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Personal Finance FIN201 > Exam 3 > Flashcards

Exam 3 Flashcards

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1
Q

calculate price per unit (comparison shopping)

A

unit price = total price / total quantity

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2
Q

lawsuit

A

A suit filed on behalf of a group of people with similar claims.

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3
Q

mediation

A

The attempt by an impartial third party to resolve a difference between two parties through discussion and negotiation.

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4
Q

arbitration

A

The settlement of a difference by a third party whose decision is legally binding.

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5
Q

rebate

A

A partial refund of the price of a product.

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6
Q

warranty

A

A written guarantee from the manufacturer or distributor of a product that specifies the conditions under which the product can be returned, replaced, or repaired.

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7
Q

sticker price

A

The suggested retail price printed on a vehicle label.

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8
Q

lemon laws

A

If your car has been under repair for 45 days or more, or subject to repair 4 or more times for the same defect, you may be entitled to a refund or a replacement vehicle.

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9
Q

what does it mean to be upside down on a car loan?

A

You owe more on your car than it’s actually worth.

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10
Q

what does federal law require on food labels?

A

Requires the company’s name and address, ingredients, nutrients, and food allergy warnings.

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11
Q

open dating

A

Information about freshness or shelf life found on the package of a perishable product.

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12
Q

what are the advantages and disadvantages of leasing a car?

A

On the one hand, buying involves higher monthly costs, but you own an asset—your vehicle—in the end. On the other hand, a lease has lower monthly payments and lets you drive a vehicle that may be more expensive than you could afford to buy, but you get into a cycle in which you never stop paying for the vehicle.

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13
Q

what is a second mortgage or home equity loan?

A

A cash advance based on the paid-up value of a home.

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14
Q

what does it mean to sublet an apartment?

A

Subletting is renting your apartment or room inside your rental to someone not on your lease for a set period of time.

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15
Q

when should you refinance a mortgage?

A

Consider the refinancing costs in relation to the savings with a lower monthly payment, and how long you plan to be in the home.

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16
Q

what are costs associated with renting?

A

Utilities include electricity, gas, water, cable and internet. Some (or all) of your utilities may be included in your rent. Renters insurance.

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17
Q

what is a contingency clause in a housing contract?

A

Contingency clauses provide a way for one or both parties to back out of a real estate contract if certain specified conditions are not met. In other words, the sale is contingent upon these conditions.

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18
Q

advantages and disadvantages of renting

A

adv: easy to move, fewer maintenance responsibilities, minimal financial commitment
dis: no tax benefits, limitations on remodeling and privacy, pet restrictions

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19
Q

advantages and disadvantages of buying a house

A

adv: pride of ownership, tax benefits
dis: financial commitment, possibility of repairs, limited mobility

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20
Q

what does it mean to be prequalified?

A
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21
Q

what is amortization related to a loan balance?

A

The gradual reduction of the debt through the repayments we agree with the lender.

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22
Q

what is an escrow account?

A

Money, usually deposited with the lending financial institution, for the payment of property taxes and homeowner’s insurance.

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23
Q

what are closing costs?

A

Fees and charges paid when a real estate transaction is completed; also called settlement costs.

24
Q

what is earnest money?

A

A portion of the price of a home that the buyer deposits as evidence of good faith to indicate a serious purchase offer.

25
Q

calculate equity in a home.

A

assets - liabilities = equity

26
Q

what is a conventional mortgage?

A

A fixed-rate, fixed-payment home loan with equal payments over 10, 15, 20, 25, or 30 years.

27
Q

what is a balloon payment mortgage?

A

a mortgage that does not fully amortize over the term of the note, thus leaving a balance due at maturity.

28
Q

what is a variable interest rate?

A

Refers to any type of debt instrument, such as a loan, bond, mortgage, or credit, that does not have a fixed rate of interest over the life of the instrument.

29
Q

what are zoning laws?

A

Restrictions on how the property in an area can be used.

30
Q

what is a hazard vs a peril?

A

hazard: A factor that increases the likelihood of loss through some peril.
peril: The cause of a possible loss.

31
Q

what are liability risks?

A

Possible losses due to negligence resulting in bodily injury or property damage to others.

32
Q

what is vicarious liability?

A

A situation in which a person is held legally responsible for the actions of another person.

33
Q

what is a personal property floater?

A

Additional property insurance to cover the damage or loss of a specific item of high value.

34
Q

what is an umbrella policy?

A

Supplementary personal liability coverage; also called a personal catastrophe policy.

35
Q

what is usually covered by renter’s insurance?

A

Renters insurance covers your personal property if it is damaged or stolen and protects you from liability if an accident happens in your home.

36
Q

what is replacement value?

A

A claim settlement method in which the insured receives the full cost of repairing or replacing a damaged or lost item.

37
Q

what is actual class value?

A

A claim settlement method in which the insured receives payment based on the current replacement cost of a damaged or lost item, less depreciation.

38
Q

types of motor vehicle property damage coverage?

A
  1. property damage liability: Protects a person against financial loss when that person damages the property of others.
  2. collision: Pays for damage to the insured’s car when it is involved in an accident.
  3. comprehensive physical damage: Covers financial loss from damage to a vehicle caused by a risk other than a collision, such as fire, theft, glass breakage, hail, or vandalism.
39
Q

what does each number mean in a 50/100/25 car insurance policy?

A

Up to $50,000 per person you injure, $100,000 in injuries per accident and $25,000 in property damage per accident

40
Q

what is bodily injury liability?

A

Coverage for the risk of financial loss due to legal expenses, medical costs, lost wages, and other expenses associated with injuries caused by an automobile accident for which the insured was responsible.

41
Q

what does comprehensive insurance cover?

A

Protects against damage to your vehicle caused by non-collision events that are outside of your control.

42
Q

what is self-insurance?

A

The process of establishing a monetary fund to cover the cost of a loss.

43
Q

A person with homeowner’s insurance icurs damage of $17,000. The policy has a $500 deductible. What would the insurance pay for the claim?

A

$17,000 - $500 = $16,500

44
Q

what is a premium?

A

The amount of money a policyholder is charged for an insurance policy.

45
Q

what is a deductible?

A

The set amount a policyholder must pay per loss on an insurance policy.

46
Q

what is a co-pay?

A

A provision under which the insured pays a flat dollar amount each time a covered medical service is received after the deductible has been met.

47
Q

what is co-insurance?

A

A provision under which both the insured and the insurer share the covered losses.

48
Q

what is maximum out of pocket?

A

A cap, or limit, on the amount of money you have to pay for covered health care services in a plan year.

49
Q

what is long-term care insurance?

A

Pays for the cost of day-in, day-out care for long-term illness or disability.

50
Q

what is disability insurance?

A

Provides payments to replace income when an insured person is unable to work.

51
Q

what is workers’ compensation?

A

A form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee’s right to sue his or her employer for the tort of negligence.

52
Q

what is medicare? PPO?

A
  1. A federal health insurance program for people 65 or older, people of any age with permanent kidney failure, and people with certain disabilities. The program is administered by the Centers for Medicare and Medicaid Services.
  2. A group of doctors and hospitals that agree to provide health care at rates approved by the insurer.
53
Q

what are group health insurance plans?

A

Health insurance offered by an employer, union or association to its members while they are still working.

54
Q

what are exclusions and limitations in a health care plan?

A

Limitations are conditions or procedures covered under a policy but at a benefit level lower than the norm. Exclusions, on the other hand, are conditions or procedures that are completely omitted from coverage.

55
Q

A driver causes $15,400 in damage to a store and $4,300 to a parked car. If the driver has 50/100/15 coverage, what will the insurance company pay?

A

It would pay $15,000.

56
Q

Gene makes $900 a week. He is injured on the job and out of work for 18 weeks. His insurance covers 65% of his earnings after a 6-week period. What would he receive in benefits?

A

900 x .65 = $585
18 - 6 = 12
$585 x 12 = $7,020

Personal Finance FIN201 (4 decks)

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