5, Section 10.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

79) Which of the following applies to a limited POA?

A) Agent has limited powers only after disability or incapacitation.

B) Agent has specific durable powers.

C) Agent has limited powers that terminates with disability or incapacitation.

D) Agent has broad durable powers.

Diff: 2

LO: 10.5, Section 10.5

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

80) Which of the following applies to a durable POA?

A) Agent has limited powers.

B) Agent has specific powers.

C) Agent has broad powers.

D) Terminates with disability or incapacitation.

Diff: 2

LO: 10.5, Section 10.5

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

81) Which of the following provides very broad powers?

A) General POA.

B) Durable POA.

C) Limited POA.

D) Springing POA.

Diff: 2

LO: 10.5, Section 10.5

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

82) Which of the following comes into effect when a predetermined event happens?

A) General POA.

B) Durable POA.

C) Limited POA.

D) Springing POA.

Diff: 2

LO: 10.5, Section 10.5

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

83) Which of the following remains in force throughout the duration spelled out in the document, regardless of any disability or incapacitation?

A) General POA.

B) Durable POA.

C) Limited POA.

D) All POAs are in force regardless of any disability or incapacitation.

Diff: 2

LO: 10.5, Section 10.5

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

84) Which of the following allows your agent to act only in specific ways for a restricted amount of time?

A) General POA.

B) Durable POA.

C) Limited POA.

D) Springing POA.

Diff: 2

LO: 10.5, Section 10.5

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

85) Which of the following is an example of a common use of a POA?

A) Helping a relative who is temporarily incapacitated or injured.

B) Allowing your accountant to talk to the Internal Revenue Service (IRS) about your financial and tax situation.

C) Allowing a financial advisor to manage your portfolio and make investment decisions for you.

D) All of the choices are correct.

Diff: 2

LO: 10.5, Section 10.5

Bloom: Ap

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

86) Without a living will, who makes the decisions regarding life-sustaining treatment?

A) Family member.

B) Courts.

C) Hospital administrator.

D) Doctors.

Diff: 2

LO: 10.5, Section 10.5

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

87) Which of the following provides guidance and advice on all aspects of your financial situation, sometimes thought of as your "financial quarterback"?

A) Financial planner.

B) Financial counselor.

C) Financial advisor.

D) Tax advisor.

Diff: 1

LO: 10.6, Section 10.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

88) Which of the following provides advice designed to help you fix past financial problems?

A) Financial planner.

B) Financial counselor.

C) Financial advisor.

D) Tax advisor.

Diff: 1

LO: 10.6, Section 10.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

89) Which of the following provides advice on one or a few financial topics and tends to be product focused?

A) Financial planner.

B) Financial counselor.

C) Financial advisor.

D) Tax advisor.

Diff: 1

LO: 10.6, Section 10.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

90) Which of the following provides specialized advice on taxes and IRS questions?

A) Financial advisor.

B) Financial counselor.

C) Tax advisor.

D) All the choices are correct.

Diff: 1

LO: 10.6, Section 10.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

91) Which of the following provides legal advice and counsel and can draft legal documents?

A) Tax advisor.

B) Financial counselor.

C) Legal advisor.

D) All of the choices are correct.

Diff: 1

LO: 10.6, Section 10.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

92) Which of the following is a credential that a financial planner might have?

A) Certified financial planner.

B) Chartered financial consultant.

C) Personal financial specialist.

D) All of the choices are correct.

Diff: 1

LO: 10.6, Section 10.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

93) Which of the following provides individual assistance in specifically negotiating with creditors for simplifying and reducing payments?

A) Certified financial planner.

B) Chartered financial consultant.

C) Personal financial specialist.

D) Credit counseling agency.

Diff: 1

LO: 10.6, Section 10.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

94) Which of the following is the typical focus of financial planning?

A) Managing short-term goals.

B) Achieving long-term goals.

C) Helping negotiate with creditors.

D) All of the choices are correct.

Diff: 2

LO: 10.6, Section 10.6

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

95) Which of the following refers to an amount paid to a financial professional from a financial firm that is based on the percentage of the sales price of a product?

A) Fee.

B) Commission.

C) Fee-based.

D) Service fee.

Diff: 1

LO: 10.6, Section 10.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

96) Which of the following refers to a payment from the client to the financial professional?

A) Fee.

B) Commission.

C) Capital gain.

D) Liquidity.

Diff: 1

LO: 10.6, Section 10.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

97) How much is a typical fee for managing a portfolio?

A) 1% of assets under management.

B) 3% of assets under management.

C) 5% of assets under management.

D) 10% of assets under management.

Diff: 1

LO: 10.6, Section 10.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

98) When a financial professional benefits financially to an extent that exceeds the value provided to the client, a _______ occurs.

A) commission.

B) conflict of interest

C) conflict of suitability

D) overcharge

Diff: 2

LO: 10.6, Section 10.6

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

99) Which of the following refers to when brokers who provide non-retirement advice are only required, by law, to provide clients with a suitable product, not necessarily the best product?

A) Conflict of suitability.

B) Conflict of interest.

C) Fiduciary standard.

D) Suitability standard.

Diff: 2

LO: 10.6, Section 10.6

Bloom: Ap

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

100) Which of the following requires financial professionals to act in the best interest of the client at all times and to fully disclose any and all conflicts of interests?

A) Best interest rule.

B) Conflict of interest.

C) Fiduciary standard.

D) Suitability standard.

Diff: 1

LO: 10.6, Section 10.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

101) Which of the following helps people resolve past financial difficulties?

A) Financial planner.

B) Financial counselor.

C) Financial advisor.

D) Tax advisor.

Diff: 1

LO: 10.6, Section 10.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

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