semester exam vocab

consumer

individual who purchases and uses goods and services to satisfy wants and needs

goods

produced, physical products

services

actions performed for a client

necessity

type of good for which demand will not change in relation to price

normal good

type of good whose demand increase with an increase in income

inferior good

type of good whose demand decreases with an increase in income

luxuries

type of good or service whose demand increases when income increases and demand decreases when price rises

demographic status

quantifiable statics detailing an individual’s current status, such as age, gender, ethnicity, occupation, and income

target market

specific group for which a business’s products, services, and marketing efforts are intended

lifestyle

mode of living which reflects the attitudes and values on an individual of group

personality

individual’s consistent pattern of interactions in response to recurring situations which forms a distinctive character

perception

process in which an individual creates personal experience by selecting, organizing, and interpreting information available to him or her

selective exposure

consumers actively choose messages which they want to see

selective attention

consumers decide how much attention they would like to give to a message

selective comprehension

consumers interpret information, so it is consistent with their beliefs and values

motivation

energizing force which causes an action to satisfy a need

attitude

predisposition to respond to a product or brand in a favorable or unfavorable way

belief

subjective perception of how well a product or brand performs

culture

set of symbols, rules, and values which are formed by a homogeneous group of people and transmitted to the next generation

reference group

groups to which an individual looks as a source for personal standards

family life cycle

different stages of a family experience, such as marriage, birth, and retirement

economics

study of the production, distribution, and consumption of goods and services

demand

consumer’s desire and ability to purchase a good or service

supply

amount of a good or service available for purchase

elasticity

measure of an item’s sensitivity to change in another item

opportunity cost

cost of making an investment which is the difference between the return on one investment and the return on on alternative

budget

itemized summary of the expected income and expenses for a defined period of time

budgeting

process of creating a plan to spend and save money

assets

individual’s belongings which have value

liabilities

individual’s expenses and outstanding debts

short-term goals

goals set to be achieved in less than a year of time

intermediate-term goals

goals set to be achieved in about 5 to 10 years

long-term goals

goals set to be achieved in about 10 or more years

money personalities

categories in which people can be put based off of their spending and saving habits

saver

individual who likes to save money rather than spend money

spender

individual who enjoys spending money on themself or others

risk taker

individual who enjoys investing money into high-risk ventures

security seeker

individual who plans for the future and is prepared for any type of financial situations

flyer

individual who does not consider money as a necessity and does not have much of an opinion on money

spending needs

expenditures which are essential for an individual to be live and function

spending wants

expenses which help an individual to live more comfortably

financial institutions

companies engaged in the business of dealing with the monetary transactions of individual and commercial clients

checking account

secure means of storing money in which individuals or business can deposit or withdraw money as needed

savings account

secure means of storing money while earning interest

interest

fee paid regularly at a set rate

personal loan

money borrowed for personal reasons, to be repaid within a specific time frame and with added interest

business loan

money borrowed for business reasons, to be repaid within a specific time frame and with added interest

mortgage loan

money borrowed for the purchase of real estate, to be repaid within a specific time frame and with added interest

auto loan

money borrowed for the purchase of a vehicle, to be repaid within a specific time frame and with added interest

home equity loan

allows an individual to borrow against their home’s value to finance major expenses, to be repaid within a specific time and with added interest

debit card

form of payment in which customers draw money directly from their checking account

credit card

form of payment in which customers borrow money from a financial institution up to a certain limit, with added interest

trust account

allows banks to manage and protect an account on behalf of a beneficiary

beneficiary

individual who holds legal control of the assets in a trust account

electronic funds transfer

electronic movement of money from one account to another

automated teller machine

electronic banking terminal which allows customers to complete basic transactions, such as deposits or withdrawals

direct deposits

allows individuals to have their paycheck or other payments deposited directly into their account

online banking

electronic banking systems allowing customers to conduct financial transactions via the internet

overdraft protection

line of credit issued to customers to cover checks or debit exceeding the amount in their account

electronic checks

form of online payment where money is electronically withdrawn from the customer’s account

pay-by-phone system

allows customers to pay bills or transfer money between accounts over the phone

depository financial institutions

organizations which accept deposits and provide loans

commercial banks

receive, transfer, and lend money to individuals, businesses, and government

retail banks

provide financial services, such as checking and savings accounts, mortgages, credit cards, and auto loans for individuals, families, and small businesses

credit unions

offer financial services such as checking and savings accounts, debit and credit cards, mortgage and auto loans, and lines of credit at an affordable rate for its members

savings and loan associations

handle deposit accounts, personal loans, and mortgage lending

non-depository financial institutions

do not offer federally insured deposit accounts

investment banks and companies

private organizations which hold and manage securities for investment purposes

securities

financial investments with ownership rights, debt rights, or rights to buy, sell, or trade, such as stocks and bonds

brokerage firms

assist individuals in buying and selling securities among investors

insurance companies

provide financial coverage to protect individuals or organizations against possible adverse events in exchange for premium payments

premium

amount paid for an insurance policy

mortgage company

provides loans for prospective home buyers

multifactor authentication

requiring more than one method of credential authentication to verify a user’s identity

business continuity

continued actions of a business

fraud

wrongful or criminal deception used for financial gain

phishing

sending forged emails impersonating an online bank

equity

value of an owner’s share in a property, value minus debt

mortgage

loan to finance the purchase of real estate

inflation

increase in price levels and reduction in the value of money

debt-to-income ratio

percentage of a person’s income which goes toward paying debts, one way lenders measure an individual’s ability to borrow

credit history

record of how an individual has repaid debts in the past, used as a guide to measure the individual’s ability to borrow

interest

fee charged by a lender for the use of borrowed money, expressed as a percentage of the amount borrowed

pre-approval

written proof a lender is willing and ready to lend an individual a specific amount of money for a mortgage based on verified income and assets

real estate agent

person who is licensed to negotiate and arrange real estate sales

offer to purchase

detailed written document which, once signed by both parties, becomes a legally binding contract

contingency

provision stating fulfillment of a contract depends on certain conditions

closing

process during which the title to the property is transferred to the buyer, also known as settlement

taxes

percentage based fee charged by the government on products, income, or activities

direct tax

levied directly of personal or corporate income

indirect tax

levied on the price of a good

income tax

paid based on taxable income

tax brackets

divisions at which tax rates increase or decrease in a progressive tax system

sales tax

listed as a certain percentage of an item’s cost

property tax

collected from the owners of buildings, land and other taxable property, a set percentage of the estimated property value

tax deductions

expense an individual is allowed to subtract from gross income to arrive at taxable income

tax credits

decrease the tax per unit of income

tax exemptions

portions of a person’s income which is not subject to tax

taxable income

portion of income which is subject to being taxed

gross income

amount of a person’s or company’s income prior to deductions