Question 1

What is the importance of understanding the financial life cycle?

Accepted Answer

Understanding the financial life cycle can help you in many ways. It allows you to be proactive in financial planning to prepare for your changing needs, take advantage of the time-value-of-money, and achieve your long-term financial goals. Therefore, all the options given in the question are correct.

Question 2

College graduates should be prepared to make many financial decisions during their first decade after graduation.

Accepted Answer

College graduates are likely to face major financial decisions such as buying a car, renting/buying a home, paying off student loans, investing, and saving for retirement during their first decade after graduation. Therefore, they should be prepared to make these decisions wisely.

Question 3

If you have good financial goals then you really don't need a financial plan.

Accepted Answer

While having good financial goals is important, it is not enough to ensure financial success. A financial plan is necessary to determine how to achieve those goals, manage income and expenses, save for the future, and protect against financial risks. A financial plan helps to ensure that your goals are realistic and achievable, and provides guidance on how to make financial decisions throughout your life.

Question 4

At the end of each year for 25 years you deposit $365 in an account that earns 12% interest.If instead you had begun saving earlier,and had deposited $365 in the account each year for 50 years,how much more money would you have on deposit?

Accepted Answer

The formula for finding the future value of an annuity is:

FV = PMT x {(1 + r)^n - 1}/r

where
PMT = payment made each period (year)
r = annual interest rate
n = number of periods (years)

For the first scenario:

PMT = $365
r = 12%
n = 25

FV = $365 x {(1 + 0.12)^25 - 1}/0.12
FV = $365 x 127.058
FV = $46,336.17

For the second scenario:

PMT = $365
r = 12%
n = 50

FV = $365 x {(1 + 0.12)^50 - 1}/0.12
FV = $365 x 2,523.204
FV = $921,675.60

The difference in the two scenarios is:

$921,675.60 - $46,336.17
= $875,339.43

So the answer is D) $827,339.80, the closest option.

Question 5

It is never a good idea for both spouses to be actively involved in and aware of the family's finances.This can lead to arguments.

Accepted Answer

It is actually important for both spouses to actively be involved in and aware of the family's finances to avoid misunderstandings, reduce financial stress and work together towards financial goals. However, disagreements can arise but that does not mean one spouse should be completely unaware of the finances. Communication and compromise can help in resolving such issues.

Question 6

List the 10 'ingredients' in order to succeed financially.

Accepted Answer

The answer of List the 10 'ingredients' in order to...

Question 7

The earlier you start saving for your retirement,the easier it will be to reach your financial goals.

Accepted Answer

Starting to save for retirement early allows more time for compound interest to work its magic, potentially resulting in a larger retirement savings balance. Waiting to start saving can result in a need for larger contributions later on or a lower retirement income.

Question 8

Why is it more difficult for women to plan for their retirement than it is for men?

Accepted Answer

Women tend to live longer than men, which means they will need to stretch their retirement funds further. Also, due to the gender pay gap, women generally earn less money and therefore pay less into Social Security. This can result in lower Social Security benefits. Option C is incorrect because defined-benefit plans are becoming less common and are being replaced by defined-contribution plans, which put more responsibility on the individual to save for retirement.

Question 9

You put $5,000 per year in an IRA earning 10% a year starting when you graduate and stop 15 years later.How much will you have for retirement,30 years after you stop depositing,if the account continues to earns 10% a year?

Accepted Answer

The first step is to calculate the balance after 15 years of contributions:

$5,000 * [(1 + 0.1)^15 - 1] / 0.1 = $146,621.01

This formula calculates the accumulated balance of these annual deposits over 15 years, taking into account the interest earned. Now, we need to know how much this balance will grow over the next 30 years, assuming the same rate of return of 10%.

$146,621.01 * (1 + 0.1)^30 = $2,772,053.70

Therefore, the answer is C.

Question 10

Women are more likely to have a pension than men.

Accepted Answer

Men are generally more likely to have a pension than women, largely due to factors such as higher average earnings, more continuous work histories, and greater access to employer-sponsored retirement plans.

Question 11

Financial goals must be reexamined periodically and adjusted to accommodate changes in your life.

Accepted Answer

As your life circumstances change, your financial goals may need to be adjusted to ensure they remain relevant and achievable. It is important to periodically review your goals and make any necessary changes.

Question 12

As a percentage,there are more elderly men living below the poverty line today than there are elderly women living below the poverty line.

Accepted Answer

According to the U.S. Census Bureau, in 2019, 8.9% of elderly men and 11.9% of elderly women were living below the poverty line. This means that there are actually more elderly women living below the poverty line than men.

Question 13

Women live,on average,7 years longer than men.

Accepted Answer

According to global statistics, women have a longer life expectancy than men. On average, women live approximately 7 years longer than men.

Question 14

Suppose that immediately after graduation you invested $3,000 each year for 15 years and nothing thereafter.You earn 10% on this money.Which of the following is closest to the amount of money you would you have on deposit when you retired in 40 years (25 years after the deposits stopped)?

Accepted Answer

The answer of Suppose that immediately after graduation you invested...

Question 15

Why is it more challenging for women to become financially security?

Accepted Answer

The answer of Why is it more challenging for women...

Question 16

Which of the following statistics concerning women are not true?

Accepted Answer

The statement "Only 22% of women 65 and older received pension benefits, versus 29% of men, and the median amount of the women's pension income was over twice that of men" is not true. In fact, according to a report by the National Institute on Retirement Security (NIRS), women are less likely to have pension benefits than men, and when they do have them, the median income from pensions is less than that of men.

Question 17

According to "Step 1: Manage Your Life," what are the two things that,if not eliminated,might jeopardize your future?

Accepted Answer

The answer of According to "Step 1: Manage Your Life,"...

Question 18

What is a smart thing for married women to do regarding their personal financial situation?

Accepted Answer

All three options are important for married women to consider in order to properly manage their personal financial situations. Option A emphasizes the importance of planning for the future by considering factors such as life expectancy and the possibility of divorce. Option B highlights the significance of being informed and involved in their husband's employee benefits and retirement plans, which can greatly impact the couple's financial wellbeing in the long run. Option C suggests seeking professional advice to address any specific financial concerns or questions, which can provide clarity and guidance in making informed decisions. Therefore, all three options are correct and together can help married women be proactive in managing their finances.

Question 19

Why is it important for someone twenty five years old to start planning for retirement?

Accepted Answer

The answer of Why is it important for someone twenty...

Question 20

Roxanne began saving for retirement at age 23 when she graduated college.She wants to have $2.3 million dollars in her retirement account when she reaches age 55.If she deposits $9,000 each year in an account earning an 11% Annual Rate of Return,will she achieve her goal in time?

Accepted Answer

Using the future value of an annuity formula, the future value of Roxanne's savings at age 55 is calculated to be less than $2.3 million.

Quiz 17: Financial Life Eventsfitting the Pieces Together