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2023 > Personal Finance Final Exam December 2023 > Flashcards

Personal Finance Final Exam December 2023 Flashcards

1
Q

Define APR.

A

Annual Percentage Rate, measure used to calculate the cost of borrowing, such as on a loan or credit card.

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2
Q

Define Asset.

A

Something of value that a person or entity owns.

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3
Q

Define bankruptcy.

A

Legal process that individuals or businesses go through when they are unable to repay their debts.

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4
Q

Define cash flow.

A

Movement of money in and out of a business or individual’s finances.

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5
Q

Define certificate of deposit.

A

Low-risk investment where you deposit a certain amount of money for a fixed period of time.

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6
Q

Define closed end credit.

A

The borrower receives a set amount of money upfront and agrees to repay it in installments.

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7
Q

Define cover letter.

A

One-page letter that introduces yourself to the employer and highlights your qualifications, skills, and experiences.

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8
Q

Define credit bureau.

A

Organization that collects and maintains credit information on individuals and businesses.

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9
Q

Define creditor.

A

Someone that lends money or extends credit to another person.

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10
Q

Define current liability.

A

Debt or obligation that is expected to be settled within a short period.

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11
Q

Define deductible.

A

Amount of money that someone is responsible for paying out of pocket before their insurance coverage kicks in.

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12
Q

Define deficit.

A

Situation where expenses exceed income or resources.

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13
Q

Define economy.

A

System that involves the production, distribution, and consumption of goods and services within a country.

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14
Q

Define employee.

A

Person who works for a business in exchange for wages.

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15
Q

Define employer.

A

Person that hires people to work for their business.

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16
Q

Explain the 3 different timelines of goals.

A

Short-term: Right now
Medium-term: A little in the future
Long-term: Long future

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17
Q

Explain the 5 C’s of Credit.

A

Character: Reputation
Capacity: Ability to pay
Capital: Resources/Assets
Collateral: Security deposit
Conditions: External factors

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18
Q

Explain the difference between a job and career.

A

A job is temporary while career is long-term.

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19
Q

Explain the difference between a need and a want.

A

A need is something crucial to survival while a want is not required.

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20
Q

Explain the importance of net worth.

A

It gives you a snapshot of your overall financial health.

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21
Q

Explain the importance of cash flow statement.13

A

It helps you keep track of the money flowing in and out of your business.

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22
Q

Explain the importance of check book register.

A

It helps you keep track of all your transactions and manage your personal finances.

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23
Q

Explain the importance budget.

A

Helps you take control of your money and make sure you’re spending it wisely.

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24
Q

Explain the importance of bank reconciliation.

A

Helps you make sure that your records match the bank’s records.

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25
Q

Define endorsement.

A

Someone publicly supports or approves of something or someone.

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26
Q

Define expenses.

A

Costs or money that you spend on various things or services.

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27
Q

Define FDIC.

A

Federal Deposit Insurance Corporation, safety net for your bank deposits.

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28
Q

Define Federal Reserve System.

A

Responsible for managing the country’s monetary policy and overseeing the banking system.

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29
Q

Define finance charge.

A

Additional fee or cost that you have to pay when you borrow money or use credit.

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30
Q

Define fixed expense.

A

Regular and consistent cost that you have to pay on a recurring basis.

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31
Q

Define fraud.

A

When someone deceives or tricks others for personal gain or to cause harm.

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32
Q

Define grace period.

A

Specific period of time after a deadline that you can still complete a task without facing penalties.

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33
Q

Define income.

A

Money or earnings you receive from various sources, such as your job, investments, or business ventures.

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34
Q

Define inexpensive loan.

A

A loan that doesn’t cost a lot in terms of interest or fees.

35
Q

Define inflation.

A

When the general prices of goods and services in an economy increase over time.

36
Q

Define insolvency.

A

When a person is unable to pay their debts or meet their financial obligations.

37
Q

Define interest.

A

Additional amount of money that is charged or earned on top of the original amount of money borrowed.

38
Q

Define investments.

A

Financial assets or items that you purchase or put your money into with the expectation of generating income or earning a profit in the future.

39
Q

Define lease.

A

Legal agreement between a landlord and a tenant to rent a property.

40
Q

Give examples of open and closed end credit.

A

Open-end: Credit card
Closed-end: Morgage

41
Q

List the steps in writing a check.

A
  • date
  • payee
  • amount in numbers
  • amount in words
  • sign
  • note the reason
42
Q

Explain the relationship between education, potential earning power, and unemployement.

A

Higher levels of education can increase your ability to find employment and have higher earning power.

43
Q

List the steps taken to balance your checkbook.

A
  • start with your bank statement
  • record your deposits
  • record your withdrawals
  • compare transactions
  • reconcile your balance
  • make adjustments
  • update your register
  • keep track of future transactions
44
Q

What are 2 things you can do to increase your net worth?

A

Save and invest, reduce debt

45
Q

What are 2 things you can do to decrease your net worth?

A

Overspending, making poor investment decisions

46
Q

What are 3 advantages and disadvantages of owning your own home?

A

advantages: stability and equity, investment potential, pride of ownership
disadvantages: financial responsibility, lack of flexibility, maintenance and repairs

47
Q

What are 3 advantages and disadvantages of renting?

A

advantages: flexibility, lower financial commitment, maintenance and repairs
disadvantages: lack of equity, limited control and customization, rent increases and lease terms

48
Q

Define liability.

A

Legal responsibility or obligation that someone has for their actions or debts.

49
Q

Define liquid asset.

A

Asset that can be easily converted into cash without significant loss in value.

50
Q

Define liquidity.

A

The ease in which an asset or investment can be bought or sold in the market without causing a significant change in its price.

51
Q

Define money management.

A

Process of effectively managing and controlling one’s financial resources.

52
Q

Define needs.

A

Essential things that are necessary for our survival, well-being, and basic functioning.

53
Q

Define net income.

A

The amount of money a person or a business earns after deducting all expenses and taxes from their total income.

54
Q

Define net worth.

A

The value of an individual’s or entity’s assets minus their liabilities.

55
Q

Define open end credit.

A

Credit that allows borrowers to repeatedly borrow and repay funds up to a certain credit limit.

56
Q

Define opportunity cost.

A

Weighing the pros and cons of different choices.

57
Q

Define overdraft protection.

A

Service offered by banks that helps prevent your account from going into a negative balance when you don’t have enough funds to cover a transaction.

58
Q

Define personal financial planning.

A

Process of managing your money and making informed decisions about your finances to achieve your financial goals.

59
Q

Define personal possessions.

A

Belongings or items that an individual owns and considers as their personal property.

60
Q

Define point of sale transaction.

A

When a purchase is made at a physical or virtual location where goods or services are sold.

61
Q

Define policy.

A

Set of rules, guidelines, or principles that are established to guide decision-making and behavior within a group.

62
Q

Define potential earning power.

A

The capacity or ability of an individual to earn income based on their skills, qualifications, and experience.

63
Q

What are four characteristics of a successful budget?

A

Realistic, specific, flexible, regularly monitored.

64
Q

What are the 4 requirements/characteristics of a Good Financial Goal?

A

Specific, measurable, attainable, time-bound.

65
Q

What are the 6 steps in the Financial Planning Process?

A
  • establishing goals
  • gathering data
  • analyzing and evaluating
  • developing a plan
  • implementing the plan
  • monitoring and reviewing
66
Q

What are the 6 warning signs of someone experiencing financial/debt problems.

A
  • persistent difficulty paying bills
  • increasing debt levels
  • borrowing to meet basic needs
  • frequent overdrafts or late payments
  • lack of savings or emergency fund
  • avoiding or ignoring financial matters
67
Q

What are the differences between common stock and preferred stock?

A

Common have voting rights, preferred have higher priority when receiving dividends.

68
Q

Define rate of return.

A

Gain or loss on an investment relative to the amount of money invested.

69
Q

Define real estate.

A

Property consistent of land and any structures or improvements on it.

70
Q

Define rebate.

A

Refund or partial refund given to a customer after they have purchased a product or service.

71
Q

Define renter’s insurance.

A

Type of insurance coverage that is designed specifically for tenants who are renting a property.

72
Q

Define resume.

A

Document that provides a summary of a person’s education, work experience, skills, and qualifications.

73
Q

Define safe deposit box.

A

Secure storage space provided by banks or other financial institutions.

74
Q

Define service.

A

Activity or task that is performed to meet a specific need or provide assistance to someone.

75
Q

Define stop payment order.

A

Request made by an account holder to their bank or financial institution to stop the payment of a specific check or transaction.

76
Q

Define surplus.

A

Excess or an abundance of something beyond what is needed or expected.

77
Q

Define time value of money.

A

Concept that money available today is worth more than the same amount of money in the future.

78
Q

Define variable espense.

A

Cost or expenditure that fluctuates or changes in amount from one period to another.

79
Q

Define wants.

A

Desires or preferences for things that are not necessary for survival.

80
Q

What is the difference between Chapter 7 & Chapter 13 Bankruptcy?

A

Chapter 7 focuses on liquidating assets to pay off creditors, while Chapter 13 involves creating a repayment plan based on the debtor’s income.

81
Q

What steps do you take to fix a mistake on your credit report?

A

Obtain a copy of your credit report, review your credit report, dispute the errors, contact the furnisher of the information, follow up.

82
Q

Who is the Consumer Credit Counseling Service and what do they do?

A

Provides financial education and counseling services to individuals and families.

83
Q

Why would a bank be interested in your net worth?

A

It gives them an idea of your overall financial health and stability.

2023 (5 decks)

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