Fundamentals of Building Wealth Final Examination


1. Differentiate between a Deductible IRA and a Roth IRA. Provide examples to substantiate why individuals/couples would choose either.

2. Explain what 100/300/50 means for auto insurance? What is the minimum amount required for the state or country that you currently reside in? Do you think it’s enough coverage for the vehicle you drive?

3. Your employer provides a 401(k) retirement plan and matches 100% of your contributions up to 5%. Your annual income is $54,000 and you expect to earn an annualized 8.0% return on your investment.

What is the value of your 401(k) if you contribute 5% of your annual income after 30 years? What is the value if the return on investment is at a 10.0% annualized rate?

How much of a difference would it be if you stopped making contributions five years earlier? [Note: you must use the tables found in the Weekly Discussion and show your factors. Use of an online calculator is not approved for this problem.]

Fundamentals of Building Wealth

4. Explain the difference between term and cash value life insurance. Discuss the difference between the following cash value life insurance types: ordinary, variable, and universal.

5. Briefly explain the following estate planning tools:
a. Will
b. Living Will
c. Power of Attorney (financial and medical)

6. You are considering the purchase of a $250,000 house using a regular fixed rate mortgage loan with a 20% down payment; what is the monthly payment (not including taxes and insurance) using a 30-year (5.0%), 20-year (4.50%), and a 15-year (4.00%)? How much total interest would you pay using the three different loans over the course of the loan?

What are the reasons you would consider using a 5/1 adjustable rate mortgage? Would it be beneficial in today’s current interest rate environment to consider using an ARM?

7. Explain the difference between the Dow Jones Industrial Average index, NASDAQ, and S&P 500 index. What is the current price for each and how has each changed since the start of the class (May 22, 2017)? What is the current stock price of Google and Chipotle, and would you consider investing in either company? Why or why not?

8. List and briefly explain the five determinants of a credit score. Why is your credit score important?

Last Updated on February 14, 2019 by Essay Pro