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Unit 6 Review
Terms in this set (29)
What are mutual funds?
What are some advantages to investing in a mutual fund?
Takes money from shareholders and buys shares of stock in many companies.
Less risky, diversified portfolio
The greater the risk, the greater the ______________________________.
The greater the risk, the greater the REWARD
What should you consider before purchasing stocks and bonds?
Risks and returns
What does it mean to have a diversified portfolio?
spread your investment money among several different types of investments (stocks, bonds, cash, etc.) in the interest of moderating risk that one investment type will perform poorly
What is the Rule of 72?
How does it work?
How long it takes to double your money?
Divide 72 by the interest rate
Which type of investments are the least risky?
Which are most risky?
Least risky - U.S. government securities, U.S. savings bonds
Most risky - Speculative stocks, real estate, individual stocks
Describe the following types of insurance: car
financial protection to the owners, operators and occupants of an automobile in case of accidents or damages.
Describe the following types of insurance: health
Protects against financial loss caused by the costs of illness or accident.
Describe the following types of insurance: life
financial protection to a family when the insured dies.
Describe the following types of insurance: disability
Provides income during a specified period when a person is unable to work because of illness or an accident.
Describe the following types of insurance: homeowner's
Protects the homeowner from loss caused by fire, theft and storm damage of the structure and the possessions within the structure.
Define: inflation rick
Inflation can decrease the value of your investment
Define: market risk
Risk that the price of an investment will go down. The prices of some investments are determined by supply and demand.
The cost to buy the insurance
What you have to pay every office visit or for prescriptions.
The amount you have to pay, while the insurance will pay the rest.
Define: Annual Percentage Rate (APR)
annual interest rate on the card
Define: credit limit
The maximum balance you carry on your credit card
what you currently owe on your credit card
Define: finance charge
the interest and fees that you have accumulated
Describe the following types of places you may receive credit from: commercial bank
Loans money in a number of areas including homes, cars, and business loans.
Describe the following types of places you may receive credit from: credit union
Must be a member in order to borrow money. Usually good rates and membership based on where you work. Often unions and government employees have access to Credit Unions.
Describe the following types of places you may receive credit from: consumer finance company
Loans money in a number of areas including homes, cars, and business loans. Also, loans to pay things like credit cards. Rates are higher, but often will give loans to people who are risky.
Describe the following types of places you may receive credit from: pawn shop
You let them hold onto something like jewelry or a car title, and they loan you money. If you pay them back with interest, then you get your stuff back, otherwise you lose your stuff.
Describe the 3 "C's" of credit: character
Your willingness to repay your debt
Describe the 3 "C's" of credit: capacity
Your ability to repay your debt
Describe the 3 "C's" of credit: collateral
What are things credit companies cannot use when making the decision to offer a line of credit to an applicant?
Budgeting is an important step in monitoring your expenses.
There are 2 types of expenses you incur each month. List and describe each type of expense.
Provide an example of each type of expense
Fixed- these are the same every month.
example: rent, certain utilities (cable,
Flexible- these change from month to month
example: certain utilities (power,
water, natural gas)
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Aggregate Supply and Aggregate Demand
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