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Consumer Economics > Investiment Unit > Flashcards

Investiment Unit Flashcards

1
Q

Dividends

A

Portion on a corporations earnings paid in stockholder

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2
Q

Credit union

A

Nonprofit financial cooperative owned by/operated for the benefit if it’s members.

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3
Q

Cashiers check

A

Special type of check that the bank guarantees to pay.

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4
Q

Certified check

A

Personal check that a bank certifies is genuine and that there is enough money in the account to cover the check.

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5
Q

Dow jones industrial average

DJIA

A

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded in the New York Stock Exchange and the NASDAQ.

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6
Q

Diversification

A

Spreading risk by putting money in a variety if investments.

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7
Q

Electronic funds transfer (EFT)

A

Movement of money electronically from one financial institution to another.

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8
Q

Mutual fund

A

Investment created by pooling the money of many people and investments in a collection of several securities.

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9
Q

Prospectus

A

Legal document that gives a detailed description of a security.

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10
Q

Roth IRA

A

Individual retirement account in which individuals contribute after-tax income and qualified withdrawals are not taxed.

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11
Q

Rule of 72

A

Equation that estimates how long it will take to double an investment with a fixed interest rate.

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12
Q

What’s something you should think about when your considering the best investment plan for you?

A

Tax advantages
Past history on rate of return
Liquidity

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13
Q

What can you do electronically on an ETF?

A

Deposit a check
Withdraw money
Wire money to another account

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14
Q

When you invest in a bond…

A

You earn a fixed amount of interest and the company/gov. is actually borrowing money from you

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15
Q

Certification of a deposit state

A

You deposit a certain rate for a certain time

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16
Q

Mutual funds are good because…?

A

They are managed by a professional, you are naturally diversified, and you can start with a modest amount of money

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17
Q

List Liquid investment characteristics

A

Easy to get your investment back, usually low risk, and appeal to the investor who does not have a lot of money.

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18
Q

List 2 stock exchanges

A

NYSE and Nasdaq

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19
Q

Roth IRA characteristics

A

You can withdraw tax free at the age of 59 and a 1/2, you use the after tax money to invest, they are tied to stock market performance, and they are usually a great choice for young investors

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20
Q

Difference between DOW and the Nasdaq composite is that…?

A

The Dow tracks 30 blue chips stocks while the Nasdaq comp tracks electronically traded tech stocks

21
Q

When you diversify, you…?

A

Invest in a variety of different stocks in different industries, could be investing in a mutual fund, or could have CD’s, IRA’s, stocks, bonds and savings

22
Q

The most liquid investment is…?

A

A checking account

23
Q

The SEC…?

A

Keeps companies honest about info to their investors, regulated insider trade, and is a federal agency

24
Q

Rule 72 characteristics

A

Requires the interest rate of your investment, shows that a higher interest rate will result in a lower number of years to increase your money, and is a simply an estimate (as guaranteed rates are often not possible)

25
Q

A commercial bank…?

A

Has investors
Is usually backed by the FDIC in the amount of 250,000 per account
An example would be chase

26
Q

Index examples

A

DJIA (Dow Jones)
S and P 500
Nasdaq composite

27
Q

IRA characteristics

A

Not company based
Cannot withdrawal before age 59 and a 1/2 without penalties
Have tax advantages
You can choose the types of funds

28
Q

When you invest in a 401k you…?

A

Utilize a vendor provided be the company you work for, your employer may match all or a portion of what you invest, you be taxed if you withdraw before age 59 1/2, you can invest up to 17,500 tax fee

29
Q

Dollar cost average will…?

A

Even out the purchase prices of stocks over time, if you invest at regular intervals

30
Q

A voided check means that…?

A

The check had been rendered without value by the payor

31
Q

What’s important about these three terms?

Bounced check, insufficient funds, and overdrawn account

A

They mean the same thing

32
Q

The best way to make sure your account is balanced?

A

Reconcile your account

33
Q

Whats the Tradition pension plan? Why is it no longer offered?

A

A defined amount of money provided every month during retirement
They’re too expensive to provide anymore

34
Q

401k plan

A

Employe contributes money to an account with an employer, usually matching up to a certain amount/percent

35
Q

What does it mean that money put into the 401k is a pre-tax contribution?

A

The money goes into the account before you pay any tax from your paycheck

36
Q

Difference between Traditional/Roth IRA

A

Traditional-money goes in pre-tax

Roth-the money goes after tax

37
Q

10% penalty if you withdraw money early from…?

A

An IRA

38
Q

What percent of your paycheck is deducted for social security?

A

6.2%

39
Q

Who benefits from social security?

A

People who are disabled, retired, surviving family member of deceased worker

40
Q

At what age can a person start collecting social security benefits?

A

62, only receive 75% of what the bank entitles you

41
Q

What age can a person start collecting dull social security benefits?

A

66

42
Q

IRA account that uses after tax dollars, no income tax

A

Roth IRA

43
Q

IRA that uses pretax and will result in income

A

Traditional

44
Q

Company pension plan characteristics

A

Both employer and employe contribute money, provisions provide a benefit each month for a retired person for as long as they live, and few companies provide pension to employe’s because they’re expensive

45
Q

Difference between investing and saving?

A

Investing: achieving part ownership of a company, risk loosing money

Saving: giving bank money, they give some back

46
Q

Blue chip stalks

A

A stalk of a large, well established and financially sound company that’s been opened for years

47
Q

Common stock

A

Stock that has voting rights and receives dividends declared by the company.

48
Q

Traditional IRA (or just IRA)

A

Traditional IRA contributions are tax-deductible on both state and federal tax returns for the year you make the contribution; withdrawals in retirement are taxed at ordinary income tax rates

Consumer Economics (7 decks)

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