Final Examination – FINC 321: Fundamentals of Building Wealth

  1. Differentiate between open-and closed-end funds, as well as exchange-traded funds, and discuss the various types of fund loads and charges.
  2. 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.
  3. Briefly explain the following estate planning tools:
    1. Will
    2. Living Will
    3. Power of Attorney (financial and medical)
  4. Differentiate between a Deductible IRA and a Roth IRA.  Provide examples to substantiate why individuals/couples would choose either.
  5. List and briefly explain the five determinants of a credit score. Why is your credit score important?
  6. 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 16, 2016)?  What is the current stock price of Facebook and Dunkin Donuts (July 5, 2016), and would you consider investing in either company?  Why or why not?
  7. List and briefly explain the three levels of diversification. Using a diagram illustration (pie chat, graph), depict a typical investment asset allocation.
  8. Your grandfather would like to share some of his fortune with you. He offers to give you money under one of the following scenarios (you get to choose):

Scenario #1: $8,750 per year at the end of each of the next seven years

Scenario #2: $50,050 (lump sum) now

Scenario #3: $100,250 (lump sum) seven years from now


  1. Calculate the present value of each scenario using a 6% discount rate. Which scenario yields the highest present value? Round to nearest whole dollar.
  2. Would your preference change if you used a 12% discount rate?

Hint: Use the time value of money tables.


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