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Personal Finance Study Guide
Terms in this set (142)
A check which has cleared could still bounce.
A deposit would appear as a credit on your bank statement.
The individual whose name appears after "Pay to the order of" is known as the "payee."
If your cancelled checks are lost or stolen, you should notify the bank immediately to close your account.
A service charge would appear as a credit on your bank statement.
The individual who signs the check is called the "drawer."
A certified check guarantees that the check will not bounce.
If money is wired to your account, you must wait a few days before the funds are available to you.
What factors should you consider before choosing a savings option?
Safety and risk, Liquidity, and Earnings
Which of the following would be considered the more liquid savings option?
Why is it important to diversify your investments?
To reduce your exposure to risk
What is the best way to learn about investing?
Hire a professional advisor
Why is it important to begin investing early for retirement?
The longer you have to collect, the more money (and interest) you will be able to accumulate
What is the main difference between a defined-benefit plan and a defined contribution plan?
Employees can contribute to a defined contribution plan, employees can contribute to a defined benefits plan, and defined benefit plans are better
What is the difference between common stock and preferred stock?
Preferred stock has less risk
Which of the following could cause the stock market to change?
Industry Trends, Economic Factors, and National and World Events
What is an advantage of a mutual fund?
Diversification, Cost, and Stock Funds
What is a disadvantage of investing in real estate?
Property depreciates in value over time
Which of the following is a benefit of estate planning?
It helps people provide financially for loved ones or for a favorite organization or cause, It can reduce the time and legal complications involved in settling the estate, and It can minimize the amount of taxes that must be paid.
What is the purpose of a will?
Identify an executor, Identify a guardian for children, if needed, and Give instructions for assets and liabilities
Overtime consists of work in excess of __ hours per week.
Overtime is usually paid at least __ time the regular rate.
Net pay is the same as...
On a pay stub, the contributions identified as FICA are paid toward...
Social Security and Medicare
By January 31, your employer will send you Form __ showing your total earnings for the year and the total amount of taxes withheld.
Form __ must be filled out by new employees so that the employer can deduct the correct amount of tax from pay.
Form __ is sent by a bank to those who were paid interest on their savings.
The purpose of Form __ is to specify the number of allowances you're claiming.
Form __ is used to complete tax information and must be sent into the IRS.
Which of the following is an advantage of having a checking account?
Avoid carrying large amounts of money
Which of the following is a responsibility associated with having a checking account?
Keeping accurate records, Reconciling your account, and Keeping money in your account
Which is a good alternative way of paying bills other than by personal check?
Write a Blank Endorsement below.
ENDORSE CHECK HERE
Write an endorsement in full below.
ENDORSE CHECK HERE
Pay to the order of
Write a restrictive endorsement below.
ENDORSE CHECK HERE
For Deposit Only
ENDORSE CHECK HERE
For deposit to account no. 000000
The ease with which savings or investments can be turned into cash to be spent.
A period of time during which money must be kept on deposit.
A certificate issued by a financial institution to indicate that money has been deposited for a certain term.
Certificate of Deposit
As U.S. government bond with principal amounts up to $10.000
A type of savings account in which deposits by the financial institution yield higher earnings.
Money Market Account
The income that an investment produces.
The possibility of variation in the return on your investment.
The degree to which an investment's return or value may change.
A strategy of making a variety of investments in order to reduce your exposure to risk.
A collection of investments that is both diversified and well-balanced.
A group of people who meet regularly to learn about investing and to make investments together.
Any retirement plan offered to a company's employees.
A type of defined-contribution pension plan to which the employee contributes on a pretax basis.
401 K Plan
An individual retirement account which is a personal savings plan that enables workers and their spouses to set aside money for retirement.
A federally approves, defined-contribution, tax-deffered retirement plan designed specifically for self-employed people.
An IRA in which contributions are not tax-deductible; however, earnings are accumulated tax-free.
Ownership interest in a corporation.
Individual units of ownership, available for purchase.
Investors who purchase shares of stock.
The organized trading of stock.
A central location where stocks are sold on the trading floor.
A payment to shareholders that represents a portion of the company's net profits.
An individual or firm that will buy and sell stock for clients according to their instructions.
Certificates of debt issued by corporations and governments.
A group of investments that is held in common by many individual investors.
Land and any structure on it.
A contract purchased from an insurance company that guarantees to provide payments at regular intervals in the future.
Basic economic goods bought and sold in quantity.
A legal document that provides potential investors with information about a mutual fund or other security.
The assets and liabilities left behind by a deceased person.
The process of making legal and financial arrangements for how one's property should be administered before and after death.
A legal document in which a person directs how his or her estate is to be distributed after death.
The individual who is in charge of handling the affairs of the estate.
A person or group designated to receive some or all of a deceased person's assets.
Without a valid will.
A legal arrangement that can serve as an alternative to a will.
A legal document assigning someone the right to act on a person's behalf.
Power of Attorney
A legal document that outlines a person's wishes for medical treatment under specific circumstances.
An arrangement in which pay is electronically transferred directly into the employee's bank account.
The lowest hourly rate an employer may legally pay a worker.
Work for which wages are based on the number of items produced.
Are employee earnings that are paid by the hour, day, or item.
Is the total amount of money earned for working during the pay period.
A federal program that helps pay medical expenses for those who qualify.
Is a fixed percentage or amount of profit given to an employee in exchange for making a sale.
A request made by the holder of an insurance policy for payment of a loss.
An arrangement in which the insurance company and the insured person share the costs of claims after the deductible is met.
A set amount issued person must pay per loss before the insurance will pay benefits.
An attachment to a standard insurance policy that adds or takes away coverage; this is sometimes called a rider.
Specific risks not covered by an insurance policy.
Purchased protection that guarantees to pay you in the event of certain specified losses.
Legal responsibility to pay someone who has suffered an injury or loss caused by another.
The written agreement between a consumer who purchases insurance and the insurance company.
Payments insured people make to the insurance company in exchange for coverage.
A group of drivers within a state who are unable to obtain auto insurance on their own.
Point-of-Service Plan. A managed care plan that provides the option of using health care providers outside the plan's network.
A detailed list of personal belongings.
An estimate of value made by a qualified person.
Preferred Provider organization. A group of health care providers who band together to provide services at a discount.
Property that can be moved, such as furniture, appliances, clothing, and jewelry.
State-regulated programs that insure employees against injuries that occur on the job, job-related illnesses, and job-related death.
Loss in value over time.
A system under which no fault or blame is assigned in the event of a traffic accident, and all parties involved collect from their own insurance companies for losses up to their coverage limits.
In a permanent life insurance policy, the accumulated value of the additional amounts paid in premiums beyond actual insurance coverage and of investment earnings on those amounts.
A program under which the federal and state governments share the cost of medical aid to low-income families.
Insurance that gives a person protection for his or her entire lifetime.
Permanent Life Insurance
A plan under which you are charged a fee for each medical service you receive, and your insurance plan pays a portion of that fee.
Health insurance policies purchased from private companies to supplement Medicare coverage.
Life insurance that gives protection for a specific period of time.
Term Life Insurance
A flat fee given to a health care provider at the time of service.
A physician who coordinates health care and provides general medical care.
Primary Care Physician
A health care plan that is designed to lower costs for both the insurer and the consumer while maintaining a high standard of care.
Managed Care Plan
Health Maintenance Organization. A health care group that offers medical care to members for a prepaid fee and small co-payments.
Checks which you have written but the bank has not yet returned to you.
To sign your name on the back of a check payable to you.
A bank listing of checks paid, deposits and service charges.
A bank form used to put money into your account.
To make the bank statement balance agree with your checkbook balance.
Checks which the bank has paid and returned with your statement.
A historical record of a person's payment activity.
Total percentage it costs you yearly to use your credit.
Annual Percentage Rate (APR)
A period of time allowed in which you can pay off new purchases, if there is no old balance, without being charged interest.
A legal process giving a person deeply in debt a plan to get out of that debt.
Payment (rent) you make for the use of another's money.
The amount you owe with an obligation to pay back.
The amount of financial trust (principal) extended to you by a lender.
A once a year fee charged by many card issuers in addition to the interest charged on your purchase.
The length of time a loan lasts.
The dollar cost for using credit.
Hours Worked: 56
Regular rate of pay: $6.85
56 * 6.85 = $383.60
Annual pay: $38,000. Calculate monthly pay.
38,000/12 = $3166.66
Hours worked: 40
Regular rate of pay: $3.75
* 5% commission on the sale of $9,500
40 * 3.75 = $150
9,500 * 5% = $475
150 + 475 = $625
One hundred forty-two
One thousand four hundred eighty-five
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