final

Question 0

4 steps to assessing risk (risk management process):

Answer 0

1) identify risk- what can go wrong 2) Measure the risk- what is the probability of it occurring? 3) Decision - transfer risk, transfer part of risk, or accept risk 4) ongoing management of risk

Question 1

what percent of compounded interest should be achieved yearly?

Answer 1

7-8%

Question 2

when Allstate pays out after a hurricane and stocks go down, this is an example of?

Answer 2

stock potential

Question 3

To reduce risk with an insurance company (losing benefits you paid for due to bankruptcy, etc) one should:

Answer 3

analyze risk, breach of contracts and AM Best info on company

Question 4

putting sprinkler in a house for a fire is an example of risk ……..

Answer 4

reduction

Question 5

not going in the car to prevent having a car accident is an example of risk ……….

Answer 5

avoidance

Question 6

an example of risk transfer would be …………

Answer 6

an insurance policy

Question 7

an insurance agent acts as ……….. and works with………company (s) to find the customer a policy.

Answer 7

underwriter; 1

Question 8

An insurance broker uses ……………….. to find the customers policy

Answer 8

multiple companies

Question 9

what is the connection with risk and premiums?

Answer 9

Directly related

Question 10

when there’s …………….on the policy, a circumstance may not be covered; such as with a home policy, ……………, though when carried by wind, water damage may still be covered. Or with a life insurance policy………

Answer 10

an exclusion; flooding; suicide

Question 11

A rider endorsement makes your policy …………..and the phrase is to………

Answer 11

stronger; attach rider

Question 12

……………..don’t need a life insurance policy unless they want ………..

Answer 12

Single people; to leave a legacy (scholarship)

Question 13

gross income x (a #, 5-10)

Answer 13

calculating life insurance coverage by multiplying gross income by the multiplier, called the multiple earnings approach

Question 14

Adding up the person’s family loans, education, and expenses- to then deduct sources such as a Group DB, S.S death benefits, and savings, is an example of

Answer 14

Needs Approach- to determine amount of insurance coverage needed

Question 15

Are life insurance benefits taxable?

Answer 15

no tax free, & possibly estate tax free as well

Question 16

a non-cancelable rider adds security that

Answer 16

the policy will remain at the same premium

Question 17

to prevent getting denied for a renewal on your policy, one should

Answer 17

get a renewability rider

Question 18

when choosing between whole life insurance consider the cons:

Answer 18

higher (nearly double) premiums, part of premium put into ‘savings’ account would be better spent at higher ROR

Question 19

The CSV gained from a whole life policy refers to, ………. and the interest earned is …………

Answer 19

cash surrender value; tax-deferred

Question 20

policies being sold is a billion dollar business called

Answer 20

life settlements

Question 21

to mediate the risk is to …………….., a term used everyday in business

Answer 21

mitigate the risk

Question 22

2 types of healthcare are

Answer 22

fee for service (less popular now) and managed care (HMO)

Question 23

explains to the insured what the HMO paid and what is owed by insured:…………….., usually a ratio of :……. in network and ………..out of network

Answer 23

explanation of benefits; 80/20; 50/50

Question 24

if someones in the hospital past their limit, do they still pay their deductible?

Answer 24

yes for every day they are there assume they owe a deductable

Question 25

the standard of care given to a person would need to be considered ...............; therefore having a good relationship with your dr is advised.

Answer 25

reasonable and necessary;

Question 26

government health insurance programs include:

Answer 26

medicare, AARP (over 50 can join, covers medigap), medicaid

Question 27

the risk that a company may become bankrupt is called:

Answer 27

credit risk

Question 28

workman's comp policies that companies take out are based on :

Answer 28

the nature of the industry

Question 29

with .............., an insured person is able to keep their health insurance at its regular group rate after leaving a job for ..............You will stay pay your premium. This is a federal mandate for companies with .......+ employees

Answer 29

COBRA; 18 months to 2 years; 50

Question 30

a policy that covers 60% of your income if you become disabled in which ........... is considered long-term and........ is considered short-term. If you become unemployed your policy goes with you.

Answer 30

Disability Group Policy; 6 months + ; up to 6 months

Question 31

a ................ policy adds another ............ of your income and sits on top of your group policy. This policy is non-taxable

Answer 31

supplemental disability; 15%

Question 32

once you are collecting on a policy, do you need to pay the premium?

Answer 32

no

Question 33

with disability insurance there are 2 definitions of disability

Answer 33

Own occupation: in which you cannot perform your own job (stronger); or any occupation: in which you cannot work in ANY occupation & can get stuck in a non-preferred job

Question 34

pregnancy is usually considered............; for the first 6 months benefits are ..... income and ......... income after 6 months.

Answer 34

a disability; 100%; 60%

Question 35

a COLA rider accounts for.........; the acronym stands for........

Answer 35

inflation; cost-of-living adjustment

Question 36

the # 1 catalyst in increase of stock prices is .........

Answer 36

buying

Question 37

demand a higher ror for markets such as ................ rather than others such as GE

Answer 37

international and emerging

Question 38

a higher Networth means a ............. tolerance for risk

Answer 38

higher

Question 39

2 key components you need to achieve success with stocks ares:

Answer 39

compounding and risk mitigation

Question 40

1- 8 weeks trade time describes a ................ An example of this would be when Phelps was winning Olympics and speedo stock went up.

Answer 40

swing trader

Question 41

a short-term trader trades ..............

Answer 41

6 months to 2 years

Question 42

a trader covering something related to a terrorist event, or one that needs to take all risk off by 4 would be a ...........

Answer 42

day trader

Question 43

you should always be in stocks for at least............., a period of.........

Answer 43

1 market cycle; 5 years

Question 44

markets drop .......... faster than they go up, but generally are ...........Markets tend to drift down when times are uncertain

Answer 44

3xs; in ascent

Question 45

the 6 parts to a broker order are:

Answer 45

1. Type (long) 2. How many shares (#) 3. What company (name) 4. What price 5. Type of limit order 6. Length of time

Question 46

an IPO is an............., which is the price a stock is first offered at

Answer 46

initial public offering

Question 47

the price you expect to reach in order to sell or hold is called a.........

Answer 47

price target

Question 48

the ror for a stock is

Answer 48

profit/ investment

Question 49

the 5 main investing asset categories are:

Answer 49

1. Cash/ least risk (Cds, commercial paper) 2. Bonds and debt/ medium debt (inverse relationship with us interest rates); types: gov. (T-bond, T-bill & T-notes), state/ city, quasi government (securitized-Ginnie Mae, etc) , corporate (high yield, junk, too good to believe) 3. Stock/ equities (highest risk) 4. other (crude oil, private equities, F/X gold> sexy assets or esoteric) 5. international investments

Question 50

the percentage of return given for bonds which doesn't change and usually given ............, or every 3 months, is called

Answer 50

per anum; coupon rate

Question 51

The YTM will fluctuate based on ..............

Answer 51

US interest rates

Question 52

international investing is.............., but global investing is..............

Answer 52

every country excluding the home country; every country including the home country

Question 53

the unemployment rate isn't accurate because people unaccounted for include :

Answer 53

those working part-time and discouraged workers

Question 54

investments tend to grow...........% a year with......... being from dividends

Answer 54

10-12; 4.4%

Question 55

the ........ ratio is a good indicator of the market and when it is low it can be predicted it will go back up to historical average

Answer 55

P/E ratio or price to earning

Question 56

asset category diversification 3 main groups are ..............and the proper percentages here account for .............. of your success with stocks. The other 8.5% is based on ..................

Answer 56

cash, bonds, stocks; 91.5%; stock/ industry allocation

Question 57

a small company is considered......... in capital, a medium is..........., and a large is over ...............

Answer 57

1 billion, 1-10 bil, 10 billion

Question 58

a disruptive technology company brings................., such as .........

Answer 58

break-through technology and new ideas for how things are done; Apple

Question 59

............ companies have high revenue and earnings

Answer 59

growth

Question 60

this type of company has been in business for awhile, such as............ and won't have much more than 5% growth

Answer 60

value; radio shack;

Question 61

the morning star style box categorizes what 6 things?

Answer 61

1. large company 2. medium company 3. small company 4. value 5. blend 6. growth

Question 62

to choose your stocks you must first choose:

Answer 62

industry, sector, sub-sector (IE local, regional), specific stock

Question 63

a REIT stands for........... and its a place that people put their money into and collectively into buildings and get paid as return in rents

Answer 63

real estate investment trust

Question 64

a trust where the money is pooled and a portfolio manager uses information from analysts and such to invest that trades only once a day at NAV (net asset value). Most retirement funds use this.

Answer 64

mutual funds

Question 65

similar to a mutual fund only it trades every day

Answer 65

ETF (exchange traded fund)

Question 66

international stocks and bonds should allocate for ........... of assets. The 2 different types are:

Answer 66

10-30%; emerging and developed

Question 67

6 objectives of an investor from low risk to high are:

Answer 67

capital preservation, income, growth and income, growth, aggressive growth, speculation

Question 68

Why would someone want a higher standard deviation?

Answer 68

Higher risk, higher reward

Question 69

the measure of risk which compares a stock to an entire market (S&P) is called; S & P is always

Answer 69

beta; 1.0

Question 70

the 7 risk management points for investing are:

Answer 70

1. diversification 2. identify, measure, and manage risk (SD and Beta for entire portfolio) 3. use correlations properly 4. est. fair values for investments 5. establish a target price in which to sell 6. control loss (use stop loss GTC) 7. trailing stop less (adjusts for highest value reached)

Question 71

what is the 3 legged stool? and what has it basically been replaced with?

Answer 71

pension, S.S, personal savings; 401K / retirement funds

Question 72

always choose a 401k or 403 b when there is a/n............

Answer 72

employer match

Question 73

an account for retirement which is taxed when the contributions are put into it is called:...........; conversely, a similar account which is taxed at the point the money is removed from the account is considered a ...........

Answer 73

Roth IRA ; traditional IRA

Question 74

a spouse is protected for their rights to ............., but with a/n ............. they may not be

Answer 74

a 401k plan; IRA

Question 75

the most aggressive account in your portfolio should be your ............, and should also be the ............. account you withdraw from- before your............ which will still be taxed and taxes inevitably go up

Answer 75

Roth IRA > according to our speakers; last; traditional IRA

Question 76

If you invest .........../ yr between ages .............., you will become a millionaire. Also, you will make ........... more than someone older investing from 35-65.

Answer 76

3600; 25-34; 100K

Question 77

pros to annuities include:.............; cons include:

Answer 77

tax deferred, payments wont outlive recipient, good for elderly in homes (so the home cant take it all), may be good for someone struggling to save? ; inability to pass to heir, no inflation adjustment, limited investment options

Question 78

2 different options for an annuity is .........

Answer 78

variable (low investment options + high costs) or fixed

Question 79

it's no longer, "buy low sell high", it is now:..........

Answer 79

"buy high, sell higher"!

Question 80

the only rule of thumb in this class, which is regarding how much one should invest into stocks is:...........

Answer 80

110- (age of person)

Question 81

The percentage which should be invested into international stocks range from :......

Answer 81

5-30%