FINP 235 EXAM 3 TAMU KILMER
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197 Terms
______describes the money you pay to an insurance company regularly (ex. monthly) in order to have insurance coverage in the event of a covered, unexpected event (loss).
Premium
3 multiple choice options
According to the lecture, _____ is defined as how to protect your wealth and mental well-being.
Risk Management
3 multiple choice options
All of the following except for ______ were types of insurance covered in the Risk Management lecture.
Professional Liability Insurance
3 multiple choice options
The ________ Approach to Life Insurance is purchasing enough insurance to cover burial expenses, transitional funds, medical debts, etc.
Needs
3 multiple choice options
A ______ contains your wishes regarding life support and organ donation in the event that you cannot communicate your wishes.
Living Will
3 multiple choice options
Long term Disability Insurance typically covers up to 100% of your yearly salary.
False
1 multiple choice option
Which term best describes the annual limit you must pay for health insurance expenses before co-insurance will pay a set percentage of any remaining, additional costs?
Deductible
3 multiple choice options
Identity Theft Insurance typically covers all of the following except _______.
Stolen Money
3 multiple choice options
The “P” in PITI stands for Principal.
True
1 multiple choice option
Home Insurance policies typically cover losses related to flooding.
False
1 multiple choice option
An FHA Loan typically requires a down payment of only _____%.
3.5%
3 multiple choice options
Per the lecture, Closing Costs typically can cost up to _____ of the house purchase price.
7%
3 multiple choice options
Lenders would prefer for home buyers to make a down payment of 10% of the home's price.
False
1 multiple choice option
Private Mortgage Insurance is a benefit that protects home buyers from natural disasters.
False
1 multiple choice option
Options for reducing the down payment amount required to purchase a home include all of the following except for ______.
Escrow Servicing
3 multiple choice options
A mortgage may not be approved if PITI represents more than ______% of a home buyer’s monthly gross income.
28
3 multiple choice options
In class, Professor Kilmer recommended that, generally speaking, recent graduates (young professionals) should buy an old house and try to fix it up (and possibly flip it for a profit).
False
1 multiple choice option
_____ is the first step of the home buying process.
Make an Offer
3 multiple choice options
As of March 2024, the home buyer's agent is no longer paid by the home sellers agent.
True
1 multiple choice option
In comparison to 30 year mortgages, 15 year mortgages have higher payments and a chance of foreclosure, but lower interest rates.
True
1 multiple choice option
According to the lecture, a multi-story household may be harder to sell later to _____.
Senior Citizens (old people)
3 multiple choice options
For a Fixed Rate Mortgage, the required monthly loan payments will change, making budgeting harder.
False
1 multiple choice option
According to the risk and return pyramid from the Investments lecture, Stocks are the riskiest form of financial asset.
False
1 multiple choice option
Unsystematic Risk is the risk all investments are subject to (tax reform, interest rate hikes, natural disasters, human behavior, etc.).
False
1 multiple choice option
Customer Service was something to consider when starting to invest.
True
1 multiple choice option
When buying a Bond, _____ is a type of risk you take on because market interest rates could climb, causing the value of your lower interest Bond to lose value.
Interest Rate Risk
3 multiple choice options
Bonds issue ______ payments.
Coupon
3 multiple choice options
As described in the lecture, most Americans will have to work for ______ years to earn enough credits to become eligible for Social Security Benefits.
10
3 multiple choice options
In 2024, contributions were limited to $_______ and $_______ for Traditional or Roth IRA accounts respectively.
7000, 7000
3 multiple choice options
The earliest age capable of receiving reduced Social Security benefits is _____.
62
3 multiple choice options
The maximum annual contributions allowed for a 401K is ______.
$23,500
3 multiple choice options
______ payments in retirement are based upon formulas related to years of service and average salary.
Pension
3 multiple choice options
Semi-annual payments on a 20 year, $4,000 Face Value Bond earning 1% should be ______.
$20
3 multiple choice options
Taxes on Roth retirement accounts are paid during the year of contribution rather than the year of withdrawal on the account.
True
1 multiple choice option
After leaving an employer, 401k assets held by that employer must remain with that employer until you retire (then withdrawals may begin).
False
1 multiple choice option
________ was one of the first 3 steps in the Financial Order of Operations recommended during the Financial Planning Opportunities Lecture.
Employer Match
3 multiple choice options
A _______ was described as a Good Debt in the Financial Planning Opportunities Lecture.
Mortgage
3 multiple choice options
During the Financial Planning Opportunities lecture, the guest speakers shared that, when it comes to Budgeting, their clients should consider using the 100/50/10 rule when choosing their car loans.
False
1 multiple choice option
During the Financial Planning Opportunities lecture, the guest speakers explained that they used Monte Carlo Analysis to study the probability of success for the investment portfolios they create for their clients.
True
1 multiple choice option
________ was the first step in the Financial Order of Operations recommended during the Financial Planning Opportunities Lecture.
Deductibles Covered
3 multiple choice options
In the Advising Others lecture, Step 3 of the 7 step Financial Planning Process was Analyzing the Client’s Current and Alternative Course(s) of Action.
True
1 multiple choice option
The 2nd step to advising others is to _____.
Identify the Issue
3 multiple choice options
When Advising Others, it is recommended to Give a Warm Welcome.
True
1 multiple choice option
When Advising Others and trying to Identify the Issue, it was recommended to Stop Assuming because it could be a(n) _______.
Emergency
3 multiple choice options
As you age and your experience and _____ grow(s), members of your network will seek out your ______.
Wisdome, Advice
3 multiple choice options
According to the Advising Others lecture, non-verbal communication accounts for _______ of communication.
55%
3 multiple choice options
The Identifying an Issue step to Advising Others recommended to Be Aware of Your Biases (😊).
False
1 multiple choice option
The Advising Others lecture recommended to use the ________ for active listening.
SOLER Technique
3 multiple choice options
According to the Finding a Good Financial Planner Video, a good financial planner is like a ______.
Hometown Doctor
3 multiple choice options
According to the Finding a Good Financial Planner Video, ______ is the 1st step financial planners typically take to assist their clients.
Map Out Your Finances
3 multiple choice options
Risk Management's sole purpose is to protect your wealth
False
1 multiple choice option
Risk management's sole purpose is to protect your wealth & mental well-being.
True
1 multiple choice option
All but ____ were used as examples of unexpected events which could destroy your accumulated wealth
Government Policy & Legislation
3 multiple choice options
All but ____ were commonly used types of insurances covered during the lecture which can help with managing risk.
Alien Abduction Insurance
3 multiple choice options
For insurance, the ____ provides financial coverage for the losses of the ____ that they may bear under uncertain circumstances.
Insurer, Insured
1 multiple choice option
Which apply to Identity Theft Insurance
All of the above
3 multiple choice options
All of the following except for ___ were listed as commonly used types of P&C Insurance.
Fire Insurance
3 multiple choice options
Most people rely upon ____ for health insurance coverage.
Their Employer
3 multiple choice options
Monthly payment required to receive insurance coverage
Premium
3 multiple choice options
Payment required for a standard office visit.
Co-Pay
3 multiple choice options
Annual limit you must reach before co-insurance kicks in
Deductible
3 multiple choice options
The % of expenses which is covered by the insurance company after the deductible has been met.
Co-Insurance
3 multiple choice options
Disability Insurance is usually reserved for end of life or estate planning.
False
1 multiple choice option
Disability Insurance provides money if person is incapacitated due to illness or injury (ex. cancer)
True
1 multiple choice option
Long-term Disability Insurance typically covers up to ___ of the insured person's salary.
67%
3 multiple choice options
Short-term Disability Insurance last up to 3 years and is necessary even if you already have an adequate emergency fund set aside.
False
1 multiple choice option
Short term plans are <1 year and are unnecessary if you have an adequate emergency fund.
True
1 multiple choice option
As college students, it's generally suggested that you have a life insurance policy
False
1 multiple choice option
Life insurance becomes critical once you have dependents
True
1 multiple choice option
Long-term care insurance replaces lost income if a person is incapacitated due to illness or injury
False
1 multiple choice option
Long term care insurance pays for the costs of care needed on a daily basis over an extended period of time. Does not replace any income lost.
True
1 multiple choice option
Medicare eligible patients still need long-term care insurance as medicare does not cover such expenses
True
1 multiple choice option
Purchasing life insurance that covers 5 to 25 times your annual salary and is used to cover lost income
Earnings Multiple Approach
3 multiple choice options
Purchasing enough to cover burial expenses, transitional funds, and/or potential medical expenses, household debts, and dependents' expenses.
Needs Approach
3 multiple choice options
Care needed on a daily basis for an extended period of time. Reserved for end of life or estate planning.
Long-term Care Insurance
3 multiple choice options
Long-term Care Insurance is covered by regular insurance and Medicare
False
1 multiple choice option
Living Will is also known as
Directive to Physician
3 multiple choice options
An agent makes medical decisions if you are incapable of doin so
Medical Power of Attorney
3 multiple choice options
Limited Power of Attorney
Power of Attorney, but limited by a timeline or event
3 multiple choice options
A disadvantage of buying a home is the
All of the above
3 multiple choice options
The lecture recommended using a renting vs. buying calculator on
Realtor.com
3 multiple choice options
A great question to ask yourself when looking into home buying is
All of these
3 multiple choice options
You should live in your new house for at least 4 years
False
1 multiple choice option
Lenders would prefer for home buying to make a down payment of ___ of the home's price.
20%
3 multiple choice options
With an 80-15-5 Piggy Back Loan, "15" represents
Secondary Mortgage of 15%
3 multiple choice options
FHA loans require a credit score of 700 or better for approval
False
1 multiple choice option
FHA loans only require a credit score of ___ or higher
580
3 multiple choice options
PMI is a good thing as it reduces the overall cost of home buying for you, the home buyer.
False
1 multiple choice option
PMI protects the lender by guaranteeing that the outstanding mortgage balance will be paid off if you default
True
1 multiple choice option
Closing cost typically cost ___ of the sales price of the house.
2-7%
3 multiple choice options
The T in PITI stand for
Taxes
3 multiple choice options
Termite damage is typically covered by a standard homeowners insurance policy
False
1 multiple choice option
Flooding is covered in standard homeowners insurance policy
False
1 multiple choice option
All except for ___ are losses typically covered by a homeowners insurance policy
Earthquakes
3 multiple choice options
A mortgage may not be approved if PITI represents more than ___% of a home buyers monthly gross income.
28%
3 multiple choice options
What are the available down payment assistance options
All of the above
3 multiple choice options
What is the minimum down payment required in a FHA loan.
3.5%
3 multiple choice options
In a Private Mortgage Insurance, what is the minimum that needs to be put down.
5%
3 multiple choice options
Pay 1% of the loan amount in exchange for a lower interest rate.
Points
3 multiple choice options
A reserved account in which funds are deposited, generally monthly and are drawn out by your lender to pay for property taxes and home insurance.
Escrow Account
3 multiple choice options