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| An investment company that pools funds obtained by selling share to investors and makes investments to achieve the financial goal of income, growth, or both. |
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| When investors choose to automatically reinvest any interest, dividends, and capital gains payments to purchase additional fund shares. |
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| A sales charge paid when an individual buys an investment, reducing the amount available to purchase fund shares. |
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| Expense per dollar of assets under management. (mutual funds) |
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| Amount of rental income you have left after paying all operating expenses for a real estate investment. |
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| Costs incurred in making value-enhancing changes in real property. |
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Measures the amount of leverage in a real estate investment project by dividing the total amount of debt by the market price of the investment.
debt/market price |
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| Contract to buy or sell a financial asset at a specified point in the future at a specified price. |
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| Type of exchange= traded standardized forward contract that specifies the size of the contract, quality, and delivery date. (similar to an option but requires the holder to buy the asset on the date specified) |
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| Act that authorizes Social Security and Medicare tax withdrawals from employee paychecks |
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| Ensures that a retirement plan participant has the right to take full possession of all employer contributions and earning if employee is dismissed, resigns, or retires. |
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| A nondeductible, after-tax IRA that offers significant tax and retirement planning advantages for taxpayers earning less than $110,000. |
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| A person or organization designated to receive a benefit. |
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Term
Lina earns $125,000 a year, while Christine earns $115,000 a year. If both are employees and the Social Security wage base is $106,000, Lina pays _________ Social Security taxes than Christine.
1. significantly higher
2. slightly higher
3. slightly lower
4. the same |
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Definition
Lina earns $125,000 a year, while Christine earns $115,000 a year. If both are employees and the Social Security wage base is $106,000, Lina pays _________ Social Security taxes than Christine.
2. slightly higher |
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Term
Marketing tax-deferred deposits into a retirement account means that the funds are
1. taxed when deposited but not taxed when withdrawn
2. not taxed when deposited but taxed when withdrawn
3. taxed both when deposited and when withdrawn but not while held in the account
4. never taxed |
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Definition
Marketing tax-deferred deposits into a retirement account means that the funds are
2. not taxed when deposited but taxed when withdrawn |
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Term
Upon termination of employment, an employee can keep his or her savings in a tax-sheltered account by transferring the retirement funds from the employer's account to another account without penalty in a protection called
1. severance
2. vesting
3. portability
4. sheltering |
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Definition
Upon termination of employment, an employee can keep his or her savings in a tax-sheltered account by transferring the retirement funds from the employer's account to another account without penalty in a protection called
3. portability |
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Term
The primary purpose of the Employee Retirement Income Security Act (ERISA) is to
1. regulate employer-sponsored pension plans
2. require employer-sponsored pension plans for large companies
3. collect taxes on retirement benefits
4. regulate employer-sponsored pension plans and require employer-sponsored pension plans for large companies |
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Definition
The primary purpose of the Employee Retirement Income Security Act (ERISA) is to
1. regulate employer-sponsored pension plans |
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Term
The process by which employees obtain nonforfeitable rights to their retirement benefits that cannot be taken away in case of dismissal or resignation is called
1. funding
2. vesting
3. integration
4. catch-up |
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Definition
The process by which employees obtain nonforfeitable rights to their retirement benefits that cannot be taken away in case of dismissal or resignation is called
2. vesting |
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Term
A married worker who is to receive income from his or her defined-benefit plan can elect to have a higher check that will stop upon his or her death but only if
1. the employer allows such a situation
2. he or she contributed an extra amount into the plan while employed
3. his or her spouse consents
4. the spouse works for the same firm |
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Definition
A married worker who is to receive income from his or her defined-benefit plan can elect to have a higher check that will stop upon his or her death but only if
3. his or her spouse consents |
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Term
Financial experts estimate that retirees need at least ________ percent of their preretirement income to live comfortably.
1. 55
2. 60
3. 80
4. 100 |
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Definition
Financial experts estimate that retirees need at least ________ percent of their preretirement income to live comfortably.
3. 80 |
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Term
_______ percent of Americans employed in this country are covered by the Social Security program.
1. fifty
2. sixty
3. seventy-five
4. ninety |
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Definition
_______ percent of Americans employed in this country are covered by the Social Security program.
4. ninety |
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Term
An employer sponsored retirement plan in which the employer or the employee puts money in a retirement account for the employee, and the amount of the retirement benefit depends on how well the investment yield, is called a
1. defined-contribution plan
2. defined-benefit plan
3. tax-sheltered annuity
4. profit-sharing plan |
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Definition
An employer sponsored retirement plan in which the employer or the employee puts money in a retirement account for the employee, and the amount of the retirement benefit depends on how well the investment yield, is called a
1. defined-contribution plan |
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Term
Women need to save more money for retirement than men because they
1. get less from social security
2. get fewer retirement benefits from employer plans
3. live longer
4. all of these |
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Definition
Women need to save more money for retirement than men because they
4. all of these |
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Term
The age at which retirees born in 1960 or later will be able to receive full Social Security benefits will gradually increase until it reaches
1. 66
2. 67
3. 65
4. 72 |
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Definition
The age at which retirees born in 1960 or later will be able to receive full Social Security benefits will gradually increase until it reaches
2. 67 |
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Term
The type of employer retirement plan in which the benefit is determined by a formula that generally includes the worker's average pay and the number of years worked for the company is called a _________ plan.
1. defined-contribution
2. defined-benefit
3. contributory
4. noncontributory |
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Definition
The type of employer retirement plan in which the benefit is determined by a formula that generally includes the worker's average pay and the number of years worked for the company is called a _________ plan.
2. defined-benefit |
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Term
Open-end mutual funds
1. are sold only through brokers
2. make up about 75% of all mutual funds
3. are sold at their current net asset value
4. are sold to other investors on a secondary market |
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Definition
Open-end mutual funds
3. are sold at their current net asset value |
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Term
Taxes on annual earnings from mutual funds can be avoided
1. while those amounts are kept in an IRS qualified retirement account
2. if those earnings are interest from municipal bonds
3. as long as the mutual shares are not sold
4. while those amounts are kept in an IRS-qualified retirement account and if those earnings are interest from municipal bonds |
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Definition
Taxes on annual earnings from mutual funds can be avoided
4. while those amounts are kept in an IRS-qualified retirement account and if those earnings are interest from municipal bonds |
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Term
Compounding is attained in mutual fund investing through
1. frequent buying and selling of shares
2. minimizing account fees
3. using leverage
4. automatic reinvestment of dividends |
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Definition
Compounding is attained in mutual fund investing through
4. automatic reinvestment of dividends |
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Term
_______ are received while one owns shares of a mutual fund.
1. dividend distributions and capital gains distributions
2. dividend distributions and capital growth
3. capital gains distributions and capital growth
4. dividend distributions only |
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Definition
_______ are received while one owns shares of a mutual fund.
1. dividend distributions and capital gains distributions |
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Term
Open-end mutual fund shares have good liquidity because
1. they act very much like a bank account
2. the fund company will buy back the shares whenever requested
3. there are no redemption fees
4. you can always find another investor willing to purchase your shares |
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Definition
Open-end mutual fund shares have good liquidity because
2. the fund company will buy back the shares whenever requested |
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Term
A switching privilege on mutual funds allows shareholders to exchange shares of one mutual fund for shares of
1. common stock
2. any mutual fund sold in the US
3. any mutual fun in the same family of funds
4. all of these |
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Definition
A switching privilege on mutual funds allows shareholders to exchange shares of one mutual fund for shares of
3. any mutual fun in the same family of funds |
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Term
| ______ is a repair expense for rental property rather than a capital improvement. |
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Definition
______ is a repair expense for rental property rather than a capital improvement.
1. painting the kitchen |
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Term
| There is more risk when borrowing to finance a real estate investment because |
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Definition
There is more risk when borrowing to finance a real estate investment because
2. the investor does not live in the property |
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Term
| Under the depreciation provisions applying to real estate, which of the following is false? |
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Definition
Under the depreciation provisions applying to real estate, which of the following is false?
1. the value of the land and property is added together and divided by the depreciation factor |
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Term
| Investors choose derivatives |
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Definition
Investors choose derivatives
4. both to reduce risk by hedging against losses and to take on additional risk by speculating |
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Term
| An option is a contract that |
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Definition
An option is a contract that
4. all of these |
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Term
| When an option writer does not own the asset, it is called a |
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Definition
When an option writer does not own the asset, it is called a
2. naked option |
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Term
The process by which a decedent's estate is settled and the assets distributed by the courts to legal heirs is called
1. interstate
2. community property distribution
3. probate
4. estate planning |
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Definition
The process by which a decedent's estate is settled and the assets distributed by the courts to legal heirs is called
3. probate |
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Term
When one dies without a will, this is called dying
1. escheat
2. intestate
3. testate
4. probate |
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Definition
When one dies without a will, this is called dying
2. intestate |
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Term
The right of escheat gives a deceased's property to the
1. surviving spouse
2. children
3. parents
4. state of resident |
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Definition
The right of escheat gives a deceased's property to the
4. state of resident |
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Term
A trust established while alive to take effect at your death is called a
1. living trust
2. will
3. power of attorney
4. testamentary trust |
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Definition
A trust established while alive to take effect at your death is called a
4. testamentary trust |
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Term
A _________ power of attorney takes effect when a specified event occurs.
1. limited
2. springing
3. special
4. durable |
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Definition
A _________ power of attorney takes effect when a specified event occurs.
2. springing |
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Term
A _______ is designed to take effect only when the grantor is unable to manage his or her own financial affairs owing to incapacitation.
1. letter of last instructions
2. power of attorney
3. durable power of attorney
4. trust |
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Definition
A _______ is designed to take effect only when the grantor is unable to manage his or her own financial affairs owing to incapacitation.
3. durable power of attorney |
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