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1. Burt Reynolds has changed jobs. His last retirement plan’s contributions depended on how well the company performed and he shared in the earnings. His present employer allows him ownership in the firm, although that is the riskiest plan. Burt’s former plan was a (n) _______ and his current plan is a (n) ________. A. Esop; money purchase plan B. Profit-sharing; esop C. Esop; 401(k) D. Profit-sharing; thrift and savings E. Esop; profit sharing 2. The difference between a testamentary trust and a living trust is that a testamentary trust ___________. A. Is written by an attorney B. Is created by a will C. Exist only after probate D. Is controlled by the heirs E. B and C 3. Suppose that you have estimated that, to provide for your retirement income, you will need $1,150,000 on deposit in your retirement account when you retire. You believe that you will earn an average of 10% on your retirement investments until you retire in 30 years. What must your annual deposits be accumulate this total? A. 121,991.14 B. 6,991.14 C. 65,904.84 D. 63,878.77 E. None of the above 4. Suppose a husband and wife have an estate of 1.75 million. They will leave the entirely of their estate to their only child. Which of the following is true, assuming tax year 2009? A. Using simple wills, the parents can pass the estate to their child incurring no estate taxes B. Parents can combine the 675,00 exclusion for a total of 1.35 million C. If the husband dies first, and his wife sets up a trust, the wife cannot receive any income from the trust if they wish to pass it on to their child and incur no estate taxes D. Setting up a trust for the first to die, and allowing the surviving spouse access to income from the trust, would make the entire trust subject to estate taxes E. None of the above are true statements 5. Which of the following does a budget help you accomplish? A. It allows you not to think about what you spend money on B. It allows you live above your means C. It forces you to use restraint D. All of the above E. None of the above 6. Which of the following statements is true regarding social security retirement benefits? A. It attempts to replace 42% of your average earnings B. Not all occupations are covered C. Some people’s benefits may be taxed D. You may retire beginning at age 62 with reduced benefits E. All of the above 8. Karim works for a company with a 401k plan. The company will contribute .50 for every dollar Karim contributes up to 4% of his salary. If Karim earns 50,000 and contributes 12% of his salary, how much will the employer match be in dollars for the year? A. 1,000 B. 2,000 C. 3,000 D. 6,000 9. According to the text, what is the ultimate financial surprise? A. Children B. Parents’ death C. Divorce D. Inheritance E. None of the above 11. You have determined that you will need to accumulate 1,000,000 in your retirement account in order to cover your inflation adjusted shortfall. How much money would you have to put into a tax-deferred retirement account every year if you plan on retiring in 40 years? Assume a 8% average return on this account and there is nothing in the account today. A. 1,458 B. 3,860 C. 5,957 D. 8,444 E. None of the above 12. Suppose that immediately after graduation you invested 3,000 each year for 10 years and nothing thereafter. You could earn 10% on this money. How much would you have on deposit in 40 years when you retired (30 years after the deposits stopped)? A. 834,295.53 B. 909,405.67 C. 1,124,448.93 D. 1,890,783.55 E. None of the above 15. Which of the following is not true, according to Stanley and Danko in their book “The Millionaire Next Dorr: The surprising secrets of america’s wealthy”? A. Their wealth was not inherited B. They own a home worth less then 300,000 C. They have incomes of less than 100,000 D. They have been divorced at least once E. None of the above 16. Your estate tax


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