Chapter 10 & 11: Accounts, Loans, and Investing Flashcards
1
Q
Advantages of regular savings account -
A
higher liquidity
safe
2
Q
disadvantages of regular savings account -
A
lower interest rate
3
Q
advantages of CD’s -
A
has a fixed rate
safe
4
Q
disadvantages of CD’s
A
penalty for early withdrawl
maturity date
5
Q
Advantages of money market funds (not an acct)
A
high interest rate
6
Q
disadvantages of money market funds -
A
higher then savings account
not safe at all
7
Q
…. involves an employer or financial institution electronically depositing your paycheck into a bank account
A
direct deposit
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
9
Q
interest drawn on the sum of the original principal plus interest is called …….. interes
A
compound
10
Q
money that is paid for the use of money is called -
A
interest
11
Q
a regular account at a credit union is called an …… account
A
share
12
Q
….. occurs when student loans are combined into one large loan
A
loan consolidation
13
Q
deposits kept in credit unions are insured by the …
A
NCUA
14
Q
federal insurance for depositors in commercial banks and savings and loans is provided by the …
A
FDIC
15
Q
the greater the ……… you are willing to take, the higher rate of interest u are willing to receive -
A
risk
16
Q
a deposit that is set aside for a specified length of time at a specified rate is called an
A
CD
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
18
Q
the capability of financial resources being readily converted to cash is called
A
liquidity
19
Q
the amount of money you place in savings is caled
A
principal
20
Q
money borrowed for education, called ……, can be subsidized or unsubsidized
A
student loans
21
Q
the day on which a certificate must be renewed of cashed in is called
A
maturity date
22
Q
when a CD is cashed before its maturity date, the depositor must pay an ….. penalty
A
early withdrawl
23
Q
T or F
emergencies, vacations, social events, major purchases are examples of short term needs
A
true
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
25
T or F
a subsidized student loan has a higher interest rate, and interest begins the day you receive the loan
false
26
T or F
compound interest refers to interest paid on principal and interest
true
27
T or F
work study programs will replace your need for other sources of money.
False
28
T or F
when choosing a financial institution in which to place your savings, you should consider safety, liquidity, convenience and purpose
True
29
T or F
deposits in savings and loan associations and commercial banks are insured by the FDIC
true
30
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
true
31
T or F
financial institutions can offer interest compounded daily because of computers that makes rapid computations possible
true
32
T or F
some ways to make saving easier include dirrect deposit and automatic deductions
true
33
what are 3 examples of a long - term savings goal
home ownership
college education
retirement
34
what is the most liquid
regular savings
35
a type of savings plan whereby you set aside money at a financial institution for a set period is a
certificate of deposit
36
what do banks usually offer
ATMs
numerous locations
drive up windows
37
The FDIC insures a depositors money up to ....
250,000
38
which pays the highest total interest when deposits are withdrawn at irregular times
compounded daily
39
short term needs examples -
vacation, emergencies
40
they are things that you're saving up for now for the future -
long term needs
41
long term needs examples -
home ownership
education
retirement
investing
42
its knowing that you are living within your means -
financial security
43
4 ways ur money grws-
principal
interest
compound interest
annual percentage yeild
44
its the money you deposit ; the original amount
principal
45
the money from the bank (borrowing money from the US)
interest
46
its making more money interest on interest
| grows faster
compounded interest
47
what the rate will be every year (how much you'll make over a year!!)
annual percentage yeild
48
where can you save ? (5)
```
commercial banks
savings banks
savings&loan associations
credit unions
brokerage firms
```
49
its banks that are for proft
commercial banks
50
theres not that many
| they offer 2 types of services (loans, mortages, savings)
savings bank
51
they do loans and have savings
savings&loan association
52
member-owned
- lots of servies
- in business to help community (not to make $$)
credit unions
53
they have diff types of security stocks & bonds
brokerage firms
54
They are high liquidity
| They have a lower interest rate
Regular savings account
55
Means its easy to get to money
Liquidity
56
```
Its the money you put in,
Highest interest rate,
Can't take it out until a certain time
Maturity date
Penalty for early withdraw
```
certificate of deposit (CD)
57
- It has a minimum balance - usually high, but gets high interest rate
- variable interest rate but usually higher than savings accounts
Money market account
58
its not liquid, you dont often touch this money
money market account
59
3 savings options -
savings account
CD
money market account
60
5 things to selecting a savings plan -
```
liquidity
safety
convenience
interest-earning potential
fees/restrictions
```
61
its the capability of financial resources being converted to cash -
liquidity
62
questions like will your money be protected/ safe?
safety
63
an ATM is a ....
convenience
64
questions like whats the interest on that savings?
interest-earning potential
65
questions like are there any fees? fees for early withdraw?
fees/restrictions
66
its telling the workers just to pull $$ from your account
automatic payroll deductions
67
3 reasons for investing -
helps beat inflation
increases wealth
fun and challenging
68
5 stages of investing -
```
put-and-take account
beginning investing
systematic investing
strategic investing
speculative investing
```
69
its when you first get a job and begin investing
beginning investing
70
they are savings to earn a financial return
investments
71
its the rise of prices
inflation
72
its planning ahead & comfortable w/ doing it on a reg. basis (a plan for long term)
systematic
73
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)
strategic
74
(rich people)
| kind of gambling where there is rick to lose A LOT of $$ (make a lot or lose a lot)
speculative
75
5 types of risk -
```
interest rate
political
market
non-market
company/industry
```
76
its where if it goes down, youll lose money -
interest-rate risk
77
its anything that costs money / or raises taxes
political risk
78
it affects all investments at once, stock market go up & down
(natural disaster, terrorism)
market risk
79
where a certain industry can be affected as another industry is not, but soon affects all
non-market risk
80
affects a company at a time -
company/industry risk
81
its $ you get from stocks
dividends
82
when choosing an investment make sure ......
it will be safe
can u afford it
tax benefits?
83
wise investment practices -
```
define financial goals
go slowly
follow through
keep good records
seek advice
keep knowledge
know limits
```
84
sources of financial information -
```
newspapers
newsletters
finanacial magazines
financial advisers
financial statements
online investor education
```
85
3 investment options -
low risk
medium risk
high risk
86
its a low-to-medium return
low risk
87
its a medium return
medium risk
88
a high return -
high risk
89
examples of low risks -
corporate & municipal bonds
US government saving bonds
treasury securities
90
examples of medium risks -
mutual funds
annuities
self-managed retirement accounts
real estate
91
examples of high risk -
```
penny stocks
collectibles
futures
options
commodities
```
92
T or F
the put-and-take account is an emergency fund
true
93
T or F
public corporations are not required to publish annual reports
false
94
T or F
market risk is caused by business declines or other events
true
95
T or F
political risk refers to the effect of higher interest rates when you are locked into lower rates
false
96
T or F
an investor does not need to build trust with a financial adviser. it is important only to communicate goals clearly -
false
97
T or F
investments that require more risk usually provide greater potential returns
true
98
T or F
an investment in real estate (owning your own home) is generally considered relatively safe but fairly illiquid -
true
99
T or F
beginning investments should include only long-range goals such as planning for retirement -
false
100
T or F
an investment adviser is responsible for your decisions
false!!
101
T or F
Forbes and Business Week are examples of finanial magazines -
true
102
which risk is associated with a business decline -
market risk
103
permanent investments are generally made to provide for ..... goals
long-term
104
how long are treasury bills issued -
1 year or less
105
the final level or realm of investing is called -
speculation
106
are stocks a high risk/high return statement
yes
107
the first goals to wise investment practices -
define financial goals
108
financial advisers should provide u info like ....
training/background
fees
philosophy of investing
109
a savings plan whereby an individual invests on a regular and planned basis
systematic investment
110
to find the most detailed data about a corporation, consult .....
financial magazines
111
its a rise in the general level of prices
inflation
112
is the use of savings to earn a financial return -
investing
113
the chance that an investments value will decrease is an ...
investing risk
114
is a document that gives the financial history of a corporation
annual report
115
government actions that affect business profits are called .......
political risk
116
sections of newspapers containing financial data are called the ....
financial pages
117
a person who buys and sells securities for clients -
full-service broker
118
they provide financial data for interpretation -
investor services
119
........... buy and sell securities for clients for a reduced commission
discount brokers
120
professional investment planners -
financial advisers
121
the spreading risk among many types of investments is called
diversification
122
a formula used to estimate time or rate to double your $$ -
rule of 72
123
they represent ownership in a corporation
stocks
124
are debt obligations of corporations or a government
bonds
125
are pools money of many investors and buys a large selection of securities
mutual fund
126
a contract issued by an insurance company that pays a series of regular payments, usually after retirement
annuity
127
is purchased for less than its maturity value -
discount bond
128
are contracts to bu and sell commodities for a specified price on a specified future date
futures
129
low-priced stocks of small companies that have no track record are called .......
penny stocks
130
is the right, but not the obligation, to buy or sell a commodity or stock for a specified price within a specified time period
option
