Finance Exam 2

Chapter 6. Using Credit Cards: The Role of Open Credit

• Open (revolving) credit, credit limit, and APR

• What happens when you carry a balance

• Types of credit cards, including secured and student cards

• FICO scores: the 300 to 850 range and the five factors (payment history is the largest)

• Monthly interest on a credit card balance

Chapter 7. Student and Consumer Loans: The Role of Planned Borrowing

• Secured versus unsecured loans

• Fixed-rate versus variable-rate loans

• Paying for college: grants and scholarships first, federal loans before private

• Subsidized versus unsubsidized loans: interest that builds while you are in school

• Financial aid refunds from loans are borrowed money

Chapter 8. The Home and Automobile Decision

• The 20/4/10 rule for a car budget

• Monthly car loan payments on the BA II Plus

• Longer car loans: a lower payment but more total interest

• Monthly take-home pay

• Keeping housing costs to 25% to 30% of take-home pay

• 15-year versus 30-year mortgages

• Private mortgage insurance (PMI)

Chapter 9. Life and Health Insurance

• Life insurance terms: premium, face amount, policyholder, and beneficiary

• How much life insurance: the earnings multiple approach

• Term versus whole life insurance

• Deductible, coinsurance, and co-payment

• Health Savings Account (HSA) versus Flexible Spending Account (FSA): what happens to unused money

Chapter 10. Property and Liability Insurance

• Renter's, homeowner's, and condo insurance: what each one covers

• What the insurer pays on a claim: replacement cost minus the deductible

• Reading auto liability limits (100/300/50) and what you owe above them

• Liability, collision, and comprehensive coverage