Details Title: Finance Final Description: mathier Total Flash Cards: 60 Created: 11/19/2008 12:00:44		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 what is future value? Definition the value to which an amount today will grow if it earns a specific rate of interest over a given period. It can be used to find the yearly savings needed to accumulate a given future amount of money. Term Whats a contribution plan? Definition A pension plan that defines the current pension plan contribution. Future retirement benefits are dependent upon the underlying investments in the retirement fund. Term what is time value of money? Definition the concept that a dollar today is worth more than a dollar received in the future; this true as long as one can earn a positive rate of return (interest rate) of investments Term what is an annuity? Definition a fixed sum of money that occurs annually Term what is present value? Definition the value today of an amount to be received in the future; it is the amount that would have to be invested today at a given interest rate over a specified time period to accumulate late the future amount Term what is discounting? Definition the process of finding present value; the inverse of compounding to find future value Term what is the rule of 72? Definition if you take 72 and divide by the percentage of your interest, you'll get an approximation for how long it'll take for your money to double (in years) e.g. 8% interest, (72/8) your money will double in approx nine yearsfuture value Term What's a benefit plan? Definition A pension plan that specifies the monthly benefit you will receive at retirement age. Term wat're accrued benefits? Definition Pensions benefits that have been accumulated because of previous credited service. Term wat're vested benefits? Definition Pension benefits that you are entitled to receive regardless of future employment. Term wats normal retirement age? Definition The age at which you are entitled to full retirement benefits. Term wats early retirement age? Definition The earliest age at which you can retire with reduced benefits. Term wats the flat benefit method? Definition Pension benefits are equal to a specified percentage of compensation or a specific dollar benefit. Term what's the unit benefit method? Definition Pension benefits depend directly upon units of credited service. Term wats the 401(k) salary-reduction plan? Definition A savings plan that permits earners to defer the taxability of income until funds are withdrawn. Term whats a 403(b) tax sheltered annuity? Definition A tax advantaged savings plan for employees of nonprofit institutions. Term by when should you retire? Definition when you start losing money ('always retire before you start losing money') Term whats an IRA? Definition (Individual Retirement Account(s): An account for retirement that qualifies for special tax treatment under IRS regulations. Term whats a Keogh (HR-10) plan? Definition A tax deferred pension account for self employed individuals. Term whats a will? Definition a legal declaration of how you wish your property to be disposed of at your death. Term what's a death estate? Definition Property and wealth transferred at death. Term wats an intestate? Definition without a valid will. or (i.e. testator) refers to a male rix (i.e. testatrix) refers to a female Term whats it mean to testate Definition to die with a valid will. Term what's an Executor or executrix? Definition The person who manages the distribution of the death estate according to the wishes expressed in the will. Term What's an administrator/administratrix? Definition The courts appointed manager of the death estate or will. Term wats a bequest/legacy? Definition property given by a wish expressed in a will. Term what's a Codicil? Definition an amendment to an existing will, modifying or explaining specific items. Term whats a letter of last instruction? Definition A document providing advice on the management of your death estate and the distribution of your assets. Term whats a probate? Definition a court process in which assets are transferred according to a will or the laws of intestacy. Term whats a trust? Definition a legal arrangement in which property is held by one party for the benefit of another. Term whats a beneficiary? Definition the one who is to benefit from the trust. Term what's a trustee? Definition the one who controls the property in the trust. Term whats an irrevocable trust? Definition a trust that can never be changed. Term whats a revocable trust? Definition a trust that can be changed or revoked by the one who established the trust (grantor). Term what's death tax? Definition a tax on property either transferred or received at death. Term whats estate tax? Definition a tax imposed on the property of the deceased before transfer. Term what's gift tax? Definition a tax imposed upon gifts transferred during life. (You can give up to $12,000 w/out tax as of 2006) Term whats inheritance tax? Definition a tax paid by the beneficiary on property received as an inheritance. Term How do you solve for the future value given present value, interest rate, and number of periods? Definition FV = PV x (1 + r)^n FV = Future value PV = Present amount r = interest rate n = number of periods Term How you find future value given annuity amount, interest rate, and number of periods? Definition FV = AA x [(1 + r)n - 1] / r FV = future value AA = annuity amount r = interest rate n = number of periods Term How do you find the inflation rate (IR) given the recent year's price (RYP) and previous year's price (PYP)? Definition IR = (RYP - PYP)/PYP Term What is estate planning? Definition a definite plan for the administration and disposition of one's property during one's lifetime and at one's death. Term what's an estate? Definition everything one owns Term what's a simple will? Definition a will that leaves everything to the spouse; also called an i love you will Term what's an exemption trust will? Definition a will in which everything passes to the spouse except the exemption ($2,000,000 in 2006) Term what's a stated dollar amount will? Definition a will that allows you to pass on to your spouse any amount that satisfies your family objectives (you should really use percentages) Term what's a holographic will? Definition a handwritten will Term what's a formal will? Definition a will that is usually prepared with an attorney's assistance Term what's a statutory will? Definition a formal will on a preprinted form Term what's an ethical will? Definition a document that dispenses emotional and spiritual wealth to heirs Term what's a prenuptial agreement? Definition a documentary agreement between spouses before marriage Term what's a living will (also called an advance directive)? Definition a document that enables an individual, while well, to express the intention that life be allowed to end if he or she becomes terminally ill Term what's a power of attorney? Definition a legal document authorizing someone to act on one's behalf Term what's a letter of last instruction? Definition this doc, though not legally enforceable, can provide your heirs with important information (e.g. you funeral arrangements). Term what's a durable power of attorney for health care? Definition If you are unable to make decisions regarding your health care this authorizes someone to do it for you. Term what's a defined contribution plan? Definition a plan--profit sharing, money purchase, Keogh, or 401(k)--that provides an individual account for each participant Term what's a defined contribution plan? Definition a plan--profit sharing, money purchase, Keogh, or 401(k)--that provides an individual account for each participant Term what's vesting? Definition an employee's right to at least a portion of the benefits accrued under an employer pension plan, even if the employee leaves the company before retiring Term what's a defined contribution plan? Definition a plan--profit sharing, money purchase, Keogh, or 401(k)--that provides an individual account for each participant Term what's a defined benefit plan Definition a plan that specified the benefits the employee will receive at the normal retirement age