W!SE exam review

Bounced check

a check written for an amount more than in your account

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. It certifies that you have the money available.

credit union

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

Commercial Bank

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

Money Order

A form of check payment on which the financial institution prints the exact amount covered. Often used by people who do not have a checking account.

Reconcile

Make your bank records compatible with your bank statements.

safe deposit box

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

Brokerage

a firm that provides you access to the stock markets

U.S. Savings Bond

Obtainable through the U.S. government. Purchased at one-half the face value and will mature to full face value over a specified period of time. FDIC insured, moderate liquidity, moderate rate of return.

3 C's of Credit

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

APR

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

Chapter 7

The chapter of the Bankruptcy Code providing for "liquidation" (i.e., the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors).

chapter 11

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

Consumer Credit Counseling Services

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

collateral

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

FICO score

A credit rating developed by Fair Isaac & Company in the late 1950s, now widely used by lenders and employers. It consists of digit numbers ranging from 300-850.

credit reporting agencies

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

finance charge

is the total dollar amount you pay to use credit.

default

failure to pay back a loan

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.

payday loans

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

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.

installment credit

a type of closed credit where the loan is repaid with interest in equal periodic payments. Example: car loan, mortgage

truth in lending

Credit legislation that is federal they have to tell you the truth about their lending. Have to tell the whole truth in lending practices.

Repossession

taking away property due to failure to repay the debt

predatory lending

take advantage of ill-informed consumers through excessively high fees

Principal

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

Collateralized Loan

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

Barter

exchange goods without involving money

Garnishment

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

gross pay

the total amount you earn before any deductions are subtracted

net pay

the amount of a paycheck after the deductions are taken out

Inflation

a general increase in prices

FICA

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

Windfall Income

any type of additional income over expenses that is completely unexpected

compound interest

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

simple interest

interest paid on the principal alone

rule of 72

A quick way to figure out how long it will take to double your money at a given return rate . Interest rate divided by 72.

time value of money

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

scarcity

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

Deductible

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

Beneficiary

n. person entitled to benefits or proceeds of an insurance policy or will

Cash Value

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

Claim

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

Death Benefit

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

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.

Homeowners Insurance

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

Insurance

protection against financial loss

Risk

The possibility of a financial loss

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.

Term Insurance

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

Renters Insurance

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

Rider

an add-on to an insurance policy

Floater

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

Bull Market

a period of rising stock prices

Bear Market

a stock market with declining stock prices

Bond

an IOU issued by a corporation or government that confirms you are lending the corporation or government money. Bonds pay interest regularly to lenders. At the end of the term of the bond, the borrower returns to the lender the face value of the bond (the amount the lender invested in the bond).

Capital Gain

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

diversification

spreading out investments to reduce risks

dividend

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

Dow Jones

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

liquidity

ease with which an asset can be converted into cash

Mutual Fund

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

NASDAQ

America's largest electronic stock market. Many technology stocks such as Apple, Microsoft and Yahoo are traded on this stock exchange

S & P 500

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

Securities

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

Stock

Share of Ownership in a Corporation

Treasury Bill

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

Treasury Note

a government bond that is repaid within two to ten years

Return on Invesment (ROI)

ratio of money gained or earned on an investment

Budget

a plan for making and spending money

Deficit

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

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

Fixed Expense

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

Opportunity Cost

What you give up when you make one choice over another

Pay Yourself First

A GOLDEN RULE of personal finance. Put a portion of your paycheck into savings/investments before any other spending.

Variable Expense

an expense that changes from month to month

Need

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

Want

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

FDIC Federal Deposit Insurance Corp.

Insures your bank deposits up to $250,000

IRS Internal Revenue Service

Federal Tax Collectors

Federal Reserve Bank

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

SEC Securities and Exchange Commission

Makes and Enforces rules for the stock market

US Mint

Make US coins

US Bureau of Engraving and Printing

Make "paper" money

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

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.

Beneficiary

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

Benefit Period

period of time for which benefits are available.

Claim

an established or recognized right

comparison shopping

comparing products and prices in different stores before making a purchase

co-pay

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

deductible

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

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

face value

Amount of principal due at the maturity date of the bond

homeowners insurance

"A combination of both property and casualty coverages arising out of the ownership of a home. Coverage includes damage to the home, its contents, additional living expenses, and for the insured's personal liability. "

insurance

promise of reimbursement in the case of loss

comprehensive insurance

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

insurance benefit

Advantage, privilege, right, or financial reimbursement

insured

a person whose interests are protected by an insurance policy