DSST Personal Finance

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DSST Prep

standard of living

The primary objective of financial planning is to improve one's __________________.

late fees

Almost one third of credit card company profits are derived from _________.

value

The total _____ of stocks, bonds, savings accounts, cars and real estate owned by an individual is called wealth.

assets

Personal ______ are the things you own.

savings

Financial assets include stocks, bonds, _______ accounts and securities.

Tangible

________ assets include real estate, cars, artwork and jewelry.

Utility

_______ is the amount of satisfaction received by an individual for purchasing goods and services.

marriage

Financial compatibility is one of the most important aspects of ________.

Short

_____ term planning should include an emergency fund with 3 - 6 months of income.

years

Financial goals covering a period of six to forty _____ are called long term.

mature

Liquid assets include cash, deposits in checking and savings accounts, mutual funds, and CDs that ______ within 1 year.

insurance

Income and assets can be protected by _________.

buildings

Land and _________ are considered real property.

jewelry

Personal property includes vehicles, furniture, home electronics, and _______.

Investments

___________ are purchased to earn a return.

liability

A _________ is represented by the amount of debt we owe.

net worth

The difference between assets and liabilities is _________.

summary

A balance sheet is a _______ of a person's or organization's assets and liabilities.

current

All assets are recorded on the balance sheet at their _______ fair market value.

fiscal

The government's programs of spending and taxation are called ______ policy.

circulation

Government programs for controlling the amount of money in ___________ make up monetary policy.

employment

During an economic expansion phase, __________ and economic activity are both high.

six

A recession occurs when economic expansion continues to decline for more than ___ months.

unemployment

Rising ____________ and a falling GDP (gross domestic product) are both early indicators of a recession.

growth

A depression occurs when economic ______ declines to a near halt.

depression

A recovery phase follows a recession or a __________.

regulating

Monetary and fiscal policy are the government's two tools for __________ the economy.

growth

Changes in the GDP are used to measure economic ______.

Great Depression

During the height of the ________________, US unemployment reached 25 percent.

sell

The law of supply and demand dictates that when more people want to buy, the price goes up and when more people want to ____, the price goes down.

Inflation

_________ occurs when the general price level is rising due to excessive demand.

inflation

The CPI is used to measure _________.

CPI

Social Security payments are increased periodically as the ___ increases.

unemployment

Stagflation occurs when inflation and ____________ both rise while at the same time economic growth declines.

amount

Purchasing power is the ______ of goods and services that can be bought with our money.

45

People with the highest incomes are typically in the age group __-65.

education

The single most controllable factor that affects a person's income is _________.

inflation

High rates of _________ tend to drive up interest rates.

credit

In the US, ______ is used to purchase almost every good and service.

securities

Paying for __________ (i.e. stocks and bonds) on credit is called paying on margin.

leverage

When an investor purchases stocks or investment real estate with borrowed money this is called ________.

Lenders

_______ examine a potential borrower's credit history to find out if the borrower is dependable, reliable and responsible.

Credit capacity

_______________ is the amount of borrowing a person can realistically handle considering current income and expenses.

secure

Collateral is an asset that is used to ______ a loan.

personal

If you borrow money and use ________ property as collateral for the loan, this is called a chattel mortgage.

assets

Capital is the amount of ______ owned by a borrower that are free and clear.

debt safety

The ___________ ratio is determined by dividing a person's total monthly consumer credit payments by their monthly take home pay.

maximum

Most experts regard 20 percent as the _______ debt safety ratio.

cash surplus

When money is left over after subtracting the total expenses from the total income, the result is a ____________.

advance

Credit extended to a consumer in _______ of any transaction is called open account credit.

balance

Borrowers can avoid paying interest on open account credit by paying the full amount of the account _______ each month.

credit

A ______ statement summarizes transaction charges, interest and fees on a consumer credit account.

maximum

A line of credit is the _______ amount a borrower can owe at any time on a credit card.

cash advance

Most bank credit cards allow the cardholder to obtain a ____________ from any participating bank.

balance

Transferring the balance from one or more credit cards to a new credit card is called a _______ transfer.

incentive

A rebate card combines the traditional features of a bank credit card with an additional _________.

credit cards

In general, the interest rates on ____________ are higher than any other form of consumer credit.

full

The grace period is the number of days in which you can pay your credit card statement in ____ without being charged interest.

variable

Most credit cards feature a ________ interest rate which is tied to an index which goes up and down depending on the market.

bank

Affinity cards make money for the group backing the card in addition to the ____.

secured

A _______ credit card requires the cardholder to provide collateral before receiving the card.

debit

A _____ card works like writing a check.

borrowers

A credit bureau collects and stores information about individual _________.

age

Factors such as ___, annual income, length of time in current job, and level of existing debt are used to determine a borrower's credit score.

Equal

The _____ Credit Opportunity Act of 1975 and 1977 prohibits credit discrimination based on sex, marital status, race, religion, or national origin.

1996

The Consumer Credit Reporting Act of ____ requires the full and accurate disclosure of credit information.

1975

The Fair Credit Billing Act of ____ dealt with billing procedures and recourse on unsatisfactory purchases.

personal bankruptcy

With ___________________, a debtor petitions a court for protection from creditors and arranges for liquidation and distribution of their assets.

straight

The result of a ________ bankruptcy is to wipe the slate clean and start anew.

straight

A ________ bankruptcy is more formally known as a Chapter 7 bankruptcy.

Wage Earner

The ___________ plan is an alternative to straight bankruptcy in which the debtor makes regular payments to the court which pays off the creditors.

business

Chapter 11 bankruptcy is for ________ owners and is similar to the wage earner plan.

20

A combination of straight bankruptcy and the wage earner plan is called a Chapter __ bankruptcy.

undisciplined

Sometimes bankruptcy is caused by a personal catastrophe, but typically it is caused by the individual's _____________ use of credit.

10

If you've had a bankruptcy in your past, that information may remain in your file for up to __ years.

debt counseling

A _______________ agency may be able to contact your creditors and get your payments reduced.

cheapest

Home equity lines of credit are among the ________ forms of consumer credit.

revolving

A home equity line of credit is similar to a credit card in that it is a _________ credit account.

home

With a home equity line of credit, your ____ is the collateral.

Interest

________ paid on a home equity line of credit is tax deductible.

75

80 - On a home equity line of credit, most banks limit the maximum loan amount to _____ percent of the equity in the home.

market value

Home equity is the difference between the amount you still owe on your mortgage and the ____________ of the home.

2/5/2013

Most people buy a car every ___ years.

20

Your monthly car payment should be no more than __ percent of your monthly income.

out of pocket

Auto insurance, fuel, tires, and maintenance costs are some of the _____________ costs of operating a car.

depreciation

The loss in value that occurs over a period of time for an asset (such as an automobile) is called ____________.

3000

If Bob buys a car for $10,000 but is only able to sell it for $7,000 two years later, the depreciation is $_____.

sticker

The manufacturer's suggested retail price for a particular vehicle with its options is called the _______ price.

closed end

The __________ lease is the most popular form of automobile lease.

businesses

Open end leases are used primarily by __________, not individuals.

residual

Often an auto lease specifies the ________ value as the price at which the lessee can buy the car for at the end of the lease term.

price

The _____ of a leased car is its capitalized cost.

finance

The _______ cost on a lease is called the money factor.

multiply

To convert the money rate to the annual percentage rate you must ________ it by 2400.

purchase

Most auto leases include a ________ option which allows the lessee to buy the car at the end of the lease.

2/5/2013

Generally auto lease terms run ___ years.

lemon

The Magnuson-Moss Warranty Act is more commonly known as the federal _____ law.

Lemon

_____ laws are designed to protect consumers who purchase a defective car, truck, van, SUV, motorcycle, boat or computer.

as is

If you knowingly purchase a car in _____ condition, you accept the defects and void your rights under the lemon law.

FTC

Although the ___ doesn't resolve individual consumer complaints, they do enter all complaints they receive into an online database that is used by law enforcement authorities worldwide.

State

In small claims court, the maximum claim amount varies depending on the _____.

do not

You (do or do not?) need a lawyer to represent you in small claims court.

Condominiums

____________ can be apartments, cluster housing, or town houses.

Coop

In a ____ apartment, each tenant owns a share of the corporation that owns the building.

assessment

With a cooperative apartment, tenants pay a monthly __________ in proportion to ownership shares, based on the space they occupy.

renting

A big disadvantage of _______ a home versus owning one is that rent is not tax deductible.

lease agreement

A _______________ is a legal document which protects both the lessor and the lessee.

equity

Money that the bank requires a buyer to invest when purchasing a home is called ______.

loan to value

The _____________ ratio is the maximum percentage of the property value that the bank is willing to loan.

20

In general, the bank will require the buyer to purchase private mortgage insurance if the down payment is less than __ percent.

points

Mortgage ______ are up front fees charged by a lender.

Truth in Lending

Under the ________________ Law, lenders are required to quote their rates in terms of APR.

attorney

Buyer closing costs include the down payment, ________ fees, insurance, mortgage points, appraisal fees, taxes, inspections, title search, etc.

prequalification

A ________________ letter is obtained from a bank or finance company prior to shopping for a home and includes interest rates, down payment information and the size of the loan the borrower can expect approval for.

deposit

Earnest money is a _______ pledged by the buyer as a show of good faith when making an offer to purchase real estate.

title search

The purpose of a ____________ is to verify the property has no liens or encumbrances and that the seller has the legal right to sell it.

property

A mortgage loan is secured by the ________.

closing

A _______ statement is provided to both the buyer and seller before and after the closing.

single

A balloon payment mortgage features a ______ large payment due at a later date.

payments

With a fixed rate mortgage, your ________ remain the same throughout the life of the loan.

adjustable

Choosing an __________ rate mortgage offers the advantage of a lower initial interest rate to the borrower than a competing fixed rate loan.

limit

On an adjustable rate mortgage, the interest rate cap is the _____ the interest rate can increase.

negative

Loan payments that are lower than the amount of monthly interest charged results in ________ amortization.

closing

The money a buyer puts down on a home is kept in an Escrow account until _______.

city and county

Title companies search _______________ records to verify the home you're buying has a clean title.

inspection

When buying a home, a professional __________ is designed to evaluate the physical aspects of the house.

interest

One way to obtain a lower ________ rate home loan is to pay points.

Prequalification

________________ is informal and is based on information you provide the lender.

Preapproval

___________ is a formal process where the lender verifies the financial information you provide and runs a credit check on you.

amortization

An ____________ schedule shows how much of the mortgage payment will be applied to principal and how much to interest over the life of the loan.

interest

In the early years of a mortgage, the majority of the payment is applied to ________.

insurance

PITI is an acronym that stands for principal, interest, property taxes and homeowner's _________.

insurance

When making a monthly mortgage payment the principal and interest go toward the loan and the tax and _________ goes into an escrow account.

term

The ____ of a mortgage refers to how many years it will take to pay off the loan.

refinancing

When interest rates fall, it's possible to lower your payments by ___________ your mortgage.

commissions

Real estate ___________ are paid by the seller at closing.

insures

The FHA does not make direct loans but instead _______ loans made by private lenders.

federal

Gross income includes all income subject to _______ taxes.

active

Non-investment income, such as wages and salaries, tips and bonuses is classified as ______ income.

investments

Earnings from ___________ are classified as portfolio income.

real estate

Income from ___________ and tax shelters is classified as passive income.

real estate

Capital gains are taxes assessed for making a profit selling stocks, bonds, and ___________.

gross

Subtracting deductions and exemptions from _____ income results in taxable income.

head of household

An unmarried taxpayer who pays more than half of the costs for maintaining a home and an eligible dependent child or relative files taxes as _________________.

joint

Married taxpayers can file separately or they can file a _____ federal income tax return.

Withholding

___________ taxes include city, state, and federal income taxes as well as social security taxes (FICA).

casino winnings

In addition to your paycheck, _______________, bonuses, and pensions are also subject to withholding taxes.

1040

Federal income taxes are filed on a ____ form.

Estimated

_________ tax payments for federal income taxes must be submitted with a Form 1040ES.

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