Details Title: FIN 180 FINAL Description: all chapter vocab Total Flash Cards: 31 Created: 12/11/2008 10:08:45		New Users: To study from this flashcard set, or to create your own your own study flash cards, REGISTER HERE. Existing Users: CLICK HERE. Additional Finance Flashcards
Cards in this set: Term Personal Financial Planning Definition The process of managing money to achieve personal economic satisfaction Term Types of Risk Definition -inflation risk(rising prices cause lost buying power) -interest-rate risk(effect cost of borrowing and rate of return) -income risk(lose a job) -personal risk(health, safty, costs) -liquidity rate(higher return rate may mean less liquidity) Term Economic conditions Definition influence personal financial planning. Include ... -Consumer prices(value of the dollar changes in inflation) -rule of 72(dividby the inflation rate to see how many years it will take for prices to double) -Consumer spending(demand for goods/service by individuals/household. -inter rates: the cost of money/credit when you borrow -money supply -unemployment -housing stats: number of new home ebeing built -GDP:total value of goods and service produces in a country -trade balance: diff between a countries exports nad imports -market indexes: relative calue of sttocks according to the indexes. Term Oportunity Cost Definition What you give up when you make a choice; cannot always be measured in dollars, sometimes your cost is your time Term Time value of money Definition increrases in an amount of money as a result of interest earned Term Simple Interest Rate Definition amount in saving X annual interst rate Xtime period equals the interest Term Future Value: Definition amount to which current savings will increase based ona certain interest rate and a certain time period. Also called compouding Term Compounding Definition earning interest on previously earned interest Term Present value Definition current value for a future amount based on a certain interest rate and time period; calculations are also called discounting Term CFP Definition certified financial planners Term Adult Life Ccycle: Definition marital status, household size, emplyment, Major event include graduation, marriage, children, retirement, etc... Term Money management Definition major activites: storing and maintaining personal financial records and documents, creating personal financial statements (balance sheet) and budgeting Term Home: Definition personal and employment records, money management records, housing records, insurance records, tax records, investment records auto and credit records Term Safety deposit box: Definition for records that would be hard to replace (birth cert., stock and bods cert., citizenship and militar papers, adoption and custody apers) Term Personal computerr: Definition current and past budgets, summary of checks written and other banking transactions, account summaries and performance results ffor investments Term Balnce sheet Definition net worth statement: include assets (what you own) and liabilities(what u own-jessie that alot for you) assets minus liabilites=networth Term Cash flow statement Definition shows inflow nad outflow of a give time period Term Inflow Definition new income from exmplyment, savings and investment income, other sources Term Outflow Definition fixed and variable, net cash flow can be a surplus or deficit Term Liquidity ratio Definition liquid assets/monthly expenses; show# of monts that living expenses cant be paid. Higher ratio is good. Term Debt payments ratio: Definition monthly credit payments/ take-home pay. good to keep ratio below 20% Term Savings ratio: Definition monthly savings/ gross income Term Budget Definition in contrast to the cash-flow sheet which shows a record of how you spent money in a past time period, a budget is a plan for spending in the future Term Budget Variance: Definition household and living expenses on your budget plan Term 4Types of taxes: Definition -taxes on purchases: sales and excise tax -taxes on property: real estate and property tax -Taxes on wealth: feder estate tax -taxes on earnings: income, social security tax Term AGI Definition adjusted gross income is gross income after certaindeductions have been made - these deductions are called adjustments to income and include contributions to an IRA< alimony payments, student loan interest and tuition fees, etc.... Term Computing your tax liability Definition 1. determine adjusted gross income -identify taxable income-net income, after deductions, on which incomes tax is computed. types of income subject to taxation include -earned income-wages, salaries, bonuss, tips, commission -investment income-money from dividents, interst, or rent -Passive income-ffrom business activities in which you dont directly participate -total income is afffected by exlusions -total income is affect by tax defered income 2. compute taxable inncome: a tax xeduction is an amount subtracted from AGI. They can be itemized or you can subtract the standarad deduction from AGI. 3. Calc taxed owed. The % rates are the marginal tax rates on the last dollars of taxable income Term exclutions Definition amouunts not included in gross income Term tax-defered income Definition this is income that will be taxed at a later date, such as earnings from a tradition individual retirement account (IRA) Term Exemptions Definition a deduction for yourself, your spouse and qualified dependents. Term Average tax rate Definition is based on the total tax due divided by taxable income. Ths rate is less then the marginal tax rate.