BUSI 352 quiz 5 Retirement Planning solutions complete answers

BUSI 352 quiz 5 Retirement Planning solutions complete answers 

 

Fritz has just retired with an investment portfolio equal to $1 million. He plans on using the 4% capital balance approach to retirement distributions. He also plans on distributing the amount in one lump sum at the beginning of the year. His first year, he distributes $40,000 to live on, in addition to his other income. However, the market takes a significant decline and his portfolio loses 20%. His second year, after he takes his distribution, his portfolio takes another decline of 20%. How much can he take in the third year if he is sticking with the 4% method? Round to the nearest thousand.

 

Allison, age 40, earns $95,000 annually; her wage replacement ratio has been determined to be 70%. She expects inflation will average 3% over her entire life expectancy. She expects to work until 67, and live until 95. She anticipates a 7.5% return on her investments. Allison does not expect to receive any Social Security retirement benefits. Calculate Allison’s capital needed at retirement age 67.

 

When the economy experiences a decline in real GDP for two or more successive quarters, what stage of the economic cycle does this indicate?

 

Which of the following is not one of The Federal Reserve’s primary goals?

 

Which of the following would cause the demand curve to shift downward and to the left?

 

Which of the following debts are dischargeable in Chapter 7 bankruptcy?

 

Stacy, a self-employed accountant, currently earns $100,000 annually. Stacy has been able to save 18% of her annual Schedule C net income. Assume that Stacy paid $11,000 in Social Security taxes, and that she plans to pay off her mortgage at retirement, thereby relieving her of her only debt. Stacy presently pays $1,500 per month toward the mortgage principal and interest. Based on the information provided herein, what do you expect Stacy’s wage replacement ratio to be at retirement?

 

Which of the following is not a goal of the Federal Deposit Insurance Corporation (FDIC)?

 

Which of the following best describes when an individual is voluntarily unemployed because they are seeking other job opportunities and they have not found the desired employment yet?

 

The period of time a person is expected to be in the work force is referred to as:

 

The supply of coffee has been drastically reduced due to a drought resulting in substantially higher prices. Which of the following statements is/are correct? STATEMENT ONE: The demand curve for coffee will shift to the right. STATEMENT TWO: The demand curve for creamer will shift to the left. STATEMENT THREE: The demand for orange juice will increase.

 

Which of the following is not a primary responsibility of the Federal Reserve (Fed)?

 

Betty just read that 40 years ago, milk was about $1.15 per gallon and today it is about $6 per gallon. She thought that seemed very high, especially if she can only earn 7% from her investments. She also thought that she would need about $3 million for retirement in today’s dollars. If inflation is the same in the future as it has been over the last 40 years for a gallon of milk, how much will she need to have accumulated when she retires in 30 years?

 

Which of the following debts are dischargeable in bankruptcy?

 

Terrance, age 43, earns $80,000 annually; and his wage replacement ratio has been determined to be 80%. He expects inflation will average 3% for his entire life expectancy. He expects to work until 68 and live until 90. He anticipates an 8% return on his investments. Additionally, Social Security Administration has notified him that his annual retirement benefit, in today’s dollars will be $26,000. Using the capital needs / annuity method, calculate how much capital Terrance will need to be able to retire at age 68.

 

Which of the following is/are examples of monetary policy?

 

Which of the following statements is correct?

 

Allison, age 40, earns $95,000 annually; her wage replacement ratio has been determined to be 70%. She expects inflation will average 3% over her entire life expectancy. She expects to work until 67, and live until 95. She anticipates a 7.5% return on her investments. Allison does not expect to receive any Social Security retirement benefits. Calculate Allison’s annual retirement needs in today’s dollars.

 

Allison, age 40, earns $95,000 annually; her wage replacement ratio has been determined to be 70%. She expects inflation will average 3% over her entire life expectancy. She expects to work until 67, and live until 95. She anticipates a 7.5% return on her investments. Allison does not expect to receive any Social Security retirement benefits. What is the amount of Allison’s first retirement distribution at age 67?

 

Social Security is a sizable program that impacts many families in the United States. Which of the following statements are correct regarding Social security? STATEMENT ONE: Social Security was never intended to provide a substantial wage replacement ratio for most Americans. STATEMENT TWO: Social Security skews benefits towards lower wage earners and away from higher wage earners. STATEMENT THREE: Social Security provides 90% or more of the income for more than 20% of retired married couples.

 

Which of the following comes under an exemption from registration status of the Investment Advisers Act of 1940?

 

Allison, age 40, earns $95,000 annually; her wage replacement ratio has been determined to be 70%. She expects inflation will average 3% over her entire life expectancy. She expects to work until 67, and live until 95. She anticipates a 7.5% return on her investments. Allison does not expect to receive any Social Security retirement benefits. 

Calculate Allison’s capital needed at retirement age 67. 

 

Allison, age 40, earns $95,000 annually; her wage replacement ratio has been determined to be 70%. She expects inflation will average 3% over her entire life expectancy. She expects to work until 67, and live until 95. She anticipates a 7.5% return on her investments. Allison does not expect to receive any Social Security retirement benefits. 



All of the following are true with regards to retirement planning EXCEPT: 

 

David is 30 years old and spends $75 per week on groceries. If inflation averages 3% per year, how much will David spend on the same groceries when he is 65? 

 

Jordan is 55 and wants to retire in 12 years. His family has a history of living well into their 90s. Therefore, he estimates that he will live to age 97. He currently has a salary of $100,000 and expects that he will need about 82% of that amount annually if he were retired. He can earn 9 percent in his portfolio and expects inflation to be 3 percent. Jordan currently has $325,000 invested for his retirement. His Social Security retirement benefit in today’s dollars is $30,000 per year at normal age retirement of age 67. How much does he need to save each year at year end to meet his retirement goals? 

 

Which of the following expenditures will most likely decrease during retirement? 

 

Which of the following statements regarding retirement analysis is correct?  

 

True or False: A U.S. rugby player who plays professionally in New Zealand would be included in the U.S. GNP.

 

True or False: An Australian actor who works in the U.S. would not be included in the U.S. GDP.

 

Which of the following is/are tools of monetary policy?



Which of the following is not one of the four stages of a business cycle?



If the Fed wants to ease monetary policy, they will _________ Treasury securities through Open Market Operations.

 

Fiscal Policy refers to the government's manipulation of ________



True or False: The Federal Debt is currently greater than 100% of GDP.