Finance Exam #2

APY stands for?

Annual Percentage Yield, which measures the total amount of interest earned on an investment or deposit over a year, taking into account compounding.

CD stands for?

Certificate of Deposit, a financial product that involves depositing money for a fixed term to earn interest, typically at a higher rate than a regular savings account. Penalized if money is accessed early. Range is 6-months to 36-months.

What is the difference between consumer credit and commerical credit?

Consumer credit is typically used by individuals for personal expenses such as purchasing goods or services, while commercial credit is used by businesses to finance operational expenses, inventory, and investments.

What is the range of the FICO score

300-850, represents how risky you are. Evaluates length of credit history, payment history, amounts owed, etc.

APR stands for?

Annual Percentage Rate, which represents the yearly interest rate charged on borrowed money or earned through an investment.

Advantages and disadvantages renting properties.

Advantages:

• Mobility

• Fewer responsibilities

• Lower Initial Costs

Disadvantages:

• No tax advantages

• Restricted lifestyle

• Lease or rental agreement terms

Advantages and disadvantages of buying properties.

Advantages:

• Tax Benefits

• Equity Build

• Can make greater changes to the property

Disadvantages:

• Financial Commitment

• Limited Mobility

• Maintenance Costs

• Property Taxes

What are some different financial service providers including high cost providers?

Commercial banks, credit unions, life insurance companies, investments companies, etc.

High cost: pawnshops, check-cashing outlets, payday loans, cat title loans.

What is the max amount of deposit insurance provided by FDIC and NCUA?

$250,000

What are the five C’s of Credit?

Character, Capactiy, Captial, Collateral, Conditions

What is the main reason why people don’t pay back what they borrow?

What factors and influences involved with buying activities?

Economic Factors: Interest rates and inflation

Social Factors: Lifestyle, Interests, Culture

Personal Factors: Gender, Age, Income, Family Size, etc.

What does PITI stand for?

Principal, Interest, Taxes, and Insurance