W!SE Exam Review

Collateral

security given for loan, assets to secure the debt

Capacity

your ability to repay the debt. Do you have sufficient $money to repay a loan

Capital

"net worth". wealth in the form of money or property owned by a person

Character

good reputation, Integrity

Credit history

a summary of a person's borrowing and repayment history

50 dollars

In the event that your credit card is stolen in the United States, federal law limits the liability of card holders to \____ regardless of the amount charged on the card by the unauthorized user.

zero liability "Owes nothing"

if just the credit card account number itself is stolen, federal law guarantees that the card holder has a\___________to the issuer.

EFT

electronic funds transfer; exchange of money by sending bank records via a computer network

FDIC

the federal government protects your money up to $250,000 in a single account

Department store charge cards.

Which of the following is considered to be open-end credit?

Notify the credit card companies

A person has three credit cards with very large outstanding balances and is unable to make payments on any of them. Which action should the person take

10 years

When a person declares bankruptcy that fact will appear on the person?s credit report

A personal loan without assets to cover the loan amount

What is meant by an uncollateralized loan?

a collateralized loan

When a person brings an item to a pawnshop to obtain cash, the transaction is considered

Monetary policy

Which of the following does the Federal Reserve use to regulate the nation's money supply?

Salaries, wages, and tips

The primary sources of income for most people between the ages of 20 and 35 who are not living on a pension or social security are:

better off financially the person is.

A person's debt ratio shows the relationship between debt and net worth. The lower the ratio the

Exercise Tax

A person complains about how expensive it is to be a cigarette smoker. One of the reasons cigarettes are so expensive is that

budget variance

the difference between the budgeted amount and the actual amount that you spend

budget variance

A man budgeted $200 a month for clothing. This month the man spent $150 on clothing therefore that budget item is considered to have

capital gains on the investment will be taxed at a lower rate.

One of the benefits of holding an investment for over a year rather than selling it in less than a year is that the

Federal Reserve System

New coins and currency make their way into the general economy, consumers and businesses, through the distribution system of the:

A: tax and penalty free.

After five years of owning a Roth Individual Retirement Account (IRA), a person wants to buy his first home, the person can withdraw money from the Roth IRA

80 shares of the stock and the price of each share is $40.

An investor bought 40 shares of ABC corporation's stock at $80 a share. Two weeks later, the investor receives notice that the corporation has approved a 2-for-1 stock split. Based on this information, the investor would own at the moment of the split

exempt from state and local taxes.

The interest earned on United States Series EE Savings Bonds is

a secure, low risk investment.

Buying a treasury bill (T-bill) is best for investors who are looking for

Securities

A pharmacy is to drugs as the American Stock Exchange is to:

dividend reinvestment

using dividends previously earned on the stock to buy more shares

the rate of inflation.

To determine the time value of depositing $100 in a savings account, a person needs to know the interest rate and

A long-term, fixed rate certificate of deposit

Lamar believes that interest rates are going to fall in the near future ,She should invest in:

Compounded interest

Interest earned on interest is known as:

Truth in Lending Act

Which of the following is the federal law that requires the cost of credit be disclosed

The time value of money

Money received today is worth more than the same amount of money received sometime in the future is:

includes the premiums paid as well as the interest

The person decides to surrender the policy. At the time of surrender, the person will receive

reconciling a checking account

If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the, The act of checking all transactions on your bank statement with your check registry to make sure everything adds up to the same amount.

Certificate of Deposit

Savings instrument that requires a deposit for a period of time during which there is a penalty for withdrawals

Savings and loans

Financial services and products generally offered by banks and credit unions include:

Cashiers check

a check bought from a bank with payment guaranteed by the bank

Money Order

a type of check used to pay bills or make payments for which the money is guarenteed

checking account

Paper checks or debit cards are used to withdraw money deposited into the account to pay for items

checks

Legal documents that function like cash

ATM

Automated Teller Machine that is electronically connected to an individual's bank account

PIN

Personal Identification Number used with debit cards

blank endorsement

anyone can cash the check after the check has been signed

restrictive endorsement

more secure than a blank endoresement because the receiver of the check identifies what is to be done to the check - deposit only

special endorsement

the check can be transferred to another person after the receiver signs the back and writes who is to get ownership of the check

ATM Card

a magnetic card used in an \____ machine to deposit or withdraw money.

Auto Loan

A loan that is issued for the purpose of buying a car.

Automatic Teller Machine

Machine, which allows a person to make a deposit or withdrawal from their account without having to go to the bank.

Balance

The amount of money remaining in a bank account.

Commercial Loan

A loan made to a business for the purpose of buying a business, making improvements to an existing one, or providing money for the business to use.

Mortgage Loan

A loan that is used to buy real estate property, usually a house.

Student Loan

A loan made to a \_____for payment of tuition or cost of living expenses while in school.

Commercial Bank

a financial institution that accepts demand deposits and makes loans and provides other services for the public

Credit Union

Money deposited is usually loaned only to members. Membership usually consists of people in a given job, trade, industry or other related group,

Currency Exchange or Check Cashing Stores

Cashes checks for a fee (generally a percentage of the check).

Balance a Checkbook

when the amount of money in the checking account is the same as the bank's records.

Bouncing a Check

Writing a check from an account for more money than is currently in the account, and the bank returns it to the place where it was cashed.

Credit

Money, which is loaned, most often for a fee, and must be paid back.

Credit Card

A card that allows the holder to purchase an item or service immediately but pay for it later.

Credit Limit

Maximum amount able charge at one time with a particular credit card.

Check Register

Book in which to record the amount of all checks written and to whom they were given.

Interest

Fee for borrowing money.

Bodily Injury

Covers medical, lost wages, etc. to people injured in the other car if you are at fault.

Property Damage

Covers cost of damage to the other people's property if you are at fault.

Uninsured

Covers bodily injuries to you when hit by a person not insured.

Underinsured

Covers bodily injuries to you when hit by a person who does not have enough insurance.

Medical

Covers medical expenses for you.

Collision

Covers damages to the policyholder's car if they are at fault.

Depreciation

Amount the car has decreased in value because of age and use.

Medicare

A health care plan that is supported by fed and state gvt. for people age 65 and older.

Medicaid

A health care plan that is supported by the fed and state gvt. for low income families.

Coinsurance

Sharing of costs between a health insurance company and the policyholder.

Real property

Buildings and other structures.

Personal property

Appliances, furniture, clothing, and other belongings.

Rider

An addition to a policy that covers specific items.

Homeowner's policy

Insurance that combines the major types of property insurance into one package.

Beneficiary

A survivor who receives all or part of the money from a life insurance policy.

Claim

Request for payment due to financial loss.

Liability

Legal responsibility to pay if a person causes an accident or harm to someone.

Deductible

The amount the policyholder must pay for expenses before the insurance company pays anything.

Premium

Amount of money that the policyholder has to pay the insurance company for protection.

Worker's compensation

State funded protection for employees injured on the job.

invest

to put money to work earning interest over time

liquidity

how easily an asset can be converted into cash

volatility

how easily the interest or cash value of an investment can change

risk

the possibility of earning or losing money from an investment

savings account

an account in a bank/financial institution for saving, making deposits/withdrawals

money market

a savings account in which deposits are invested to yield additional earnings

CD

a certificate of deposit stating money has been deposited for a specific time

savings bond

a debt certificate issued by the U.S. Treasury that is not transferable

stock

a share of ownership and interest in the assets and earnings of a company

common stock

stock in a public corporation; returns vary, but higher risk

preferred stock

stock with fixed dividends, less risk

blue chip stock

stock from large companies, less risk

growth stock

stock from growing companies, more risk

penny stock

stock that costs less than $1 per share; extremely high risk

bond

a certificate of debt given by a company or government that entitles the bondholder to the original amount plus interest paid by a set date

mutual fund

a group of investments held in common with shares owned by individual investors

Dow

Index of 30 largest, most traded stocks public companies