Semester Test ReviewPersonal Finance

What is an overdraft?NSF check

1

What is a certificate of deposit?

Way of saving money, there are restrictions on when you can withdraw your money.

2

State the guidelines for choosing a PIN number.

A number that nobody else could figure out.

3

What is a round lot?Stocks are traded in multiples of 100.

4

Explain the difference between a debit card and a credit card.

Debit card=way to access money in your checking account

Credit card=loan

5

The most expensive method of using a credit card.

Cash advance or convenience check

6

What does PIN stand for?Personal identification number

7

What types of public records appear on a person’s credit report?

DivorceBankruptcyLiensLawsuits

8

Why is the interest rate usually higher on credit cards than on other types of loans?

Credit cards have a high rate of default & are risky for lenders

9

What is inflation?The increase in the cost of living.

10

Which stock pays dividends first, preferred or common?

Preferred

11

What is selling short?Selling stock borrowed from a broker that must later be repaid.

12

A term for the owners of a corporation.

Shareholders or stockholders

13

List the highest bond rating.

AAA

14

A term for a bond in default.

Junk bond

15

16

When a bond is purchased for less than its face value.

Discount

17

Which type of bonds are associated with the highest interest rate? Why?

Corporate, risk

18

A risk where you could experience losses in your income or standard of living.

Personal risk

19

Why do corporations sell bonds?

To raise capital

20

A risk where there is a chance of a loss as well as a chance of a gain.

Speculative risk

21

The policyholder should be put back into the same condition as they were prior to the loss.

Indemnification

22

What is buying on margin?Using leverage

23

When a bond is purchased for more than its face value.

premium

24

A term for a person who will inherit money from another.

Heir or beneficiary

25

A loan to purchase real estate.

Mortgage

26

Added to an insurance policy to protect high value items.

Personal property floater

27

Why is it usually less expensive to take part in a group health insurance plan that purchase an individual plan?

The risk is spread among more people.

28

Another term for real estate.

Real property

29

This type of tax takes a higher percentage of your income as your income increases.

Progressive tax

30

When a bond is purchased at a premium, the yield will be ________ than the coupon rate.

Lower

31

A tax where the more you earn the less you pay.

Regressive

32

Establishing a monetary fund to cover the cost of a loss.

Self-insurance

33

A crime where a taxpayer does not pay their taxes.

Tax evasion

34

A form that lists a taxpayers total income and taxes deducted from their paycheck for a given year.

W-2

35

When a person dies without a will.

Intestate

36

The person chosen to administer a person’s will.

Executor

37

Who pays a gift tax?The giver

38

Gambling is this type of risk.

Speculative

39

When should a taxpayer itemize?

When their expenses are larger than the standard deduction.

40

A financial product where a the bank buys your house from you.

Reverse mortgage

41

Another term for a flat tax.Proportional

42

The date your income tax return must be filed by.

April 15

43

Who pays realtor’s commissions?

The seller, not the buyer.

44

When real property is transferred from the seller to the buyer.

Closing date

45

The highest price a home will bring on the market.

Market value

46

What is a canceled check?One that has been cashed.

47

An endorsement where the signature of the payee is written exactly as his or her name appears on the front of the check.

Blank endorsement

48

A term for balancing your checkbook.

Reconciling

49

A type of credit card that can only be used at a specific retailer.

Retail credit card

50

What does APR stand for?Annual percentage rate

51

List one of the 3 major credit bureaus.

ExperianTrans UnionEquifax

52

Amount of time allowed to the cardholder between the day the items are charged on the credit card and the day finance charges are applied.

Grace period

53

When can a person view their credit report for free?

Once per yearWhen denied credit due to something on their credit report

54

What does the FDIC do?Provides insurance for depositors at commercial banks

55

Income received by stockholders.

Dividends

56

The over the counter stock market.

NASDAQ

57

The largest stock exchange.

NYSE

58

An increase in the number of shares outstanding of a corporation’s stock.

Stock split

59

When an investor makes money on the sale of stock.

Capital gain

60

Elected by stockholders to guide a corporation.

Board of directors

61

These stocks do well when the economy is growing but usually do poorly in times of recession.

Cyclical stocks

62

Another term for face value.

Par value

63

Bonds with low or no rating.

Junk

64

Bond backed only by the general credit standing of a corporation.

Debenture

65

The cost of insurance.Premium

66

The possibility of a loss.Risk

67

One who calculates an insurance premium.

Actuary

68

To take measures to lessen the frequency oR severity of losses that may occur.

Reduce the risk

69

When an investor loses money on the sale of stock.

Capital loss

70

What is an attractive nuisance?

Example: trampoline or swimming pool

71

People who determine the value of property destroyed for insurance companies.

Claims adjustors

72

These people look for evidence of destroyed or damaged property.

Insurance investigators

73

Another term for self-insurance.

Risk assumption

74

Insurance that protects against loss from death.

Life insurance.

75

Being paid twice the death benefit for an accidental death.

Double indemnity

76

A front-end load.Paid when you buy the mutual fund.

77

Agreements to buy commodities at specified prices on specified dates.

Futures contracts.

78

Example of a progressive tax.

Federal income tax.

79

Items such as coins and antiques are investments known as_______.

Collectibles

80

An example of a regressive tax.

Sales tax

81

As taxable income increases, tax rates ____.

Increases

82

The difference between market value of property and what you owe on it.

Equity

83

Another term for closing costs.

Settlement costs

84

An example of a defined-benefits plan.

pension

85

A legal document authorizing someone to act on your behalf to handle personal affairs.

Power of attorney

86

An IRA that taxes contributions, but not money withdrawn at retirement.

Roth IRA

87

An apartment with one large room that serves as the kitchen, living room, bedroom, plus a bathroom.

Efficiency apartment

88

What does MLS stand for?Multiple Listing Service

89

A legal document that establishes ownership.

Title

90

The portion of the purchase price that the buyer deposits as evidence of good faith.

Earnest money

91

A formal document that expresses interest in entering into a contract with someone is a(n) _______.

Offer

92