W!SE exam

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114 Terms

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Bounced check

a check written for an amount more than in your account

2
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Cashier's Check

A check issued by a bank and sold to you for personal payments to people who won't accept a personal check

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credit union

A nonprofit financial institution that is owned by its members and organized for their benefit

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Commercial Bank

a for-profit institution that offers a full range of financial services

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Money Order

A form of check payment on which the financial institution prints the exact amount covered

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Reconcile

Make your bank records compatible with your bank statements

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safe deposit box

a small, secure storage compartment that you can rent in a bank, usually for $100 a year or less

8
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Brokerage

a firm that provides you access to the stock markets

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3 C's of Credit

Character(credit history), Capacity(ability to repay), Capital(assets)

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APR

Annual percentage rate (the annual rate of interest that is charged for using credit)

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Chapter 7

The chapter of the Bankruptcy Code providing for "liquidation" (i

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chapter 11

Section of Bankruptcy law that allows businesses to reorganize, continue functioning and pay creditors equitably according to a court-approved plan

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Consumer Credit Counseling Services

a nonprofit organizatioin that provides debt counseling for individuals with serious debt problems

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collateral

something of value that a borrower lets the lender claim if a loan is not repaid

15
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FICO score

A credit rating developed by Fair Isaac & Company in the late 1950s, now widely used by lenders and employers

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credit reporting agencies

equifax, transunion, and experian keep a record of consumer's credit transactions

17
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finance charge

is the total dollar amount you pay to use credit

18
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default

failure to pay back a loan

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lien

the legal claim of one person upon the property of another person to secure the payment of a debt or the satisfaction of an obligation

20
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payday loans

a loan where a borrower gets a cash advances based on his paycheck

21
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revolving credit

a type of open credit agreement that allows consumers to pay all or part of the outstanding balance on a loan or credit card

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installment credit

a type of closed credit where the loan is repaid with interest in equal periodic payments

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truth in lending

Credit legislation that is federal they have to tell you the truth about their lending

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Repossession

taking away property due to failure to repay the debt

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predatory lending

take advantage of ill-informed consumers through excessively high fees

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Principal

The money originally invested or loaned, on which basis interest and returns are calculated

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Collateralized Loan

A loan that is secured by collateral, properties or assets that are subject to seizure on default

28
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Barter

exchange goods without involving money

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Garnishment

a legal process that allows part of your paycheck to be withheld for payment of a debt

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gross pay

the total amount you earn before any deductions are subtracted

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net pay

the amount of a paycheck after the deductions are taken out

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Inflation

a general increase in prices

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FICA

Federal Insurance Contributions Act; tax levied on both employers and employees to pay for Social Security and medicare

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Windfall Income

any type of additional income over expenses that is completely unexpected

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compound interest

interest earned on both the principal amount and any interest already earned

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simple interest

interest paid on the principal alone

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rule of 72

A quick way to figure out how long it will take to double your money at a given return rate

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time value of money

the principle that a dollar received today is worth more than a dollar received in the future

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scarcity

basic economic problem of economics that results from a combination of limited resources and unlimited wants

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Deductible

The amount an insured person must pay before the insurance company pays on a claim

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Beneficiary

Who receives your money after you die

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Cash Value

the amount of money a whole life policyholder would receive if the policy were surrendered before death or maturity

43
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Claim

Formal request for payment, sent to the insurance company, to cover a loss

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Death Benefit

The actual amount paid to a beneficiary under a life insurance policy

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Disability Insurance

A type of insurance paid to an individual if he/she is injured and is unable to work for a specified length of time

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Homeowners Insurance

coverage that provides protection for your residence and its associated financial risks

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Insurance

protection against financial loss

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Risk

The possibility of a financial loss

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Whole Insurance

a life insurance policy where the premium remains constant and builds a cash value invested by the insurer; a more expensive policy than term

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Term Insurance

Life insurance coverage for a specified period of time, less expensive than whole

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Renters Insurance

a type of insurance that covers the loss of a tenant's personal property as a result of damage or theft

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Rider

an add-on to an insurance policy

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Floater

A policy designed to cover property that floats, or moves, from location to location

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Bull Market

a period of rising stock prices

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Bear Market

a stock market with declining stock prices

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Bond

an IOU issued by a corporation or government that confirms you are lending the corporation or government money

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Capital Gain

the profit from the sale of an asset such as stocks, bonds, or real estate

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diversification

spreading out investments to reduce risks

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dividend

check paid to stockholders, usually quarterly, representing portion of corporate profits

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Dow Jones

The average price of 30 selected industrial stocks, used as a measure of general market trends

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liquidity

ease with which an asset can be converted into cash

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Mutual Fund

fund that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets

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NASDAQ

America's largest electronic stock market

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S & P 500

tracks the prices of 500 different stocks as a measure of overall stock market performance

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Securities

all of the investments, including stocks, bonds, mutual funds, options, and commodities, that are traded

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Stock

Share of Ownership in a Corporation

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Treasury Bill

A government bond that is repaid within three months to a year

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Treasury Note

a government bond that is repaid within two to ten years

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Return on Invesment (ROI)

ratio of money gained or earned on an investment

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Budget

a plan for making and spending money

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Deficit

the amount of money spent is more than the amount of money collected

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Emergency Fund

a savings account you can access quickly to pay for unexpected expenses or emergencies, usually equal to 3-6 months of your salary

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Fixed Expense

expenses which stay basically the same from month to month, such as housing and transportation

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Opportunity Cost

What you give up when you make one choice over another

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Pay Yourself First

A GOLDEN RULE of personal finance

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Variable Expense

an expense that changes from month to month

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Need

something required or essential: food, shelter, transportation, education

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Want

an item that we desire but that is not essential to survival

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FDIC Federal Deposit Insurance Corp, IRS Internal Revenue Service

Federal Tax Collectors

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Federal Reserve Bank

Monetary Policy (how much $ should be in circulation)
Banker's Bank

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SEC Securities and Exchange Commission

Makes and Enforces rules for the stock market

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US Mint

Make US coins

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US Bureau of Engraving and Printing

Make "paper" money

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Annual Deductible

yearly fixed amount or percentage of an insurance claim that is the responsibility of the insured, and which the insurance company will deduct from the claim payment

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Assigned Risk Pool

consists of people who are unable to obtain automobile insurance due to poor driving or accident records and must obtain coverage at high rates through a state program that requires insurance companies to accept some of them

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Beneficiary

(n) one who benefits from something; a person who is left money or other property in a will or the like

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Benefit Period

period of time for which benefits are available

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Claim

an established or recognized right

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comparison shopping

comparing products and prices in different stores before making a purchase

90
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co-pay

the amount of money the patient has to pay that the insurance company will not pay

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deductible

a clause in an insurance policy that relieves the insurer of responsibility to pay the initial loss up to a stated amount

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disability insurance

A form of health insurance that provides periodic payments to replace income when the insured is unable to work as a result of illness, injury, or disease-not as a result of a work-related accident or condition

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face value

Amount of principal due at the maturity date of the bond

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homeowners insurance

"A combination of both property and casualty coverages arising out of the ownership of a home

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insurance

promise of reimbursement in the case of loss

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comprehensive insurance

Damaged by anything other than a collision, insurance pays bill, covers theft, damage caused by fire, explosions, natural disasters, or riots

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insurance benefit

Advantage, privilege, right, or financial reimbursement

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insured

a person whose interests are protected by an insurance policy

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long-term care insurance

Insurance coverage that provides a daily monetary benefit to people who are chronically ill and who require living assistance either at home or in a residential facility

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managed care health insurance

limits participants to seek health care from a specific list of providers