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Personal Finance > Chapter 10 & 11 > Flashcards

Chapter 10 & 11 Flashcards

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1
Q

Advantages of regular savings account -

A

higher liquidity

safe

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2
Q

disadvantages of regular savings account -

A

lower interest rate

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3
Q

advantages of CD’s -

A

has a fixed rate

safe

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4
Q

disadvantages of CD’s

A

penalty for early withdrawl

maturity date

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5
Q

Advantages of money market funds (not an acct)

A

high interest rate

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6
Q

disadvantages of money market funds -

A

higher then savings account

not safe at all

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7
Q

…. involves an employer or financial institution electronically depositing your paycheck into a bank account

A

direct deposit

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8
Q

a form of educational funding that doesn’t have to be repaid, is often funded by the government, and is in addition to scholarships and loans, is called for a ….

A

grant

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9
Q

interest drawn on the sum of the original principal plus interest is called …….. interes

A

compound

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10
Q

money that is paid for the use of money is called -

A

interest

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11
Q

a regular account at a credit union is called an …… account

A

share

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12
Q

….. occurs when student loans are combined into one large loan

A

loan consolidation

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13
Q

deposits kept in credit unions are insured by the …

A

NCUA

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14
Q

federal insurance for depositors in commercial banks and savings and loans is provided by the …

A

FDIC

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15
Q

the greater the ……… you are willing to take, the higher rate of interest u are willing to receive -

A

risk

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16
Q

a deposit that is set aside for a specified length of time at a specified rate is called an

A

CD

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17
Q

a type of savngs plan that offers a more competitive interest rate than a regular savings account is called an

A

money market account

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18
Q

the capability of financial resources being readily converted to cash is called

A

liquidity

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19
Q

the amount of money you place in savings is caled

A

principal

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20
Q

money borrowed for education, called ……, can be subsidized or unsubsidized

A

student loans

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21
Q

the day on which a certificate must be renewed of cashed in is called

A

maturity date

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22
Q

when a CD is cashed before its maturity date, the depositor must pay an ….. penalty

A

early withdrawl

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23
Q

T or F

emergencies, vacations, social events, major purchases are examples of short term needs

A

true

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24
Q

T or F

cash allowances awarded to students to go to college, called scholarships, are based on need or may be based on high test scores

A

true

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25
Q

T or F

a subsidized student loan has a higher interest rate, and interest begins the day you receive the loan

A

false

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26
Q

T or F

compound interest refers to interest paid on principal and interest

A

true

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27
Q

T or F

work study programs will replace your need for other sources of money.

A

False

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28
Q

T or F

when choosing a financial institution in which to place your savings, you should consider safety, liquidity, convenience and purpose

A

True

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29
Q

T or F

deposits in savings and loan associations and commercial banks are insured by the FDIC

A

true

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30
Q

T or F

if a depositor withdraws part r all of a certificateof deposit before its maturity date, there will be an early withdraw penalty

A

true

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31
Q

T or F

financial institutions can offer interest compounded daily because of computers that makes rapid computations possible

A

true

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32
Q

T or F

some ways to make saving easier include dirrect deposit and automatic deductions

A

true

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33
Q

what are 3 examples of a long - term savings goal

A

home ownership
college education
retirement

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34
Q

what is the most liquid

A

regular savings

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35
Q

a type of savings plan whereby you set aside money at a financial institution for a set period is a

A

certificate of deposit

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36
Q

what do banks usually offer

A

ATMs
numerous locations
drive up windows

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37
Q

The FDIC insures a depositors money up to ….

A

250,000

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38
Q

which pays the highest total interest when deposits are withdrawn at irregular times

A

compounded daily

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39
Q

short term needs examples -

A

vacation, emergencies

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40
Q

they are things that you’re saving up for now for the future -

A

long term needs

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41
Q

long term needs examples -

A

home ownership
education
retirement
investing

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42
Q

its knowing that you are living within your means -

A

financial security

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43
Q

4 ways ur money grws-

A

principal
interest
compound interest
annual percentage yeild

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44
Q

its the money you deposit ; the original amount

A

principal

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45
Q

the money from the bank (borrowing money from the US)

A

interest

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46
Q

its making more money interest on interest

grows faster

A

compounded interest

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47
Q

what the rate will be every year (how much you’ll make over a year!!)

A

annual percentage yeild

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48
Q

where can you save ? (5)

A 
commercial banks
savings banks
savings&loan associations
credit unions
brokerage firms
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49
Q

its banks that are for proft

A

commercial banks

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50
Q

theres not that many

they offer 2 types of services (loans, mortages, savings)

A

savings bank

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51
Q

they do loans and have savings

A

savings&loan association

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52
Q

member-owned

  • lots of servies
  • in business to help community (not to make $$)
A

credit unions

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53
Q

they have diff types of security stocks & bonds

A

brokerage firms

54
Q

They are high liquidity

They have a lower interest rate

A

Regular savings account

55
Q

Means its easy to get to money

A

Liquidity

56
Q 
Its the money you put in,
Highest interest rate,
Can't take it out until a certain time
Maturity date
Penalty for early withdraw
A

certificate of deposit (CD)

57
Q
  • It has a minimum balance - usually high, but gets high interest rate
  • variable interest rate but usually higher than savings accounts
A

Money market account

58
Q

its not liquid, you dont often touch this money

A

money market account

59
Q

3 savings options -

A

savings account
CD
money market account

60
Q

5 things to selecting a savings plan -

A 
liquidity
safety
convenience
interest-earning potential
fees/restrictions
61
Q

its the capability of financial resources being converted to cash -

A

liquidity

62
Q

questions like will your money be protected/ safe?

A

safety

63
Q

an ATM is a ….

A

convenience

64
Q

questions like whats the interest on that savings?

A

interest-earning potential

65
Q

questions like are there any fees? fees for early withdraw?

A

fees/restrictions

66
Q

its telling the workers just to pull $$ from your account

A

automatic payroll deductions

67
Q

3 reasons for investing -

A

helps beat inflation
increases wealth
fun and challenging

68
Q

5 stages of investing -

A 
put-and-take account
beginning investing
systematic investing
strategic investing
speculative investing
69
Q

its when you first get a job and begin investing

A

beginning investing

70
Q

they are savings to earn a financial return

A

investments

71
Q

its the rise of prices

A

inflation

72
Q

its planning ahead & comfortable w/ doing it on a reg. basis (a plan for long term)

A

systematic

73
Q

its to come up w/ a plan (closer to retirement) & its where the money will last ten years in the future (maximite profit w/ lower risk)

A

strategic

74
Q

(rich people)

kind of gambling where there is rick to lose A LOT of $$ (make a lot or lose a lot)

A

speculative

75
Q

5 types of risk -

A 
interest rate
political
market
non-market
company/industry
76
Q

its where if it goes down, youll lose money -

A

interest-rate risk

77
Q

its anything that costs money / or raises taxes

A

political risk

78
Q

it affects all investments at once, stock market go up & down
(natural disaster, terrorism)

A

market risk

79
Q

where a certain industry can be affected as another industry is not, but soon affects all

A

non-market risk

80
Q

affects a company at a time -

A

company/industry risk

81
Q

its $ you get from stocks

A

dividends

82
Q

when choosing an investment make sure ……

A

it will be safe
can u afford it
tax benefits?

83
Q

wise investment practices -

A 
define financial goals
go slowly
follow through
keep good records
seek advice
keep knowledge
know limits
84
Q

sources of financial information -

A 
newspapers
newsletters
finanacial magazines
financial advisers
financial statements
online investor education
85
Q

3 investment options -

A

low risk
medium risk
high risk

86
Q

its a low-to-medium return

A

low risk

87
Q

its a medium return

A

medium risk

88
Q

a high return -

A

high risk

89
Q

examples of low risks -

A

corporate & municipal bonds
US government saving bonds
treasury securities

90
Q

examples of medium risks -

A

mutual funds
annuities
self-managed retirement accounts
real estate

91
Q

examples of high risk -

A 
penny stocks
collectibles
futures
options
commodities
92
Q

T or F

the put-and-take account is an emergency fund

A

true

93
Q

T or F

public corporations are not required to publish annual reports

A

false

94
Q

T or F

market risk is caused by business declines or other events

A

true

95
Q

T or F

political risk refers to the effect of higher interest rates when you are locked into lower rates

A

false

96
Q

T or F

an investor does not need to build trust with a financial adviser. it is important only to communicate goals clearly -

A

false

97
Q

T or F

investments that require more risk usually provide greater potential returns

A

true

98
Q

T or F

an investment in real estate (owning your own home) is generally considered relatively safe but fairly illiquid -

A

true

99
Q

T or F

beginning investments should include only long-range goals such as planning for retirement -

A

false

100
Q

T or F

an investment adviser is responsible for your decisions

A

false!!

101
Q

T or F

Forbes and Business Week are examples of finanial magazines -

A

true

102
Q

which risk is associated with a business decline -

A

market risk

103
Q

permanent investments are generally made to provide for ….. goals

A

long-term

104
Q

how long are treasury bills issued -

A

1 year or less

105
Q

the final level or realm of investing is called -

A

speculation

106
Q

are stocks a high risk/high return statement

A

yes

107
Q

the first goals to wise investment practices -

A

define financial goals

108
Q

financial advisers should provide u info like ….

A

training/background
fees
philosophy of investing

109
Q

a savings plan whereby an individual invests on a regular and planned basis

A

systematic investment

110
Q

to find the most detailed data about a corporation, consult …..

A

financial magazines

111
Q

its a rise in the general level of prices

A

inflation

112
Q

is the use of savings to earn a financial return -

A

investing

113
Q

the chance that an investments value will decrease is an …

A

investing risk

114
Q

is a document that gives the financial history of a corporation

A

annual report

115
Q

government actions that affect business profits are called …….

A

political risk

116
Q

sections of newspapers containing financial data are called the ….

A

financial pages

117
Q

a person who buys and sells securities for clients -

A

full-service broker

118
Q

they provide financial data for interpretation -

A

investor services

119
Q

……….. buy and sell securities for clients for a reduced commission

A

discount brokers

120
Q

professional investment planners -

A

financial advisers

121
Q

the spreading risk among many types of investments is called

A

diversification

122
Q

a formula used to estimate time or rate to double your $$ -

A

rule of 72

123
Q

they represent ownership in a corporation

A

stocks

124
Q

are debt obligations of corporations or a government

A

bonds

125
Q

are pools money of many investors and buys a large selection of securities

A

mutual fund

126
Q

a contract issued by an insurance company that pays a series of regular payments, usually after retirement

A

annuity

127
Q

is purchased for less than its maturity value -

A

discount bond

128
Q

are contracts to bu and sell commodities for a specified price on a specified future date

A

futures

129
Q

low-priced stocks of small companies that have no track record are called …….

A

penny stocks

130
Q

is the right, but not the obligation, to buy or sell a commodity or stock for a specified price within a specified time period

A

option

Personal Finance (8 decks)

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