Helping to Plan and Manage Your Financial Future

Financial Knowledge Quiz

  1. Sarah is single, age 65, and takes a reverse mortgage with a lump sum payment.  When does the loan have to be repaid?
  1. When she permanently leaves the home
  2. When she takes on any other loan
  3. Whenever the mortgage company wants it back
  4. When she attains ate 75
  5. Don’t know
  1. True or false?  Buying a single company’s stock usually provides a safer return than a stock mutual fund.
  1. True
  2. False
  3. Don’t know
  1. Please choose the response below that best completes this statement:  If you have a well-diversified portfolio of 50% stocks and 50% bonds that was worth $100,000 at retirement, based on historical returns in the U.S. the most you can afford to withdraw is ____________ plus inflation each year to have a 95% chance that your assets will last for 30 years.*
  1. $2,000
  2. $4,000
  3. $6,000
  4. $8,000
  5. Don’t know
  1. Most agree that one way to protect against inflation is to have a:
  1. Diversified portfolio of stocks
  2. Diversified portfolio of bonds
  3. Diversified portfolio of CDs (certificates of deposit)
  4. Don’t know
  1. True or false?  Exchange-traded funds generally have higher expenses than actively managed mutual funds.
  1. True
  2. False
  3. Don’t know
  1. A PE ratio means:
  1. Price to earnings
  2. Profits to expense
  3. Price to expense
  4. Par value to earnings
  5. Don’t know
  1. Converting a portion of a traditional IRA into a Roth IRA is a good idea this year if:
  1. You have a big tax deduction this year and your marginal tax rate is lower than normal
  2. You have more taxable income than usual and your marginal tax rate is higher than normal
  3. The value of the assets in your IRA have remained the same for 10 years
  4. Don’t know
  1. Which one of the following statements concerning the federal income tax treatment of distributions to a 65-year-old retiree is true?
  1. All distributions from a Roth IRA that have been maintained for more than five years will be tax free
  2. Distributions from a traditional IRA prior to age 70 ½ will be subject to an additional 10% penalty tax
  3. All distributions from a traditional IRA created with tax-deductible contributions will be taxed as long-term capital gains
  4. Don’t know
  1. Which of the following types of long-term bonds typically has the highest yield?
  1. AAA-rated corporate bonds
  2. B-rated corporate bonds
  3. Treasury bonds
  4. Don’t know
  1. If 100% of a mutual fund’s assets are invested in long-term bonds and the investment climate changes so that interest rates rise significantly, then the value of the mutual funds shares:
  1. Decrease significantly
  2. May rise or fall depending upon the type of bond
  3. Increase significantly
  4. Will not change at all
  5. Don’t know

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