Chapter 7 The Foundation of Savings

These flashcards cover key concepts from Chapter 7 of 'Introduction to Personal Finance' focusing on savings, investment risks, emergency funds, and financial fraud.

The __ relationship shows that higher investment risk is associated with higher potential returns.

investment risk and return

An emergency fund is essential for financial __.

well-being

Savings accounts, money market savings accounts, and certificates of __ are all used for saving.

deposit

A Roth IRA provides both savings and __ benefits.

tax

U.S. savings bonds are a way for Americans to lend money to the __ government.

U.S.

Without an emergency fund, unexpected expenses can lead to a series of __ consequences.

unfortunate

Liquidity refers to how quickly you can convert an asset into __.

cash

The __ of saving is the loss of a benefit that you would have received by choosing another option.

opportunity cost

A __ is an interest-bearing asset that allows you to earn a small return on your deposit.

savings account

Certificates of deposit typically have restricted access to funds and penalties for early __.

withdrawal

A Ponzi scheme promises investors a low-risk, high rate of __.

return

In a pyramid scheme, members earn more based on fees paid by new __.

members

Telemarketing fraud involves misrepresentation of a product or service in an __ communication.

unsolicited

Custodial accounts allow minors to own titled assets through a __ adult custodian.

responsible

529 plans are popular savings plans allowing tax-free distributions for __ expenses.

educational

To protect against identity theft, the FBI recommends never throwing away ATM receipts or __ statements.

bank

The total loss associated with identity theft exceeds __ billion per year.

$18