Details Title: finance 2183 Description: Key terms for first test Total Flash Cards: 51 Created: 09/16/2009 14:55:41		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 finance Definition process of planning your spending, financing, and investing to optimize your financial situation Term personal financial plan Definition a plan that specifies your financial goals  and describes the spending, financing, and investing plans tht are intended to achieve these goals. Term opportunity cost Definition what you give up as a result of a decision Term standard of living Definition the necessities, comforts, and luxuries one seeks to obtain or maintain Term consumer price index Definition most widely known measure of inflation Term inflation Definition increases in the level of prices for goods and services Term Gross Domestic Product Definition measure of a nation's overall economic activity Term personal income Definition amount of money actually received by individuals Term disposable personal income Definition personal income after taxes Term discretionary personal income Definition personal income after taxes and after basic living expenses Term Personal Financial Plan Steps Definition Establish Goals Establish Financial Strategies  Put plan in action  Monitor performance Term External Factors Definition Government Policy  Ecomomic Conditions Consumer Price Index Term Consumer Price Index Definition Measures the change in the cost of a fixed basket of products and services, including housing, electricity, food and transportation Term recession Definition significant decline in economic activity spread across the economy that last more than a few months Term unemployed Definition Divide the number of people looking for a job by the total number of people in the work force.   People who are jobless, looking for jobs, and available for work Term underemployed Definition job below your qualifications Term financial statements Definition assessments of the current status of a household's finances Term income statements Definition a statement that traces the flow of income and expenses for a period of time Term balance sheet Definition a statement that lists the current value of assest and liabilites at a certain point in time Term net worth Definition the difference between assets and liabilities   assets -  liablilties = ? Term Assets Definition what a household owns Term liabilities Definition what a household owes Term liquidity Definition the ease at which an asset can be converted into cash Term solvency Definition the ability to repay debts total liabilities   divided by   total assets =solvency   further below 1 the better! Term Budget Definition a short term financial plan   showing income and expenses Term liquidity ratio Definition current financial assets   divided by   monthly living expenses Term debt to total assets ratio Definition total liabilities   divided by   total assets Term annuities Definition cash flow that takes place more than once Term Ordinary Annuities Definition cash flow that takes place at the end of each period Term Annuity Due Definition cash flow takes place at the beginning of the period Term financial assets to net worth ratio Definition financial assets divided by networth = financial assets to net worth ratio.   The higher the ratio the better! Term simple interest Definition amount deposited times the annual rate of interest times the number of years the money remains on deposit PV x i x n= ? Term compound interest Definition interest on the interest Term nominal Definition rate of interest using annual compounding Term effective Definition interest rate that actually occurs given that compounding occurs more than once per year Term Effective annual yield Definition 1. (FV-PV)/ PV = EAY 2. interest earned divided by amount invested 3. (1+r/n)n -1 Term Banking Act of 1933 Definition distinguished between banks, commercial business, investment, underwriting/securities Term Banking Act of 1999 Definition allowed for one stop shopping insurance, securities, underwriting, mutual funds, leasing etc. Term FDIC Insured Definition checking account, savings account, certificates of deposit Term not FDIC insured Definition investments, stocks, bonds, mutual funds, annuities, treasury bills, notes, bonds Term If you loose a credit card Definition no liability-if not used before you call $50 liability if it is used and you call within 2 business days $500 liability after 2 day deadline but before 60 days $ unlimited after 60 days Term income statement Definition a forecasting tool that represents monthly budgets for an extended period of time Term Equal Credit Opportunity Act Definition cannot deny credit based on race, sex, marital status, religion, age, etc. (married credit history in both names) Term Fair Credit Reporting Act Definition If you are rejected credit, you have the right to know why within 30 days. (check credit before you apply for a loan) Term Truth in Lending Act or Consumer Credit Protection Act Definition Financial information such as APR must show. Cannot require credit life insurance from customer. Term Bankruptcy abuse Prevention and Consumer Protection Act Definition Consumer has more responsibility Personal bankruptcies: Why...increasing numbers, significant credit or loses, loopholes. Instead of claring all dibt, you work out deals. Term The Wage Earner Plan Definition Chapter 13 Bankruptcy. Plan agreed to by you, the court and creditors. Pay on your debts over a period of years. Keep some of your assets. Shows some social responsibility. Term Can I spend now that I know I will file for bankruptcy? Definition No. you cannot discharge credit card charges made with in 20 days of filing and personal loans taken out within 40 days of filing. Term Straight Bankruptcy Definition Chapter 7 Bankruptcy. make up 63 % of all nonbusiness filings. Court liquidates all assets. preceeds pay used to repay debtors. Fresh start. Term Cannot be discharged in Bankruptcy Definition alimony, child support, back taxes, federal student loans Term Universal Default Definition When you default on anything your APR can increase immediately.