MA Study Guide Flashcards
Created to ensure the rights of consumers, as well as fair trade, competition, and accurate information in the marketplace.
Consumer Protection Laws
A set of laws that enable the FDA to oversee the safety of food, drugs, and cosmetics.
Federal Food, Drug, and Cosmetic Act
Prevents debt collectors from using abusive, deceptive, or unfair tactics to collect from you.
Fair Debt Collection Practices Act
Promotes the accuracy, fairness, and privacy of consumer information contained in the files of reporting agencies.
Fair Credit Reporting Act
Promotes the informed use of credit by requiring disclosures about its terms and cost to standardize the manner in which costs are calculated and disclosed.
Truth In Lending Act
Protects consumers from unfair credit billing practices by providing guidelines for consumers and creditors.
Fair Credit Billing Act
Requires financial institutions to explain their informationsharing practices to their customers and to protect sensitive information.
Gramm-Leach-Bliley Act
A number ranging from 300 to 850 that helps someone determine your likeliness to repay a loan.
Credit Score
- Determine financial goals
- Evaluate financial status
- Develop financial goals
- Implement goals
- Monitor goals
The Financial Planning Process
Decisions are made from customs handed down for generations.
Traditional Economy
Prices are determined by supply and demand. Individuals decide what they want to produce, how they want to produce it, and for whom they want to produce it.
Market Economy
The government sets prices for goods. Individuals have little to no say in economic decisions.
Command Economy
Individuals make decisions, but the government regulates them.
Mixed Economy
Valueless objects used as money because of government decree.
Fiat Money
Money consisting of objects that have value in themselves and their use in money (gold, silver).
Commodity Money
The increase of an amount of money due to earned interest or dividends.
Time Value of Money
The system by which the value of a currency was defined in terms of gold.
Gold Standard
A goal you would like to accomplish within the next one to two years.
Short Term Financial Goal
A goal you would like to accomplish beyond two years.
Long Term Financial Goal
A personal record of your checking account activity.
Check Register
Your salary, without deducting the many taxes you must pay.
Gross Personal Income
Your income available for you to use at your discretion after deducting taxes.
Disposable Income
Your disposable income after you pay for necessities,
such as insurance, food, or mortgage.
Discretionary Income
Additional compensation for any hours worked by nonexempt workers for more than forty hours
Overtime
Allows staff to choose from a variety of benefits to formulate a plan that best suits their needs
Cafeteria Benefit
A temporary paid period of absence from employment given to new or expecting mothers during the months immediately before and after childbirth.
Maternity Leave
Benefits provided by an employer to an employee, some of which are taxexempt when certain requirements are met.
Fringe Benefits
Taxes on a person’s yearly income.
Income Tax
Taxes paid when purchases are made on a specific good.
Excise Tax
Taxes based on the value of a person’s property.
Property Tax
Taxes on the amount by which the value of an article has been increased at each stage of its production/distribution.
Value-Added Tax
Regressive tax on sales or on the receipts from sales.
Sales Tax
Taxes in which the tax rate increases as the taxable amount increases.
Progressive Tax
Taxes imposed in a way where the tax rate decreases as the amount being taxed increases in value.
Regressive Tax
Taxes on the net value of the estate of a deceased person before distribution to the heirs.
Estate Tax
Taxes used to fund Social Security and Medicare.
Federal Insurance Contributions Act
Tax-collecting agency
IRS
Has the requirements that your income is less than $100k, you are filing as single or married filing jointly, you are under 65, you claim not dependents, you are not a debtor, and your income comes only from wages.
1040EZ Form
Has many of the same requirements as the 1040EZ form, except it allows you to claim credits for child and dependent care and education expenses, and you don’t itemize deductions like your mortgage or charitable donations.
1040A Form
Details what kinds of income you may receive other than the salary you get from your employer.
1099 Form
Sent to the IRS by an employer and details annual salary and amount of taxes withheld from an employee’s paycheck.
W-2 Form
Tells an employer what amount of taxes to withhold from an employee’s paycheck based on their marital status, number of exemptions, dependents, etc.
W-4 Form
Used to verify the identity and employment authorization of individuals hired for employment in the U.S. it must be filled out by both employees and employers.
I-9 Form
Wages deducted from a paycheck to meet income tax and other required obligations.
Mandatory Deduction
Payments you make to retirement plan contributions, health and life insurance premiums, savings programs, and beforetax health savings.
Voluntary Deductions
Can be used when children under 19 live with you for over half the year and provide for less than half of their financial support, as well as other relatives or your parents in some cases.
Dependent Exemptions
Child support payments, welfare benefits, cash rebates, damage awards for personal injury or sickness, gifts, etc.
Nontaxable Income
Earned income (salary, tips, commissions, bonuses, etc.) and unearned income (rent, dividends, interest, winnings, etc.).
Taxable Income
When two parttime employees do a fulltime job and share the remuneration.
Job Sharing
When the hours an employee has to work are set by the employer and agreed to by the employee.
Flextime
Refers to working from home. Piecework employment is work paid for according to the amount produced.
Telecommuting
Issued by a bank or business allowing the holder to purchase goods or services on credit.
Credit Card
Issued by a bank or business allowing the holder to purchase goods or services through transferring money electronically from one account to another.
Debit Card
Fees charged when someone charges more to their debit card than they have in their bank account, typically around $35 per day until the amount is paid back.
Overdraft Fee
The annual rate charged for borrowing or earned through an investment.
Annual Percentage Rate
A lawsuit where a group of people with the same or similar injuries caused by the same product or action sue the defendant as a group.
Class-Action Lawsuit
The abuse of an arbitrator to settle a dispute.
Arbitration
When two or more parties discuss something and aim at reaching an agreement.
Negotiation
Intervention in a dispute in order to resolve it.
Mediation
A seller’s promise or guarantee that a buyer relies on when they buy an item.
Expressed Warranty
When a product is guaranteed to work if used for its intended purpose.
Implied Warranty
A sale in which the vendor intends to get rid of all remaining inventory.
Clearance Sale
A series of reports on products and services used by consumers.
Consumer Reports
The forecasting and evaluation of financial risks together with the identification of procedures to avoid or minimize their impact.
Risk Management
Income return on an investment.
Yields
The gain or loss on an investment over a specified period of time.
Rate of Return
An investment vehicle made up of a pool of funds collected from investors for the purpose of investing in stocks.
Mutual Fund
A limited partnership of investors that uses high risk methods in hopes of realizing large capital gains.
Hedge Fund
Loaning money to a company or government.
Bond
The annual fee of a mutual fund.
Expense Ratio
A type of security that signifies ownership of a piece of a company.
Stock
Issues the shareholder rights to dividends and voting rights at the shareholders meeting.
Common Stock
Stock that doesn’t offer voting rights but has a higher claim on assets and earnings than common stock.
Preferred Stock
A portion of a company’s profits paid to stockholders.
Dividends
A retirement savings plan sponsored by your employer.
401K Fund
A person who arranges transactions between a buyer and a seller for a commission.
Broker
An agency that oversees securities transactions, financial activities, and mutual fund trading to prevent fraud and deception.
SEC
Interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit/loan.
Compound Interest
A quick method of calculating the interest charge on a loan, by multiplying the daily interest rate by the principal by the number of days.
Simple Interest
A central financial exchange where people can trade futures contracts.
Futures Market
The possibility of losing money due to an investment.
Financial Risk
Someone borrows money and is no longer able to pay off the loan.
Credit Risk
Involves securities and assets that can’t be bought or sold fast enough to cut losses.
Liquidity Risk
The risk that asset-backed securities may become volatile.
Asset-Backed Risk
Involves changes in political and economic climates around the world.
Foreign Investment Risk
Covers the risk involved with buying and selling stocks.
Equity Risk
When firms use financial instruments to expose risks and get rid of them.
Risk Management
Insures the structure and content of a property for its owner.
Property and Liability Insurance
The upfront cost you may have to pay, depending on your insurance plan.
Co-Pay
The money that an individual or business must pay for an insurance plan/policy.
Premium
The amount of money someone pays for expenses before their insurance plan starts to pay.
Deductible
A type of insurance coverage that covers medical and surgical expenses.
Health Insurance
An organization to which people pay predetermined fees in return for a range of services from employees registered with the company.
Health Maintenance Organization
A type of insurance that allows insured people to have flexibility with the doctors they choose.
Preferred Provider Organization
A network of individual providers who have entered into agreements with an insurer to be a provider.
Exclusive Provider Organization
A type of managed health insurance plan.
Point of Service Plans
A plan with lower premiums but higher deductibles than a normal health plan.
High-Deductible Health Plan
Insurance that offers income protection to people who have been disabled for a long period of time.
Disability Insurance
Protects your pocket from severe damage in the case of an auto accident.
Auto Insurance
Protects insured person from the risks of liabilities imposed by lawsuits and others.
Liability Coverage
Will reimburse the insured for any damage to their personal vehicle that is due to the fault of the insured driver.
Collision Coverage
Protects you against vehicle damages caused by a collision.
Comprehensive Coverage
An extension that covers medical expenses due to collisions.
Personal Injury Protection
Insurance car owners can buy to protect themselves against losses.
Gap Insurance
An insurance plan that pays out an amount of money to the dependents of the insured person at their death.
Life Insurance
A type of life insurance where a benefit is paid in the event of a person’s death.
Term Life
A type of life insurance where a benefit is paid and accumulates a cash value.
Whole Life
A bank that offers services to the general public and companies.
Commercial Bank
A financial institution that specializes in accepting savings, deposits, and making mortgage and other loans.
Savings and Loan Institutions
A cooperative where members can borrow from pooled deposits at low interest rates.
Credit Unions
A short-term borrowing where an individual borrows a small amount at a very high rate of interest.
Payday Lender
An agreement where a person borrows money to buy a property and pays the money back during an agreed-upon term.
Mortgage
A low-interest bank account, similar to a checking account, where money can be deposited, but is not very liquid.
Savings Account
A deposit account that pays interest based on current rates in money markets.
Money Mutual Account
A deposit account held at an institution that allows withdrawals and deposits.
Checking Account
A savings vehicle with a fixed maturity date and fixed interest rate.
Certificate of Deposit
A U.S. corporation insuring deposits in the U.S. against bank failure.
FDIC
A federal agency created to regulate and supervise federal credit unions.
NCUA
A signature by the creator of a check enabling the holder of the check to claim payment.
Blank Endorsement
An endorsement authorizing payments to someone other than the entity it was originally meant for.
Special Endorsement
An endorsement putting a limitation on the use of a check.
Restrictive Endorsement
An endorsement where the endorser attaches one or more conditions to their check.
Conditional Endorsement
An endorsement that passes title to a check with certain restrictions.
Qualified Endorsement
Used by lenders to determine your financial worthiness of a loan and how likely you are to pay off that loan.
Credit Record
When a company stops all operations and goes completely out of business; a trustee is then appointed to liquidate all assets in order to pay off debts; individuals can also file.
Chapter 7 Bankruptcy
A corporate bankruptcy filing restricted to corporate debtors and is intended for when a major restructuring or reorganization is necessary.
Chapter 10 Bankruptcy
When someone uses another person’s information, such as their name, credit card number, without their permission, to commit fraud or other crimes.
Identity Theft
The attempt to obtain sensitive information, like usernames, passwords, or credit card details for malicious reasons.
Phishing
An arrangement between a financial institution and a customer that establishes a maximum loan balance.
Line of Credit
Unlicensed lenders who charge illegally high rates.
Loan Sharks
A person’s financial debt or obligations.
Liabilities
Capacity, Capital, Collateral, Conditions, Character
C’s of Credit
The maximum amount of credit extended to a client by a creditor.
Credit Limits
States laws that set the maximum interest rate that may be charged for consumer loans.
Usury Laws
A special court where disputes are resolved quickly and inexpensively.
Small Claims Court
Business that makes high-interest loans based on the value of personal possessions pledged as collateral.
Pawnbroker
The interest you pay for the use of a credit card.
Finance Charge
Organization that makes high-risk consumer loans with high interest rates.
Finance Company
Credit whereby you can add purchases up to a set credit limit.
Open-End Credit
A loan for a specific amount that must be repaid in full, including finance charge, by a stated due date.
Closed-End Credit
Business that gathers, stores, and sells credit information to other businesses.
Credit Bureau
Someone who promises to pay if the borrower fails to pay.
Cosigner
Customers who pay bills before the due dates.
A-Rating
Customers who pay bills on the due date or withing the 10-day grace period.
B-Rating
