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consumer
anyone who uses a good or service
personal finance
the way you plan to spend or save your income
budget
a consumer’s plan showing the sources and uses of income
comparison shopping
the act of reviewing products and prices charged by different businesses for similar products before making a purchase
rational consumer choice
a decision to buy or not buy a product so that your utility, or satisfaction, per dollar spent is maximized
consumer loan
borrowing money to be repaid in regular installments over time, such as a car loan
consumer sales credit
amounts charged to an account that involves variable payments over time, such as a credit card
secured loan
loan for which property is pledged to back its repayment, such as a home mortgage
unsecured loan
loan for which no specific property is pledged by the borrower that can be used to satisfy the debt if payments are not made, such as credit card debt
creditworthiness
the measure of your dependability to repay a loan
character
a measure of your financial responsibility
capacity
a measure of a consumer’s ability to repay a debt on time
capital
a measure of the value of things that a consumer owns that could be sold or cashed in to repay a loan
credit history
a person’s record of paying bills and debts over time
credit rating
the measure of a person’s creditworthiness
credit scoring
a system that assigns a number, or score, to each consumer indicating whether this person is a good or bad credit risk
Food and Drug Administration (FDA)
federal agency that sets standards for foods and drugs produced or sold in the United States
Federal Trade Commission (FTC)
government agency that tries to ensure that businesses compete and market their products fairly and honestly
cease and desist order
FTC-issued directive to stop a firm from making a false or misleading advertising claim
Consumer Product Safety Commission (CPSC)
federal agency created to protect consumers from dangerous products they might purchase or use
Environmental Protection Agency (EPA)
federal agency that interprets and enforces laws passed by Congress that involve the environment
identity theft
crime in which one person fraudulently uses another’s identity to obtain credit or to access financial accounts
saving
the act of choosing not to spend current income
return
income earned from funds that are not spent
compound interest
computed on the amount saved plus the interest previously earned
annual percentage yield (APY)
formula banks must use to calculate interest they pay on deposits
certificate of deposit (CD)
savings instrument with fixed interest rate and fixed maturity date
money market accounts
bank accounts that allow depositors a limited number of transactions per month; interest is slightly higher than on a savings account but can vary from day to day
investing
using your savings in a way that earns a return
corporate stock
shares of ownership in a corporation
diversification
investing in a wide variety of firms
mutual fund
a financial organization that accepts funds from many people and invests them in a variety of stocks
corporate bonds
loan that entitles an investor to be repaid at the specified date and receive interest until that date
financial planner
expert who gives investment advice for a fee
insurance
protection you purchase against losses beyond your ability to withstand
policy
legal contract between an insured person and an insurance company
property insurance
protects policyholders from losses to their property
deductible
the amount that an insured person must pay before the insurance company pays anything
liability insurance
protects against losses from other injuries you cause to another person or damage you cause to another’s property
personal insurance
protects against financial loss from injury, illness, or unexpected death of the insured person
Note 
Flashcard (201)