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WISE PRACTICE TEST
budget variance. - the difference between the budgeted amount and the actual amount that you spend debt ratio - shows the relationship between debt and net worth. debt ratio - The lower the ratio the better off financially the person is. debt ratio - calculated by dividing liabilities by net worth excise tax - government imposes a tax on specific goods and services such as alcohol, cigarettes, gasoline, and airline capital gains - are profits made from the sale of capital assets such as stocks and bonds Capital gains - tax deferred until the asset is sold, Capital Gains Tax - If held over one year are considered long-term capital gains and are taxed at a lower tax rate or in some cases are not taxed at all. variable expenses - change from one period to another,examples Electricity and food expenditures get advice from your friends - will help you the least in managing your money? Financial planning - the process of developing and implementing a coordinated series of actions to achieve financial success. Financial planning - need to be reviewed and adjusted to accommodate changing needs and goals.
emergency fund - Should be an important consideration when saving money liquidity - being in cash or easily convertible to cash, How easily an asset can be converted into cash Social Security - benefits depends on the person?s earnings over a lifetime of work Department store charge cards. - open-end credit Department store charge cards. - is a revolving live of credit that is offered by banks There is a limit set on the line of credit and the funds mortgage loan - closed-end credit,made at a specified interest rate for a specified time period. collateralized loan. - A loan that is secured by collateral, properties or assets that are subject to seizure on default. collateralized loan. - When a person brings an item to a pawnshop to obtain cash, the transaction is considered Federal Housing Administration (FHA) loan - insures lenders who make mortgage loans that are riskier than regular bank loans because uncollateralized loan - A personal loan without assets to cover the loan amount. Collateral - tangible asset that is used to secure a loan. In the case of a mortgage, the actual house or apartment serves as the collateral for that loan. bankruptcy - will appear on the person?s credit report for 10 years Notify the credit card companies in order to negotiate a new payment plan. - Notify the credit card companies in order to negotiate a new payment plan.
certificate of deposit - A long-term, fixed rate certificate of deposit - If you believe interest rates are going to fall in the near future and remain low for a considerable period of time. You should invest in: Notify the lending institution about state usury laws - when he believes he is being charged too high a rate of interest for a loan by a lending institution? usury laws - Charging excessive interest rates on loans Interest rate - The cost to use someone else's money for a period of time is personal property floater - additional property insurance that covers the damage or loss of a specific item of high value personal property floater - Would be appropriate for a woman receiving a very expensive piece of jewelry, but has homeowners insurance. cash value of a whole life insurance - calculated amount of money which includes the premiums paid as well as the interest on that money. purpose of Insurance - is to insure major potential losses and handle small losses from one's own resources. premiums - Low cost items given to the consumer at a discount or for free. cash value for whole life insurance - Policy that accumulates cash value is more expensive than a policy that does not accumulate cash value deductible - the amount of money that the policy holder pays when a claim is settled.
deductible - 250 deductible, means the person will have to pay the first $250 which will be deducted from the claim settlement paid by the insurance company. No insurance - First get insurance against Losses resulting from an illness, accident, or disability Liability insurance - insurance that provides protection from claims arising from injuries or damage to other people or property Automobile insurance - covers motor vehicles, including automobiles, trucks, and motorcycles, the injuries to the driver and passengers US Treasury Department. - must notify be to track large deposits, the federal government requires that deposits of $10,000 or more Credit union - Credit unions are not-for-profit savings and lending financial institutions, owned by its members direct deposits - money is generally deposited in their checking account sooner, Directly from your paycheck Certificate of deposit - has the most predictable income? Certificate of deposit - Most certificates of deposit (CDs) are issued with an interest rate that is fixed at a specified rate for the entire term of the deposit. Deposit slips - list the cash deposit separately from the check as well as the total of the deposit A person is depositing $20 in cash and a check for $50. On the checking account deposit slip, the person should - list the cash deposit separately from the check as well as the total of the deposit.
electronic funds transfer (EFT) is: - An ATM transaction,authorize a financial institution to debit or credit an account Identity Theft - exposes consumers to greater likelihood of fraud and/or identity theft. stock split - an increase in the number of outstanding shares of a corporation without changing the shareholders' equity stock split - A division of shares of a company into a larger number of shares. A 2 for 1 _____ allows a shareholder to double the number of shares but worth one half of their previous value.2-for-1 ______on 40 shares that is worth $80 would result in 80 shares at $40 at the time treasury bill (T-bill) - a secure, low risk investment treasury bill (T-bill) - These bills are backed by the full faith and credit of the US government, therefore considered relatively risk free dividend reinvestment - using dividends previously earned on the stock to buy more shares Securities - All of the investments, including stocks, bonds, mutual funds, options, and commodities, that are traded. Securities - A pharmacy is to drugs as the American Stock Exchange is to: The Securities and Exchange Commission SEC - Agency created in 1934 that monitors the stock market and enforces laws regulating sales of stocks and bonds The Securities and Exchange Commission SEC - Before a company can raise capital by issuing stocks or bonds, it must register the stock or bond issue with the common stock - the most basic form of ownership, including voting rights on major issues, in a company
preferred stock - stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights Series EE Savings Bonds - Are exempt from state and local taxes. New York Stock Exchange (NYSE) - The largest of these markets is the New York Stock Exchange,Also known as the "Big Board" Why does a corporation issue bonds? - To raise money for expansion or other company operations
