Personal Finance Exam Review Flashcards
estate tax
taxes paid on property that is transferred to others upon death of owner
gift taxes
taxes on money property given by one living person to another
payroll taxes
taxes taken out of your paycheck before you get paid
equity
tax must be applied fairly and uniformly to everyone
ability to pay
people should be taxed on their ability to pay no matter benefits
proportional tax
high income earners pay higher income tax rate
regressive tax
low income earners pay larger percentage of income
deductible
amount of money you pay before the insurance starts to assume financial responsibility
service
insurance is a service
financial consequences
insurance transfers financial consequences of unexpected events from you to insurance company
premium
monthly payment for insurance
financial risk
insurance transfers financial risk from you
deductible
can lower monthly payment by raising deductible
landlord
not responsible for loss or damage of property of rented home
guaranteed replacement costs
covered by renters insurance for property and is only 10-30$ monthly
co pay
pay the doctor for a visit
income
disability insurance replace lost income
life insurance
replaces income for family when dead
fixed expenses
bills that are the same cost each month
net income
individuals personal earnings after taxes and deductions taken into account
variable expenses
costs to a person that change from monthly to yearly depending on changes in spending
gross income
total personal earnings before taxes
corporation
owned by many people but treated by law as one person
partnership
owned by 2 or more people
non profit
organization that exists to serve interests of its members or community
partnership
important to clearly define ownership and how profits and losses are shared through articles of partenership
tertiary sector
part of economy that involves service related jobs like banking retail and insurance
contingent employment
temporary or part time
right to work laws
outlawed closed shops and allowed workers to not join unions
unlimited liability
owners fully responsible for debts and losses
insourcing
foreign company contracts american company
liquidity
how quick you can turn savings or investment into cash
risk
degree of certainty that you investment will increase or lose value
rate of return
percentage or gain on investment
diversification
spreading investments among several options
compound interest
interest is added to original principal or investment periodically
mutual fund
special investment company that allows people with small amount of money to combine their money to make investments
ira/pension funds
generate retirement income
certificate of deposit account
place your money in for specified time and bank pays higher apr than a normal account if you don’t withdrawal early
apr
cost of credit expressed as yearly percentage
