Personal Finance Exam Review

Question 1

estate tax

Answer 1

taxes paid on property that is transferred to others upon death of owner

Question 2

gift taxes

Answer 2

taxes on money property given by one living person to another

Question 3

payroll taxes

Answer 3

taxes taken out of your paycheck before you get paid

Question 4

equity

Answer 4

tax must be applied fairly and uniformly to everyone

Question 5

ability to pay

Answer 5

people should be taxed on their ability to pay no matter benefits

Question 6

proportional tax

Answer 6

high income earners pay higher income tax rate

Question 7

regressive tax

Answer 7

low income earners pay larger percentage of income

Question 8

deductible

Answer 8

amount of money you pay before the insurance starts to assume financial responsibility

Question 9

service

Answer 9

insurance is a service

Question 10

financial consequences

Answer 10

insurance transfers financial consequences of unexpected events from you to insurance company

Question 11

premium

Answer 11

monthly payment for insurance

Question 12

financial risk

Answer 12

insurance transfers financial risk from you

Question 13

deductible

Answer 13

can lower monthly payment by raising deductible

Question 14

landlord

Answer 14

not responsible for loss or damage of property of rented home

Question 15

guaranteed replacement costs

Answer 15

covered by renters insurance for property and is only 10-30$ monthly

Question 16

co pay

Answer 16

pay the doctor for a visit

Question 17

income

Answer 17

disability insurance replace lost income

Question 18

life insurance

Answer 18

replaces income for family when dead

Question 19

fixed expenses

Answer 19

bills that are the same cost each month

Question 20

net income

Answer 20

individuals personal earnings after taxes and deductions taken into account

Question 21

variable expenses

Answer 21

costs to a person that change from monthly to yearly depending on changes in spending

Question 22

gross income

Answer 22

total personal earnings before taxes

Question 23

corporation

Answer 23

owned by many people but treated by law as one person

Question 24

partnership

Answer 24

owned by 2 or more people

Question 25

non profit

Answer 25

organization that exists to serve interests of its members or community

Question 26

partnership

Answer 26

important to clearly define ownership and how profits and losses are shared through articles of partenership

Question 27

tertiary sector

Answer 27

part of economy that involves service related jobs like banking retail and insurance

Question 28

contingent employment

Answer 28

temporary or part time

Question 29

right to work laws

Answer 29

outlawed closed shops and allowed workers to not join unions

Question 30

unlimited liability

Answer 30

owners fully responsible for debts and losses

Question 31

insourcing

Answer 31

foreign company contracts american company

Question 32

liquidity

Answer 32

how quick you can turn savings or investment into cash

Question 33

risk

Answer 33

degree of certainty that you investment will increase or lose value

Question 34

rate of return

Answer 34

percentage or gain on investment

Question 35

diversification

Answer 35

spreading investments among several options

Question 36

compound interest

Answer 36

interest is added to original principal or investment periodically

Question 37

mutual fund

Answer 37

special investment company that allows people with small amount of money to combine their money to make investments

Question 38

ira/pension funds

Answer 38

generate retirement income

Question 39

certificate of deposit account

Answer 39

place your money in for specified time and bank pays higher apr than a normal account if you don’t withdrawal early

Question 40

apr

Answer 40

cost of credit expressed as yearly percentage