Chapter 10.1 Vocab

Question 1

Expenses beyond your regular monthly items
•Emergencies
•Vacations
•Social Events
•Repairs
•Major Purchases

Answer 1

Short Term Needs

Question 2

Costly and require years of planning and saving
•Home Ownership
•Education
•Retirement
•Investing

Answer 2

Long Term Expenses

Question 3

Amount of money you deposit into your savings account

Answer 3

Principal

Question 4

Represents earnings on principal

Answer 4

Interest

Question 5

Interest paid on the original principal plus accumulated interest

Answer 5

Compound Interest

Question 6

Actual interest rate on account pays, stayed on a yearly basis with the compound included

Answer 6

Annual Percentage Yield (APY)

Question 7

Measure of how quickly you can get your cash without loss of value

Answer 7

Liquidity

Question 8

For higher interest rate=lower interest rate

Answer 8

Trade off

Question 9

Deposit (principal) that earns a fixed interest rate for a specified length of time
Time Deposit

Answer 9

Certificate of Deposit (CD)

Question 10

Requires a minimum deposit
Must keep in full time
May get penalized

Answer 10

CD

Question 11

Take out money early (usually loss if several months of interest)

Answer 11

Withdrawal Penalty

Question 12

Date on which an investment becomes due for payment

Answer 12

Maturity Date

Question 13

Type of savings account that offers a more competitive interest rate than a regular savings account
(Has stipulations)

Answer 13

Money Market Accounts

Question 14

High liquidity=low interest rate

Low liquidity=high interest rate

Answer 14

Liquidity and Tradeoff

Question 15

Guaranteed not to lose your savings deposit

Answer 15

Safety of Principal

Question 16

Insured banks

Answer 16

FDIC

Question 17

Insures credit unions

Answer 17

NCUA

Question 18

Locations; Services offered

Answer 18

Convenience

Question 19

Want to earn as much interest as you can on your deposit; Shop around for the best APY

Answer 19

Interest-Earnings Potential (Yield)

Question 20

Your net pay is deposited electronically into your bank account

Answer 20

Direct Deposit

Question 21

Represent money you have authorized your bank or other organizations to move from one account to another at regular intervals

Answer 21

Automatic Deductions

Question 22

You authorize your employer to make automatic deductions from your paycheck each pay period

Answer 22

Payroll Savings Plan