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Personal Finance 2 Flashcards

1
Q

Which bond earns a combined ratefor the life of the bond and an inflation rate that changes 2x a year?

A

I Bonds

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2
Q

An account that provides a complete financial services program for a single fee

A

Asset management account

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3
Q

Which type of service related to automatic loan, made to checking account customers to cove the amount of checks written in excess of available balance in checking account

A

Overdraft protection

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4
Q

A regular savings account in credit union is known as

A

Share account

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5
Q

Computer terminal used to conduct banking, also called cash machine.

A

Automatic Teller machine ATM

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6
Q

Patriot bond

A

EE bond

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7
Q

All the following are deposit institutions except.

Commercial bank
Credit union
Savings and loans association
Finance companies

A

Finance companies

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8
Q

Earnings on savings can be measured by the

A

Rate of return

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9
Q

Likely to have certain amount left on deposit for a stated time to earn specific rate of return

A

Certificate of deposit

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10
Q

Legal argument that provides for management and control of assets by one party for the benefit of another

A

Trust

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11
Q

Finance charge for credit includes all but

Interest charge
Service charge
Amount borrowed
Credit related premium insurance

A

Amount borrowed

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12
Q

Electronically subtracts money from checking or savings accounts to pay for goods or services

A

Debit card

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13
Q

A prearranged loan up to a specified amount that a consumer can access by writing a special check is known as

A

Revolving check credit

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14
Q

The use of property or savings to secure a loan relates to

A

Collateral

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15
Q

What are the 5 Cs of credit?

A

Character- attitude toward credit obligations
Capacity- ability to meet payments
Capital- borrowers assets or net worth
Collateral- valuable asset pledged to insure payments
Conditions- economic considerations that effect loaning ability

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16
Q

What is a line of credit?

A

Max dollar amount of credit the lender has made available

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17
Q

What is APR

A

Percentage cost, or relative cost, of credit on a yearly basis. The APR yields a true rate of interest for comparisons with other sources of credit

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18
Q

What is Closed ended credit?

A

One time loans that the borrower pays back in a specified period of time and in payments of equal amounts

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19
Q

What is open ended credit?

A

A line of credit in which loans are made on a continuous basis and the borrower is billed periodically for at least partial payment

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20
Q

Periodic charge for use of credit is

A

Interest

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21
Q

Asset management account

A

All in one account that includes savings checking borrowing investing and other financial services for a single fee. Also called cash management account

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22
Q

What is a commercial bank?

A

A financial institution that offers a full range of financial services to individuals, businesses and gvt agencies

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23
Q

Savings and loan associations

A

Financial institution that traditionally specialized in savings accounts and mortgage loans

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24
Q

Mutual savings bank

A

Owned by depositors, specializes in savings and mortgage loans

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25
Money market fund
Savings investment plan offered by investment companies, with earnings based on investments in various short-term financial instruments
26
What is a credit union?
User owned non profit cooperative financial institution that is organized for the benefit of his members
27
What is a certificate of deposit?
Savings plan requiring a certain amount be left on deposit for a stated time period to earn a specified interest rate
28
How do you manage CDs?
Interest has dropped shorter annuity, peak interest and won't need money for a while, take longer
29
EE Bonds
``` "Patriot bonds" Sold at half face value 50-5000$ Fixed interest compounded semiannually Penalties if redeemed within 5 yrs Earns interest for 30yrs Potential tax advantages if used to pay tuitions ```
30
I Bonds
Fixed interest rate for life of bond plus inflation rate. | Twice a year inflation adjustment
31
What does the truth savings act require?
Disclose 1. Fees on deposit accounts 2. Interest rate 3. Annual percentage yield 4. Other terms and conditions of savings plan
32
What is apy?
Percentage rate expressing the total amount of interest that would be received on a 100$ deposit based on the annual rate and frequency of compounding for a 365 day period
33
Calculate APY
APY=100(interest/principle)
34
What does the FDIC do?
Prevents a loss of money due to failure of financial institution.
35
NCUA
Protects creditors if payments arnt made
36
Certified check
Personal check with guaranteed payment
37
Cashiers check
Check from a financial institution
38
Travelers checks
Allow to make payments when away from home
39
What is credit?
An arrangement to receive cash, goods, or services now and pay them in the future
40
What is consumer credit?
Use of credit for personal needs (except a home mortgage)
41
What're the advantages of credit?
Allows you enjoy goods or services now Buy goods even when funds are low Allows you to purchase stuff with out a large wad of cash Lag between when you buy something and when you pay for it
42
What are the disadvantages to credit?
Allows you to overspend easily Does not increase purchasing power Failure to repay loan may cause damage to you and your belongings, and reputation
43
What is interest?
Periodic charge for use of credit
44
What is mobile commerce?
Ability to purchase using a smart phone
45
What is debt payments to income ratio? What is recommended ratio?
Debt payments/monthly income | 0.20 or lower
46
What is debt to equity ratio?
Liabilities/net worth | 1 is as high as it should be
47
What is a finance charge? What is APR? What is difference?
Ttl dollar amt you pay to use credit Ttl percentage cost of credit on yearly basis One is ttl amt in $ one is %
48
What is a credit bureau?
Agencies that collect info on how promptly you repay debts
49
What are the factors of Fico Score?
``` Credit History Payments Amts owed Types used New Credit ```
50
What is a home equity loan?
A loan for your house
51
For credit cards what is the difference between a convenience user and borrower?
CU uses because easy | B uses because they need to
52
Equation for APR
R=2nfinancecharge/amount borrowed (number of payments over life of loan+1)
53
How to calculate simple interest
I=Principlexratextime
54
What do the truth in lending and consumer leasing acts do?
Disclose the cost of credit
55
What is the difference between ch. 7 bankruptcy and ch. 13 bankruptcy
7. Straight bankruptcy. Some debts forgiven. Must wait 8yrs to file again 13. Wage earner. Establishes payment plan, and last up to 5 years more of a plan to pay off
56
What are the 4 steps to research based buying?
Preshopping activities Evaluation of alternatives Selection and Purchase Post Purchase Activities
57
What are the practical purchasing strategies
Timing purchases-when in the year Purchase location- location of purchase Brand comparison- stir brand vs natl brand Label info- open dating
58
What are the different types of warranties?
Express warranty-written form created by seller 2 types -full warranty- covers any thing breaking -limited warranty- covers only a few things breaking Implied warranty covers products intended use -warranty of title- can sell - warranty of merchantability- fit to do what it's supposed to
59
What is capitalized cost?
Price of vehicle
60
What is money factor
Interest rate being paid on capitalized cost
61
What is residual value?
Expected value of vehicle at end of lease
62
What is sticker price?
Suggested retail price | Base price + accessories
63
What is invoice price?
Dealers cost
64
What are the advantages of buying and renting? And disadvantages?
``` A. Rent. D Easy to move. No tax benefits Fewer maintenance can't remodel Min fin commitment restrictions Buy Pride of ownership hard financial com Financial benefits higher living expenses Life style flexibility limited mobility ```
65
What is a lease?
Legal document that defines conditions of rental agreement
66
What are the steps to the home buying process?
``` Determine home ownership needs Find and evaluate a propertyto purchase Price the property Obtain financing Close the purchase transaction ```
67
What is PMI?
Private mortgage insurance Need it if you pay less than 20% on dwn payment Auto PMI termination occurs when equity reaches 22% of house
68
What are points and how do you calculate them?
Prepaid interest charged by lender | Each point is 1% of loan amt
69
What are the different types of mortgages?
Fixed rate: rate is fixed so is payment | Adjustable rate: changes with market interest rates

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