Term
| A bond that is repaid from the income generated by the project it is designed to finance is called a(n)? |
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Which of the following steps should be completed before starting an investment program?
a. Pick out at least two stocks or bonds to invest in
b. Work to balance your budget
c. Save at least $10,000 to invest
d. Invest in certificates of deposit
e. These all completed at the same time
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Definition
| Work to balance your budget |
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Term
| A debt security issued by a state or local government is known as a... |
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Definition
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All of the following are advantages of a mutual fund except...
a. Diversification
b. Professional management
c. Loads of up to 8.5 percent
d. Ease of buying and selling shares
e. All of the above are advantages
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Term
| A legal arrangement that helps manage the assets of your estate for your benefit or that of your beneficiaries is called a? |
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Definition
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Term
If your primary investment objective is to receive income, which of the following would NOT be appropriate for your portfolio? |
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Definition
| Passbook savings accounts |
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Term
Since 1926, the average annual return for stocks has been about what?
a. 8%
b. 10%
c. 12%
d. 14% |
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Definition
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Term
| A bond backed by the full faith, credit, and unlimited taxing power of the government that issued it is called a ________ bond. |
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Definition
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Term
A good rule of thum is to limit installment payments to ______ (what) percent of your net (after tax) income?
a. 20%
b. 30%
c. 40%
d. 50% |
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Definition
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Term
If your main focus is to be able to buy or sell an investment quickly without substantially affecting the investment's value, you are most concerned with what aspect of investing?
a. Income
b. Growth
c. Liquidity
d. Business failure risk
e. Market risk
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Definition
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Term
A distribution of money, stock, or other property that is paid to owners of a company is called what?
a. Bond
b. Common Stock
c. Dividend
e. Savings Account
f. Proxy
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Definition
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If you own stock, you may receive income from __________?
a. Dividends
b. Appreciation in stock value
c. Possible increase in stock price due to stock splits
d. Two of the above are correct
e. All of the above are correct
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Definition
| Dividends, Appreciation in stock value, and the possible increase in stock prices due to stock splits. |
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Term
| Many mutual funds charge a commission when they are purchased by investors. These are called what? |
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Definition
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Term
| When choosing an investment, one-should consider risk. The four primary risk components include... |
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Definition
1. Inflaction
2. Interest rate
3. Business Failure
4. Market
I2BM
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Term
As people approach retirement, which of the following holds true for most?
a. They choose more speculative investments
b. Their choices of investments do not change
c. They choose more conservative investments
d. They choose more risky investments
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Term
| Your will must be signed by |
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Definition
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Term
Which of the following describes a growth company?
a. The company pays a large dividend
b. Earnings are reinvested in the company for future growth
c. The company isn't growing fast as in the past
d. The company invests most of its money in safe securities like government bonds
e. The company provides a predictable source of income for inevstors |
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Definition
| Earnings are reinvested in the company for future growth |
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Term
| A legal form that requests that owners transfer their voting rights to another individual(s) is called what? |
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Definition
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Term
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Definition
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Term
Another name for equity financing is money received from the sle of which of the following?
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Definition
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Term
| Who is most negatively affected by inflation? |
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Definition
| Those individuals on a fixed income |
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Term
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Definition
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Term
| Using the rule of 72 (72 / interest%), how long would it take for your money to double at an interest rate of 2.5%? |
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Definition
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Term
| Hidden Inflation is a problem for investors because? |
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Definition
| The actual amount of inflation experience by people may be different than the reported inflation rate based on the CPI. |
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Term
| What is the basis for successful achievement of long-term financial goals? |
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Definition
| Setting and achieving short-term goals |
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Term
| How much money would you have at the end of a year if you had $1,000 in savings and earned 3.26% interest? |
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Definition
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Term
| If you want to know how much you need to save now to have $1,000 for retirement, you would use what computation? |
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Definition
| Present Value Computation |
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Term
| What is the first step in developing a financial plan? |
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Definition
| Determining your current financial situation |
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Term
In evaluating your risk, which of the following should you consider?
a. Probable loss of income
b. Opportunity costs of the investment
c. The ease of declaring bankruptcy
d. Your short-term goals |
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Definition
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Term
| What is a demand deposit? |
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Definition
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Term
| Commercial banks offer what benefits to their customers? |
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Definition
| Checking, Savings, Lending, and other services |
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Term
| For Savings Accounts, what does Compounding mean? |
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Definition
| Earning interest on top of interest |
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Term
| What term is used to describe the measurement of the earnings on investments? |
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Definition
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Term
| Money management troubles can be reduce or eliminated by doing what? |
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Definition
| Finding another source of income (a second job), tracking individual spending, and making payments on time |
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Term
| Having an organized system for personal financial records allows the user to do what? |
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Definition
| Plan and measure financial goals, fill out tax forms, determine the availability of resources for current spending |
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Term
| What does it mean to pay yourself first? |
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Definition
| To include a savings category in your budget to ensure you set aside some money for savings |
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Term
| Budgeted amounts are what? |
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Definition
| The actual amount you spend on an expense |
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Term
| A completed budget needs to be reviewed how often? |
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Definition
| Periodically throughout the year as debts are paid and income adjusted |
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Term
| What is the consequence of negative cash flow? |
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Definition
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Term
| In most states, taxes you pay on the majority of your purchases at the stores are called what? |
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Definition
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Term
| The difference between taxes on wealth and taxes on earnings is? |
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Definition
| Taxes on wealth refers to assets left to you as an inheritance and taxes on earnings are taxes on income you earned at a job |
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Term
| What is added to gross income to calculate adjusted gross income (AGI)? |
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Definition
| Contributions to a Keogh retirement plan |
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Term
| Is taxable income the same as adjusted gross income? If not, why? |
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Definition
| No, it's not, because taxable income is less than adjusted gross income (AGI) |
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Term
| What is the difference between a tax deduction and a tax credit? |
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Definition
| A tax deduction reduces your taxable income while a tax credit reduces your tax dollar for dollar |
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Term
| Tax avoidance differs from tax evasion because? |
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Definition
| With tax avoidance, you use legal means to reduce your taxes? |
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Term
| A retirement account that has tax free withdrawals after age 59 1/2 is called what? |
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Definition
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Term
| When interest rates are rising, an investor should use? |
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Definition
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Term
| A credit union offers lower fees and higher interest rates on savings because? |
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Definition
| They are nonprofit organizations with "profit" distributed to its members |
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Term
| A certificate of deposit (CD) is? |
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Definition
| A savings deposit that earns higher interest because it is left in the account for a specified period of time. |
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Term
| What is the annual percentage yield (APY) on a savings account with $1,500 balance and earns $18 in interest a year? |
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Definition
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Term
| What can decrease the rate of return on your savings? |
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Definition
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Term
| Savings accounts in banks are considered a safe investment because? |
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Definition
| Banks are insured by the government and backed by the FDIC |
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Term
| Overdraft protection is what? |
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Definition
| A fee banks charge for not having sufficient funds in your accounts to cover the check. |
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Term
| What term is used to describe cash and items of value that can easily be converted to cash? |
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Definition
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Term
| What is the term used to describe money left over after paying for housing, food, and other necessities? |
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Definition
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Term
| The characteristics of a successful budget include what four things: |
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Definition
1. Well planned
2. Realistic
3. Flexible
4. Clearly Communicated |
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Term
| Income that will be taxed at a later date is called? |
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Definition
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Term
| A tax imposed on the value of a person's property at the time of death is? |
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Definition
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Term
| A tax imposed by the government on specific goods and services, such as gasoline, cigarettes, alcoholic beverages, tires, air travel, and telephone services. |
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Definition
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Term
| Consumer credit is based on what |
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Definition
| Trusting people will be able to repay their debts when they are due |
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Term
| A car loan is an example of what type of credit? |
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Definition
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Term
| The total dollar amount paid to use credit is called? |
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Definition
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Term
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Definition
| An agency that collects credit information and compiles a credit history for individuals and businesses |
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Term
| To minimize your borrowing costs, you can lower the risk to the lender by? |
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Definition
| Seeking a fixed rate of interest |
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Term
| Simple interest on loans is lowest for? |
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Definition
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Term
| The simple interest charged for a $1,500 loan with a 6% interest rate paid in 3 equal installments is: |
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Definition
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Term
| What is the warning sign that you are in financial trouble? |
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Definition
| You pay above your minimum payments |
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Term
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Definition
| The borrowers financial ability to meet credit obligations |
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Term
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Definition
| the borrowers assets or net worth |
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Term
| This type of bankruptcy requires an individual to draw up a petition listing his/her assets and liabilities is what? |
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Definition
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Term
| This type of bankruptcy forgives many, but not all debts. Most of the debtors assets are sold to pay off creditors? |
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Definition
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Term
| This bankruptcy a debtors with regular income proposes a plan for using future earnings or assets to eliminate his/her debt over a period of time? |
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Definition
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Term
| Which retail feature would lead to higher prices? |
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Definition
| Convenience (location) and hours |
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Term
| What is the difference between a full warranty and a limited warranty? |
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Definition
| A full warranty ensures that repairs will be covered for a specified period of time and a limited warranty only covers certain aspects of the product |
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Term
| What are the four phases of Research-based buying? |
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Definition
| Engage in pre-shopping activities , evaluate the alternatives, select purchase the product, consider post-purchase activities |
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Term
| The difference between mediation and arbitration is? |
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Definition
| Mediation involves using an impartial third party to negotiate a settlement between the involved parties and arbitration is where the decision of the settlement is up to the third party |
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Term
| If you cannot afford a lawyer, you can get a free or reduce fee legal representation from? |
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Definition
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