GEB 3006 LATEST 2026 EXAM QUESTIONS AND SOLUTIONS
GRADED A+
✔✔At what point should the homeowner contact the mortgage company and request
that PMI be stopped? - ✔✔When the homeowner's equity in the house reaches 20%.
✔✔In order to get the lowest interest available, your FICO score should be: - ✔✔760
✔✔square footage = - ✔✔sale price / area under ac unit and heater
✔✔Which of the following would tend to have the highest interest rate at any given time.
- ✔✔Home equity line of credit (HELOC)
✔✔Fixed rate home mortgages should be refinanced when interest rates -
✔✔Decrease.
✔✔Early in the life of a mortgage, - ✔✔most of the payment goes toward interest with
very little being applied to principal.
✔✔The primary risk of having an adjustable rate (ARM) mortgage is: - ✔✔interest rates
could increase
✔✔If you need life insurance because of a large mortgage or dependent children, you
should normally buy: - ✔✔Term life it is cheaper
✔✔The key to successful investing - ✔✔is asset class allocation, diversification, and
appropriate use of taxable, tax deferred and tax free accounts
✔✔Assume a student has 4 individual stocks worth $2,500 each. In this case: - ✔✔The
student is not adequately diversified.
✔✔The total return on a stock is the total of the: - ✔✔Dividend yield and capital gain
yield.
✔✔div yield formula - ✔✔annual dividend / stock price
✔✔What type of stock has greater risk and often does not pay dividends? - ✔✔small
cap stock
✔✔If a company's earnings do not vary much with the economy, it would be called a
____ stock. - ✔✔defense
, ✔✔The risks of the overall market that can't be diversified by adding more stocks to a
portfolio is called _____ risk. - ✔✔systematic or market
✔✔Over the long term, which asset class provided the highest rate of return? -
✔✔stocks
✔✔The historical equity risk premium or excess market return for stocks over risk free
investments is _____. - ✔✔4.4%
✔✔The returns on Real Estate Investment Trusts (REITs) is in the same range of
returns as ______. - ✔✔stocks
✔✔The US stock market is essentially a ___________ market. - ✔✔large cap
✔✔A stock with a beta of 2.0 would be a _______ stock. - ✔✔high risk
✔✔For long term investments, a 30 year old should have about ___ invested in equity
securities. - ✔✔80%
✔✔Which type of mutual fund would maintain a reasonably appropriate allocation of
stocks and bonds for your age? - ✔✔targeted retirement date stocks
✔✔If interest rates decrease, the price of a bond will: - ✔✔increase
✔✔The best predictor of future mutual fund performance is: - ✔✔expense ratio
✔✔One can reduce the risk of out living your savings by starting to save early in life
rather than - ✔✔in your 40s and 50s.
✔✔If you can limit annual withdrawals from your 401-K to no more than ____, then your
money should last forever. - ✔✔4%
✔✔When calculating the amount a person can withdraw from their 401-K, it is best to
use a __________ annuity which will allow the individual to increase their payment each
year for inflation. - ✔✔growing
✔✔W2 Taxable Income = - ✔✔gross - 401k
✔✔Flexible spending and health savings accounts are - ✔✔shown as reductions to your
W-2 income, and thus save federal taxes
✔✔The rules for flexible spending accounts generally require that employees - ✔✔use
the money within the current year or lose unused savings.
GRADED A+
✔✔At what point should the homeowner contact the mortgage company and request
that PMI be stopped? - ✔✔When the homeowner's equity in the house reaches 20%.
✔✔In order to get the lowest interest available, your FICO score should be: - ✔✔760
✔✔square footage = - ✔✔sale price / area under ac unit and heater
✔✔Which of the following would tend to have the highest interest rate at any given time.
- ✔✔Home equity line of credit (HELOC)
✔✔Fixed rate home mortgages should be refinanced when interest rates -
✔✔Decrease.
✔✔Early in the life of a mortgage, - ✔✔most of the payment goes toward interest with
very little being applied to principal.
✔✔The primary risk of having an adjustable rate (ARM) mortgage is: - ✔✔interest rates
could increase
✔✔If you need life insurance because of a large mortgage or dependent children, you
should normally buy: - ✔✔Term life it is cheaper
✔✔The key to successful investing - ✔✔is asset class allocation, diversification, and
appropriate use of taxable, tax deferred and tax free accounts
✔✔Assume a student has 4 individual stocks worth $2,500 each. In this case: - ✔✔The
student is not adequately diversified.
✔✔The total return on a stock is the total of the: - ✔✔Dividend yield and capital gain
yield.
✔✔div yield formula - ✔✔annual dividend / stock price
✔✔What type of stock has greater risk and often does not pay dividends? - ✔✔small
cap stock
✔✔If a company's earnings do not vary much with the economy, it would be called a
____ stock. - ✔✔defense
, ✔✔The risks of the overall market that can't be diversified by adding more stocks to a
portfolio is called _____ risk. - ✔✔systematic or market
✔✔Over the long term, which asset class provided the highest rate of return? -
✔✔stocks
✔✔The historical equity risk premium or excess market return for stocks over risk free
investments is _____. - ✔✔4.4%
✔✔The returns on Real Estate Investment Trusts (REITs) is in the same range of
returns as ______. - ✔✔stocks
✔✔The US stock market is essentially a ___________ market. - ✔✔large cap
✔✔A stock with a beta of 2.0 would be a _______ stock. - ✔✔high risk
✔✔For long term investments, a 30 year old should have about ___ invested in equity
securities. - ✔✔80%
✔✔Which type of mutual fund would maintain a reasonably appropriate allocation of
stocks and bonds for your age? - ✔✔targeted retirement date stocks
✔✔If interest rates decrease, the price of a bond will: - ✔✔increase
✔✔The best predictor of future mutual fund performance is: - ✔✔expense ratio
✔✔One can reduce the risk of out living your savings by starting to save early in life
rather than - ✔✔in your 40s and 50s.
✔✔If you can limit annual withdrawals from your 401-K to no more than ____, then your
money should last forever. - ✔✔4%
✔✔When calculating the amount a person can withdraw from their 401-K, it is best to
use a __________ annuity which will allow the individual to increase their payment each
year for inflation. - ✔✔growing
✔✔W2 Taxable Income = - ✔✔gross - 401k
✔✔Flexible spending and health savings accounts are - ✔✔shown as reductions to your
W-2 income, and thus save federal taxes
✔✔The rules for flexible spending accounts generally require that employees - ✔✔use
the money within the current year or lose unused savings.
