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intro to business > ch C > Flashcards

ch C Flashcards

1
Q

6 steps to controlling assets

A
  1. Take inventory
  2. keep track of expenses
  3. prepare a budget
  4. pay of debts
  5. start a savings plan
  6. borrow only to buy assets
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2
Q

Interest on mortgage is ____

A

tax deductible

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3
Q

contratian approach

A

buying stock when everyone is selling

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4
Q

criteria for the right investment

A

risk, yield, duration, liquidity, tax consequences

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5
Q

reducing risk via diversification, meaning….

A

buying difference types of investments

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6
Q

What are robo advisors?

A

automated online tools that use advanced algorithms to make suggestions, manages and re balance portfolios

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7
Q

If a company reaches business objectives then increases _____

A

potential for capital gain (positive difference between the price at which you buy and then sell)

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8
Q

blue chip stocks

A

regular dividends and price appreciation

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9
Q

growth stocks

A

earnings growing at a faster rate

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10
Q

income stocks

A

high dividend yield that pace w/ inflation

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11
Q

penny stocks

A

ownership in companies with high risk industries

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12
Q

market order

A

broker to buy / sell a stock immediatly

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13
Q

limit order

A

tells broker to buy/ sell at a specific price

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14
Q

bonds sold at a discount

A

price is less than face value

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15
Q

bonds sold at premium

A

has value, price above face value

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16
Q

advantages of bonds

A

guaranteed income and limited risk

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17
Q

When interest rates rise the bonds ___-

A

fall

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18
Q

mutual funds

A

investment company pools money to buy stocks/bonds and investments

19
Q

load fund (mutual fund)

A

charges investors a commission to buy/sell shares

20
Q

no load fund (mutual fund)

A

no commission

21
Q

open end fund (mutual fund)

A

will accept investments of any interested investors

22
Q

closed end funds (mutual funds)

A

limit # of shares, once fund reaches target #, no new investors can buy into fund

23
Q

ETF

A

mix of stocks and mutual funds

traded on securities exchanges, like stocks

24
Q

term insurance

A

simple least expensive pure insurance protection for a couple of months

25
Q

whole life insurance

A

combines pure savings and insurance. how much payment towards invesments

26
Q

variable life insurance

A

type of whole life insurance that invests cash value of policy in stocks and other high yield securities

27
Q

insurance companies sell annuities that are contracts

A

to make regular payments to a person for life/ fixed period

28
Q

fixed annuities

A

investments that pay at a specified interest rate

29
Q

variable annuities

A

provide investment choices identical to mutual fund

30
Q

Patient protection and Affordable Care Act

A

initially required nonexempt individuals to maintain a min level of ins or tax penalty until 2017

31
Q

HSA (health savings account)

A

tax deffered

32
Q

disability insurance

A

ins that pays part of cost of a long term sickness or accident

33
Q

Homeowners/ renters insurance

A

guaranteed replacement cost

covers depreciated cost

34
Q

Social Security -1935

A

fund of money, continuous flow of contribution and payments

35
Q

maintaining social security requires

A

reducing benefits/ late retirements/ limiting cost of living adjustments and increasing taxes

36
Q

IRA

A

tax deffered investment plan that enables you to save part of income for retirement

37
Q

traditional IRA

A

allows people who qualify to deduct from their reported income the money they put in their account

38
Q

tax deferred contributions

A

no current taxes but earnings gained in IRA are taxed as income when they are withdrawn

39
Q

ROTH IRA

A

no upfront deductions, earnings grow tax free

40
Q

for self employed…. SEP Ira

A

anuual contribution limit: 56000$

41
Q

simple IRA

A

for companies with less than a 100 employess

42
Q

401K plan

A

employee sponsored savings plan that allows you to deposit a set amount of pre tax and collect compounded earnings tax free free until withdrawl

43
Q

benefits of 401K

A
  1. contributions reduce present tax income
  2. Tax is offered on earnings
  3. employers will match contributions

intro to business (4 decks)

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