Ch. 3 and 8

Question 1

Consequences of overdrawing your checking account

Answer 1

Bounced check fee from store, overdraft fee from bank

Question 2

Purpose of budget

Answer 2

Make money go further

Question 3

Percentage of Americans living paycheck to paycheck

Answer 3

70%

Question 4

PYF

Answer 4

Pay Yourself First; setting aside money for saving/investing

Question 5

Four types of expenses for in a budget

Answer 5

Variables, Fixed, Intermittent, Discretionary (Non-essential)

Question 6

Intermittent expenses

Answer 6

Expenses that occur at various time throughout the year and tend to be large

Question 7

Discretionary Expenses

Answer 7

Non Essentials

Question 8

Check Register

Answer 8

your own record of all your transactions

Question 9

Reasons why cash flow statements don’t work

Answer 9

Leave things out, over complicated, don’t write a budget, and/or don’t live on your budget

Question 10

4 types of long-term mutual fund investments you should invest in to be properly diversified

Answer 10

Growth, growth and income, international, and aggressive growth

Question 11

Things to never do when investing:

Answer 11

Never invest purely for tax savings, and never invest using borrowed money

Question 12

What is a CD?

Answer 12

Certificate of deposit; savings account with a slightly higher interest rate because of a longer savings commitment

Question 13

What is a money market account?

Answer 13

low-risk bank savings account with check-writing privileges (great for emergency fun because very liquid and stable

Question 14

Dividend

Answer 14

Distribution of a portion of a company’s earnings

Question 15

SEC

Answer 15

U.S. Securities and Exchange Commission; regulates the stock market

Question 16

FDIC

Answer 16

Federal Deposit Insurance Corporation; insures deposits in commercial banks

Question 17

Roth IRA

Answer 17

an individual retirement account allowing a person to set aside after-tax income up to a specified amount each year. Both earnings on the account and withdrawals after age 59½ are tax-free.

Question 18

Annuity

Answer 18

you make an investment in the annuity, and it then makes payments to you on a future date or series of dates.

Question 19

401k

Answer 19

retirement

Question 20

403b

Answer 20

retirement for tax-exempt organizations

Question 21

What should a young investor interested in an above-average growth invest in?

Answer 21

Mutual funds

Question 22

If you leave a company that had a retirement plan, what should you do with that money?

Answer 22

roll it over

Question 23

Tax-favored dollars

Answer 23

You either pay taxes on it before, then get it or get it and pay taxes later

Question 24

529 plan

Answer 24

Tax-advantaged savings plan designed to encourage saving for future college costs

Question 25

Viaticals

Answer 25

Buying the beneficiary position on a life insurance policy if someone is dying

Question 26

What type of investment has a 70-year track record of 4.1% return

Answer 26

Gold

Question 27

Commodity

Answer 27

A raw material or primary agricultural product that can be bought and sold (Copper or coffee)