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Personal Finance: Exam
Terms in this set (40)
long term goal
more than a year
short term goal
up to three months
intermediate goal (medium)
three months to a year
what is the difference between a stock and a bond
- stock: a gamble, ownership in a company could lose or gain from company, investment in a part of a company
- bond: you are loaning money to the government and they pay you interest (ex. road repairs) - investment with fixed rate
what is a mutual fund
- different stocks pulled together - group stock
- several companies for a fund as a safe guard in case one company doesn't do as well, predetermined by investment companies
- can't choose what companies are in group
what is the difference between a need and a want?
need - shelter, food and water, basic health car and hygiene products, clothing
want - do not need a want to survive
fixed cost/fixed expenses
- every month is the exact same thing, easy to budget for (meal plan payments)
- help you budget life
variable cost/variable expenses
- changes and fluctuates out of your control, harder to budget for (books in college)
- changes monthly
what is gross pay?
- total you actually earned
- payment rate times hours worked plus overtime
what is net pay?
- money you are actually bringing home
- gross pay minus deductions
what are deductions?
- any money being taken out of gross pay (federal income tax, social security, medicare, etc...)
- 401 K is voluntary - savings that is not taxed
- social security and federal income is mandatory to pay
what is a bank reconciliation?
- the amount the bank believes you have in your account, make sure your check book and bank reconciliation statement equal each other
- term: less expensive and only during for period of time you are paying for it
- whole: permanent, savings account, can collect or barrow out of it
- uninsured/underinsured motorist
- it is your fault and it will cost you to pay for any property damage of other and their medical bills
- state required
- pays for your car if it is your fault
- want it when you owe money on a car or for a new car
- covers weather damage, hit a deer, car is stolen
- uninsured: other driver's fault with no insurance so your insurance covers your damages
- underinsured: when the other person only has state required insurance so they can't pay for your damages - your insurance pays the rest
home owner's insurance
- covers anything permanently attached to the ground and contents of house and your belongings wherever they go
- covers contents of house and your belongings wherever they go
acts of God
- weather (hail, wind, lightning, fire, volcano eruptions, tornado, etc)
- does not include floods
- replace it as if it were brand new
- what did you pay for it originally?
actual cash value
- once something is depreciated
- what did you pay for it originally?
- how long have you had it?
- $25,000 for each person you injury
- $50,000 per accident
- $25,000 property damage
what is identity theft?
- your personal information is stolen: social security number, and bank account numbers taken
what is the difference between a credit card/debit card?
- credit: loan, get billed, pay it later
- debit: comes right out of account its attached to
what is the importance of a budget?
- so you don't get into trouble by going into debt
- "pay yourself first" put away about 1/3 to 1/2 of a paycheck in your savings
what does SMART goal mean?
fixed and variable expenses
- fixed expenses: Fixed expenses or costs are those that do not fluctuate with changes in production level or sales volume (rent)
- variable expenses: expenses or costs that change (water or electric bills)
- annual percentage rate, charging you interest on unpaid balance
- a charge to carry the credit card
balance transfer fee
- transfer any money on current credit card to a new one at a charge
- what you get for using the credit card
- airline miles, hotel point, cash back
- abbreviation of company's stock (ex. Hershey: HSY)
- the stock's highest price the last day this stock traded
- the stock's lowest price the last day this stock traded
- the stock's last traded price
- the amount of change of the stock's closing price and the prior trading day's closing price
- portfolio: where you keep track of where all your money is- your different stock
- diversified: distributing money in different places and with different companies
compound interest and simple interest
- compound: everything you make they keep adding on ($100 and 2% interest: $102 and 2% interest: $104.02 and so on) pay original and all interest you never pay
- simple: original amount and add same interest ($100 and 2% interest: $102 and 2% interest: $104 and so on)
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