Deck 8: Personal Finance and Insurance Planning

Question 1

All of the Following, are the Dis-Advantages of Cash- Value Insurance-Contracts, Except --.

A)Lower Yields
B)Safe and Secure Investment
C)Returns, Subject to Corroding Effect of Inflation
D)Low Accumulation in Early Years

Answer 1

Safe and Secure Investment

Question 2

Which One of the Following Statements, is In-Correct?

A)Under Mutuality, the Funds of Various Individuals, are combined.
B)Mutuality is also known as Pooling.
C)Under Mutuality, We have the Funds flowing from One Source to Many.
D)Mutuality provides Protection against the Economic Loss, arising as a Result of One's Un- Timely Death. This Loss is shouldered and addressed through having a Fund, that pools the Contributions of Many, Who have entered into the Life Assurance Contracts.

Answer 2

Under Mutuality, We have the Funds flowing from One Source to Many.

Question 3

Mr. Rajan earns Rupees 1,20,000/-, a Year, and spends Rupees 24,000/-, on Him-Self. Suppose the Rate of Interest is 8% (expressed as 0.08). Calculate the Human Life Value (H.L.V.), in this Case.

A)Rupees 12 Lakhs.
B)Rupees 13 Lakhs.
C)Rupees 14 Lakhs.
D)Rupees 15 Lakhs.

Answer 3

Rupees 12 Lakhs.

Question 4

Mr. Ramesh is 55 Years' Old, and has 5 Working-Years, Left for Retirement. Currently, His Annual Income is Rupees 5 Lakhs, and He has purchased a Life Assurance Policy of Rupees 15 Lakhs. If He were to die Pre-Maturely, in the Current-Year, it-self, then, How Much Will His Family get from the Life Assurance Company?

A)Rupees 20 Lakhs.
B)Rupees 15 Lakhs.
C)Rupees 10 Lakhs.
D)Rupees 5 Lakhs.

Question 5

Ms. Prajakta earns Rupees 2,40,000/-, Per Annum. She spends Rupees 1 Lakh, Per Annum, on Her-Self. The Market Rate-of-Interest is 7%. Calculate Ms. Prajakta's Life Assurance Amount, through the Human Life Value (H.L.V.) Method.

A)Rupees 15 Lakhs.
B)Rupees 20 Lakhs.
C)Rupees 10 Lakhs.
D)Rupees 24 Lakhs.

Question 6

Compare the Probability of a Contingent-Event, with Regard to Life Assurance and General Insurance.

A)The Probability of the Event-Happening, stays Constant, through Time, with Regard to Both: Life Assurance and General Insurance.
B)The Probability of the Event-Happening, increases in Case of General Insurance, and decreases in Case of Life Assurance.
C)The Probability of the Event-Happening, increases in Case of Life Assurance, and decreases in Case of General Insurance.
D)The Probability of the Event-Happening, increases in Case of Life Assurance, and stays Constant in Case of General Insurance.

Question 7

Analyse the Following Two Statements, and Determine the True One(s): Statement-I: The Contingent-Event occurs Certainly, in Case of General Insurance. Statement-II: The Contingent-Event occurs Certainly, in Case of Life Assurance.

A)Statement-I is True.
B)Statement-II is True.
C)Statement-I and Statement-II are True.
D)Statement-I and Statement-II are False.

Question 8

Suggest a Class of Insurance, that will provide the Protection against Loss of Goodwill.

A)Life Assurance
B)Property Insurance
C)Liability Insurance
D)Personal Insurance

Question 9

Explain to us, Why, Young People are charged Less Life Assurance Premium, when compared to the Old People.

A)Young People do not need Life Assurance, as much as the Old People.
B)Young People cannot afford to buy Costly Life Assurance Products, Due to their Low Income.
C)Mortality is Directly Proportional to Age.
D)Mortality is Inversely Proportional to Age.

Question 10

--- Planning involves: How Much You should Save for Your After-Working-Life, and Where should You Invest those Funds.

A)Estate
B)Tax
C)Education
D)Retirement

Question 11

Name the Term, used to denote the Rise in the General Level of Prices of Goods and Services, in an Economy, Over a Period of Time. Choose the Most Appropriate Option.

A)Hyper-Inflation
B)Inflation
C)Deflation
D)Stagflation

Question 12

What is the Term, used to refer to the Value of What You Own, Minus, the Value of What You Owe?

A)Net-Worth
B)Income-Statement
C)Financial Plan
D)Net Budget

Question 13

Assess the Impact of Inflation on Your Investment- Returns.

A)Inflation has No Impact on the Investment- Returns.
B)Inflation has a Positive Impact on the Investment-Returns.
C)Inflation has a Corroding Impact on the Investment-Returns.
D)Inflation boosts the Investment-Returns.

Question 14

Examine the Following Options, and Identify the One, which is Not a Credit-Management Decision. Choose the Most Appropriate Option.

A)Investing Money in a Bank-Deposit.
B)Financing Your House with Mortgage.
C)Paying the Utility-Bills, through Credit-Card.
D)Securing a Home-Loan, to Buy a House.

Question 15

Identify the Stage of Life, when an Individual will appreciate His or Her Long-Term Savings, the Most.

A)Childhood
B)Just Married
C)Teen Age
D)Post-Retirement

Question 16

Suggest a Good Time to Start the Financial Planning.

A)Post-Retirement
B)After Marriage
C)On Receipt of First Salary
D)During Childhood

Question 17

Creating a Current Cash-Flow Statement and Balance- Sheet, help, with Which Step of the Financial Planning Process?

A)Development of Financial Goals.
B)Determining the Current Financial Position.
C)Evaluating the Alternatives.
D)Implementing a Financial Plan.

Question 18

Performing an Analysis of Current Income-Flow and Expenditure-Flow, is termed as --.

A)Net-Worth Analysis
B)Budgeting
C)Personal Financial Planning
D)Sensitivity-Analysis

Question 19

Which One of the Following, is, the Least Likely Way, that, You may benefit from Having an Understand ing of Personal Finance?

A)Becoming Director of a Large Bank.
B)Making Your Own Financial Decisions.
C)Becoming a Financial Planner.
D)Assessing the Advice of Another Financial Planner.

Question 20

What is the Purpose, behind buying Insurance?

A)Wealth-Creation.
B)Management of Expenses.
C)Protection Against Un- Certainty.
D)Receive Income-Tax Sops.

Question 21

What happens in the Distribution-Phase of Retirement- Planning?

A)Small Savings are made on a Regular Basis, to accumulate a Corpus.
B)Corpus is Consolidated.
C)Corpus is converted into Withdrawal or Annuities, for meeting the Income-Needs, Post- Retirement.
D)High-Risk Investments are made.

Question 22

Describe the Purpose of Tax-Planning. Choose the Most Appropriate Option.

A)Tax-Evasion
B)Planning Your Investments, in a Manner, such that, Maximum Benefits are Applicable.
C)Provide for Taxes.
D)Pay Tax, On Time.

Question 23

Explain: 'Risk-Tolerance'. Choose the Most Appropriate Option.

A)Types of Risks, One Can Take.
B)Amount of Risk, One is Willing to Bear, while Investing.
C)Instruments of Risk- Management.
D)Period, for which, One is willing to risk His or Her Investments.

Question 24

Illustrate the Computation, a Person would use, to Determine the Current Value of a Desired Amount, for the Future.

A)Simple Interest
B)Present Value of a Single Amount
C)Future Value of a Single Amount
D)Future Value of a Series of Deposits

Question 25

What is involved in Future-Value Calculations? Choose the Most Appropriate Option.

A)Discounting
B)Compounding
C)Internal Rate-of-Return
D)Simple Interest