Question

Question 1 (Multiple Choice Worth 3 points)

Zachary is an American traveling with a tour group in Southeast Asia. During a stop in Malaysia, he purchases a souvenir that is priced at 58 Malaysian riggits using his credit card. If the exchange rate that day is USD to MYR = 3.04, which is the best estimate of the charge Zachary will later find on his credit card statement?

$20

$55

$61

$180

Question 2 (Multiple Choice Worth 3 points)

Matthew is a 34-year old medical student. His assets and liabilities are listed below. What is the total value of his assets?

Student Loans $

Answer 1

Question 2 (Multiple Choice Worth 3 points)

Matthew is a 34-year old medical student. His assets and liabilities are listed below. What is the total value of his assets?

Student Loans $51,884
Car Value $28,840
Savings Account Balance $2,617
Medical Equipment $8,320
Electronic Equipment $9,765
Credit Card Balance $5,749
Checking Account Balance $6,904

$57,633

$49,542

$62,195

$56,446

Question 3 (Multiple Choice Worth 3 points)

Jailynn is a 47-year old fashion designer. Her assets and liabilities are listed below. What is the total value of her liabilities?

Home Value $256,612
Mortgage $57,281
Credit Card Balance $7,900
Checking Account $96,830
Car Value $56,265
Real Estate Investment $75,307
Retirement Portfolio $303,854
Money Market Account $784,968

$1,639,017

$850,149

$1,573,836

$65,181

Question 4 (Multiple Choice Worth 4 points)

Killian pays an annual premium of $1,325 for automobile insurance, including comprehensive coverage of up to $850,000. He pays this premium for 12 years without needing to file a single claim. Then he gets into an accident during bad weather, for which no one is at fault. Killian is not injured, but his car valued at $46,700 is totaled. His insurance company pays the claim and Killian replaces his car. If he did not have automobile insurance, how much more would have Killian paid for damages than what he had invested in his insurance policy?

$30,800

$62,600

$15,900

$45,375

Question 5 (Multiple Choice Worth 4 points)

Bowen invested an average of $350 per month since age 44 in various securities for his retirement savings. His investments averaged a 5% annual rate of return until he retired at age 69. Given the same monthly investment and rate of return, how much more would Bowen have in his retirement savings had he started investing at age 30? Assume monthly compounding.

$379,353.51

$61,740.00

$295,594.30

$132,300.00

Question 6 (Multiple Choice Worth 3 points)

Shown below is Odessa’s personal balance sheet. Use the information to determine Odessa’s net worth.

Personal Balance Sheet
Assets:
Home Value $560,483
Car Value 30,245
Checking Account 2,405
401(k) 133,235
IRA 33,403
Mutual Funds 6,799
Bonds 5,075
Liabilities:
Home Mortgage $318,131
Car Loan Balance 6,898
Student Loans 28,896
Credit Card Balance 8,098
Net Worth ?

$771,645

$1,133,668

–$409,622

$409,622

Question 7 (Multiple Choice Worth 3 points)

A family from Colombia is visiting the United States. Their first stop is a bank, where the following exchange rate is posted: USD to COL = 1821.23. On this day, how many U.S. dollars will the family get for 2,000 of their Colombian pesos? Round to the nearest cent.

$1.10

$3,821.23

$178.77

$1,821.23

Question 8 (Multiple Choice Worth 3 points)

In the long-term, which investment vehicles historically provide the greatest annual rates of return?

Government bonds and U.S. Treasury bills

Large company stocks and government bonds

Small company stocks and large company stocks

U.S. Treasury bills and small company stocks

Question 9 (Multiple Choice Worth 4 points)

Megan made contributions to a Roth IRA over the course of 29 working years. Her contributions averaged $2,250 annually. Megan was in the 24% tax bracket during her working years. The average annual rate of return on the account was 4.5%. Upon retirement, Megan stopped working and making Roth IRA contributions. Instead, she started living on withdrawals from the retirement account. At this point, Megan dropped into the 20% tax bracket. Factoring in taxes, what is the effective value of Megan’s Roth IRA at retirement? Assume annual compounding.

$116,151.82

$163,541.82

$113,541.82

$126,591.82

Question 10 (Multiple Choice Worth 4 points)

Leonard bought a homeowner's insurance policy when he purchased his new home. He pays an annual premium of $625 for property coverage of $200,000 and liability coverage of $300,000. His deductible is $1,100. Leonard pays this premium for 15 years, at which point Leonard’s dog bites a neighbor walking down his sidewalk. The neighbor sues Leonard for $32,000 in medical bills and pain and suffering. Leonard submits this as a claim to his homeowner’s insurance company. If the claim is approved, how much will Leonard’s insurance company pay the neighbor?

$30,900

$31,375

$32,000

$22,625

Question 11 (Multiple Choice Worth 3 points)

Morgan is 65 years old and has had a retirement portfolio for 40 years. She has about 2 years to go before retirement. Which breakdown of investments would a financial advisor most likely suggest for Morgan at this point in time?

0% high-risk; 20% medium-risk; 80% low-risk

25% high-risk; 40% medium-risk; 35% low-risk

45% high-risk; 30% medium-risk; 25% low-risk

70% high-risk; 25% medium-risk; 5% low-risk

Question 12 (Multiple Choice Worth 4 points)

Leif started making contributions to a Traditional IRA when he got his first job, at age 32. His contributions averaged $3,200 annually. Leif was in the 20% tax bracket during his working years, when he continued to make these annual contributions. The average annual rate of return on the account was 6.8%. Upon retirement at age 69, Leif stopped working and making IRA contributions. Instead, he started living on withdrawals from the retirement account. At this point, Leif dropped into the 10% tax bracket. Factoring in taxes, what is the effective value of Leif’s Traditional IRA at retirement? Assume annual compounding.

$440,728.02

$305,314.21

$483.080.97

$391,758.24

Question 13 (Multiple Choice Worth 3 points)

Yi Min is visiting relatives in Hong Kong. She exchanges 150 U.S. dollars for the local currency, Hong Kong dollars. If the exchange rate that day is USD to HKD = 7.76, how many Hong Kong dollars does Yi Min receive? Round to the nearest hundredth.

193.33

157.76

517.33

1,164.00

Question 14 (Essay Worth 6 points)

When starting a life insurance plan, there are a few factors that will determine the premium paid by the policyholder. Answer the following questions in complete sentences.

Part 1: What are some of the coverage choices (options and levels of coverage) the policyholder can make that would lead to a lower premium?

Part 2: What effect do these choices have on mitigating risk?