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INTFL > Exam #1 > Flashcards

Exam #1 Flashcards

(50 cards)

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1
Q

A goal is …

A

An end that one tries to attain

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2
Q

Types of goals are …
1.
2.
3.
4.
5.
6.

A

Short-term, intermediate, long-range, societal, family, personal

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3
Q

Objectives are …

A

Subsets of goals

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4
Q

Short-term goals are …

A

Generally accomplished in several months

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5
Q

Intermediate goals are …

A

Less than one year to complete

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6
Q

Long-term goals are …

A

One or more years to complete

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7
Q

What is the best articulated goal?
A. Get completely out of debt in 2 years
B. Retire comfortably at age 60
C. Save $8,000 for a vacation to Europe in 5 years

A

C.

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8
Q

Compound Interest Equation:
M = P ( 1 + i ) ^ n
M =
P =
i =
n =

A

Final amount (including principal), principal amount, interest rate per year, number of years invested.

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9
Q

Qualities of a ______
1. Not for profit,
member owned,
charters
2. National Credit
Union
Administration
3. Usually pay higher
interest rates,
lower fees

A

Credit union

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10
Q

Qualities of a ______
1. For profit, owned by
stockbrokers
2. Federal Deposit Insurance
Corporation

A

Bank

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11
Q

Qualities of a ______
1. Advantages – higher interest
2. Downside – no physical
location; ATM fees could be
high

A

Internet only bank

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12
Q

Regulatory Agencies:
1. _______ = Federal Deposit Insurance Corporation
2. _______= National Credit Union Administration

A

Banks, Credit Unions

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13
Q

________ : a measure of the ability of a company to pay off its short-term liabilities.

A

Liquidity Ratio

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14
Q

________ : all your monthly debt payments divided by your gross monthly income.

A

Debt-to-Income
Ratio

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15
Q

_________: Documents financial
transactions

A

Financial records

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16
Q

Examples of assets are …
1.
2.
3.

A

A car, a house, valuables

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17
Q

Examples of liabilities or debts are …
1.
2.
3.

A

Mortgage, loans, credit card debt

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18
Q

Examples of income are …
1.
2.
3.

A

Salary, investments, allowance

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19
Q

Examples of expenses are …
1.
2.
3.

A

Utility bill, insurance, groceries

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20
Q

A _______, or spending plan, is necessary for
successful financial planning.

A

Budget

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21
Q

________ is the difference between the amount budgeted and the actual amount received.

Study These Flashcards
A

Budget variance

22
Q

__________ are …
1. Usually paid in the same amount each time period, often contractual
2. Scheduled payments
3. Difficult to reduce
4. Must be paid

Study These Flashcards
A

Fixed expenses

23
Q

__________ are …
1. Controllable expenses that usually occur in the short run
2. Individual has considerable control

Study These Flashcards
A

Variable expenses

24
Q

An ______ is …
1. Monetary (cash, checking/savings account)
2. Tangible (furniture, car, computer, etc.)
3. Investment (stocks, real estate, retirement)

25
A ______ is ... Short term (less than 1 yr) vs Long Term (over a yr)
Liability
26
_______: goods and services exchanged with the promise to repay at a later date
Credit
27
________ – what is loaned ________ – what you pay
Principle, interest
28
__________: 1. Easy & convenient 2. Emergencies 3. Owning/using products or services while paying for it 4. Obtaining expensive products or services (education, home) 5. Special offers & bonuses 6. Establishing credit history
Good uses of credit
29
__________: 1. Can reduce financial flexibility 2. Ties up future income 3. Tempting to overspend and spend impulsively 4. Interest (APR) 5. Finance charges and fees 6. Identity Theft
Downside of Credit
30
(5 C’s of Credit) __________ refers to the borrower’s attitude towards his or her credit obligations.
Character
31
(5 C’s of Credit) _________ is the borrower’s ability to pay additional debts.
Capacity
32
(5 C’s of Credit) _________ is the borrower’s assets or net worth.
Capital
33
(5 C’s of Credit) _________ is a valuable asset that is pledged to ensure loan payments.
Collateral
34
(5 C’s of Credit) _________ affect a borrower’s ability to repay a loan.
Conditions
35
(Forms of Credit) _____________: 1. Credit extended in advance 2. Borrow up to your limit
Open-ended (revolving credit)
36
(Forms of Credit) _____________: 1. Repay amount plus interest 2. Number of equal payments
Closed-ended (installment credit)
37
(Forms of Credit) _____________: 1. Secured by collateral 2. If delinquent, asset is taken
Secured
38
(Forms of Credit) _____________: 1. No collateral 2. If delinquent, may go to court
Unsecured
39
_________: Open-ended and unsecured loan; can carry a balance
Credit card
40
_________: Funds come directly from your checking account (NOT a loan)
Debit card
41
___________ - interest 1. Calculated the same way- best to use for comparison
Annual Percentage Rate (APR)
42
___________ - yearly charge (not all cards)
Annual fee
43
___________ - max amount of credit extended
Credit limit
44
___________ - charge to set up loan (home loans)
Origination fee
45
____________ - length of time you have to pay loan
Loan term
46
____________ - time you have before you start accumulating interest
Grace period
47
APR/365 days in a year = ________
Daily rate
48
Total Billing Amt/days in cycle = _________
Avg daily balance
49
___________: 1. Prioritizes your smallest debts first, regardless of interest rate. 2. List of all of your debts, smallest to largest. 3. Pay the minimum balance on each one, except the smallest. For that one, dedicate as much cash as possible each month until it is repaid. Then move on to the second-smallest debt.
Snowball method
50
___________: 1. Organize debt by interest rate 2. High to low 3. Pay less in interest and pay debts off quicker
Avalanche method

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