Personal Finance Exam Part 2 Flashcards
Blank Endorsement
The signature of the payee is written on the back of the check
Provides little protection, anyone can cash it, should be used only when you are at the bank ready to cash or deposit
Bounced
A check that is not honored by a bank and is returned to the payee’s bank due to nonsufficient funds
Checkbook Register
A tool that can be used to track checking account transactions
Compound
Interest earned on both principal and previously earned interest
Forgery
Act of signing another person’s name on a check
Annuity
A fixed amount set aside on a regular basis over time
Outstanding Checks
Checks written that have not yet been processed by the bank
Restrictive Endorsement
Restricts or limits the use of a check
Rule of 72
A quick formula for computing how long it will take to double money at a given interest rate
Divide the annual interest rate by 72
Safe Deposit Box
Secure container located in a bank vault
Simple Interest
Interest earned on both principle and previously earned interest
Principal (P) x Rate (R) x Time (T) = Interest
Third-Party
Check issued by the check writer to the payee, who then endorses and transfers it to a third party
Deductible
Amount of money you must pay toward your medical expenses before your insurance company begins to pay
Disability Insurance
Insurance that provides income to replace a portion of normal earnings when the insured is unable to work due to nonwork-related injury or illness
Fee-For-Service
A type of health insurance plan that allows the patient to choose medical providers (unmanaged care)
Home Inventory
List of items of value in your home; used for insurance purposes
Liability Coverage
Protection against injuries suffered by others on your property or as a result of your actions
Medicare
Government-sponsored health insurance for people age 65 and older. Run by Social Security Administration and funded by employee payroll deductions
Premium
Price you pay for insurance coverage
Risk
Chance of injury, damage or economic loss
Risk Assessment
Involves identifying risks and deciding how serious they are
Risk Avoidance
Stoping a certain behavior
Self-Insure
Involves setting aside money to be used in the event of injury or loss of assets. One method of assuming risk.
Stop-Loss
A clause hat provides 100% coverage of medical expenses after a certain amount has been paid by the insured
Contingency
Unplanned or possible events
Dollar Cost Averaging
Systematic purchase of an equal dollar amount of the s,are stock at regular intervals
Estate Planning
Process of preparing a plan for transferring property during one’ slide time and at one’s death
Foundation
Fund or an organization established and maintained for the purpose of supporting an institution or a cause
Investing
Strategy to earn more on your money that the rate of inflation
Liquidity
Measure of how quickly an asset can be turned into cash
Return (ROI)
Amount that savings or investments grow expressed as a percentage
Divide the amount you gained by the amount you invested
Tax Deferral
Postponement of taxes to be paid
Taxes on gains are not paid until the money is withdrawn
Asset Allocation
Choosing a combination of funds within a single mutual fund company
Callable
A bond with a clause that allows the issuer to repay the bond early
Franchise
Contract that gives you the right to sell a company’s products and services
Futures Contracts
Agreement to buy or sell. Specific commodity or currency at a set price on a set date in the future
Indirect
(Investing) buying shares of a mutual fund instead of buying individual shares of stock in various companies
Preferred Stock
Stock that guarantees a fixed dividend but does not provide voting rights
Rollover
Process of moving a retirement account balance to another qualified account without incurring a tax penalty
Roth IRA
Post tax money, earnings grow tax-free
Treasury Bills
Known as T-Bills, sold in terms - 4, 13, 26, 52 weeks sold in denominations of $1000
First Fruits
First fruit giving means giving off the top
Managers
People are actually asset managers for the Lord
Offering
Offerings are different from tithing. They are hove the tithe and are freely given from surplus
Owner
The Lord is the owner of the earth
Tithe
The Bible says to give a tenth of your increase
Steward
A steward is a manager, not an owner
Proverbs 15:22
Plans fail for lack of counsel, but with many advisers they succeed
Matthew 16:26
What good will it be for someone to gain the whole world, yet forfeit their soul? Or what can anyone give in exchange for their soul?
Luke 12:15
Then he said to them, “watch out! Be on your guard against all kinds of greed, life does not consist in an abundance of possessions.”
Ecclesiastes 11:6
Sow your seed in the morning and at night let your hands not be ideal, for you do not know which will succeed, or whether both do equally well
