Question 11(Multiple Choice Worth 4 points)

(Student Loans MC) A student is graduating from college in 12 months but will need a loan in the amount of $9,529 for the last two semesters. The student may receive either an unsubsidized Stafford Loan or a PLUS Loan. The terms of each loan are: Unsubsidized Stafford Loan: annual interest rate of 5.95%, compounded monthly, and a payment grace period of six months from time of graduation PLUS loan: annual interest rate of 6.55%, compounded monthly, with a balance of $10,172.23 at graduation Which loan will have a lower balance, and by how much, at the time of repayment?

The Stafford loan will have a lower balance by $244.04 at the time of repayment. The PLUS loan will have a lower balance by $244.04 at the time of repayment. The Stafford loan will have a lower balance by $431.17 at the time of repayment. The PLUS loan will have a lower balance by $431.17 at the time of repayment.

Question 12(Multiple Choice Worth 4 points)

(Planning for Retirement LC) A software developer's current annual gross wage is $88,900. For retirement, the developer wants to have enough saved to live off 80% of the current annual gross wage and draw 4% the first year. What is the total amount the developer will need in retirement savings to meet their retirement income goal?

$1,870,700 $1,877,000 $1,780,700 $1,778,000

Question 13(Multiple Choice Worth 4 points)

(Insurance LC) A car owner pays an annual premium of $780 for automobile insurance, including liability coverage of up to $100,000. The car owner pays this for nine years without needing to file a single claim. Then the car owner causes an accident for which the other driver is claiming $32,000 in damages. How much more expensive were the costs of the accident than what the car owner paid in premiums?

$24,980 $100,000 $7,020 $39,020

Question 14(Multiple Choice Worth 4 points)

(Diversifying Portfolios MC)

Investment	Portfolio 1	Portfolio 2	Portfolio 3
Stock in Large, Old Corporation	$1,800	$2,200	$400
Stock in Emerging Company	$600	$1,200	$5,500
U.S. Treasury Bond	$1,100	$3,500	$1,200
Junk Bond	$500	$1,300	$3,000
Certificate of Deposit	$1,700	$4,200	$600

Which of the following shows the portfolios' levels of risk from lowest to highest?

Portfolio 2, portfolio 3, portfolio 1

Portfolio 1, portfolio 3, portfolio 2

Portfolio 2, portfolio 1, portfolio 3

Portfolio 3, portfolio 2, portfolio 1

Question 15(Multiple Choice Worth 4 points)

(Retirement Savings Plans LC) Which retirement plan(s) potentially involve contributions from an individual's employer?

1. Traditional IRA
2. Social Security
3. Pension Plan
4. 401(k)

I, II II, III I, II, III II, III, IV