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INTFL > Exam #1 > Flashcards

Exam #1 Flashcards

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.

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

A

Fixed expenses

23
Q

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

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)

A

Asset

25
Q

A ______ is …
Short term (less than 1 yr) vs Long Term (over a yr)

A

Liability

26
Q

_______: goods and services exchanged with the promise to repay at a later date

A

Credit

27
Q

________ – what is loaned
________ – what you pay

A

Principle, interest

28
Q

__________:
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

A

Good uses of credit

29
Q

__________:
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

A

Downside of Credit

30
Q

(5 C’s of Credit)
__________ refers to the borrower’s attitude towards his or her credit obligations.

A

Character

31
Q

(5 C’s of Credit)
_________ is the borrower’s ability to pay additional debts.

A

Capacity

32
Q

(5 C’s of Credit)
_________ is the borrower’s assets or net worth.

A

Capital

33
Q

(5 C’s of Credit)
_________ is a valuable asset that is pledged to ensure loan
payments.

A

Collateral

34
Q

(5 C’s of Credit)
_________ affect a borrower’s ability to repay a loan.

A

Conditions

35
Q

(Forms of Credit)
_____________:
1. Credit extended in advance
2. Borrow up to your limit

A

Open-ended (revolving credit)

36
Q

(Forms of Credit)
_____________:
1. Repay amount plus interest
2. Number of equal payments

A

Closed-ended (installment credit)

37
Q

(Forms of Credit)
_____________:
1. Secured by collateral
2. If delinquent, asset is
taken

A

Secured

38
Q

(Forms of Credit)
_____________:
1. No collateral
2. If delinquent, may go to
court

A

Unsecured

39
Q

_________: Open-ended and unsecured loan; can carry a balance

A

Credit card

40
Q

_________: Funds come directly from your checking account (NOT a loan)

A

Debit card

41
Q

___________ - interest
1. Calculated the same way-
best to use for comparison

A

Annual Percentage Rate
(APR)

42
Q

___________ - yearly charge (not all cards)

A

Annual fee

43
Q

___________ - max amount of credit extended

A

Credit limit

44
Q

___________ - charge to set up loan (home loans)

A

Origination fee

45
Q

____________ - length of time you have to pay loan

A

Loan term

46
Q

____________ - time you have before you start accumulating interest

A

Grace period

47
Q

APR/365 days in a year = ________

A

Daily rate

48
Q

Total Billing Amt/days in cycle = _________

A

Avg daily balance

49
Q

___________:
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.

A

Snowball method

50
Q

___________:
1. Organize debt by interest
rate
2. High to low
3. Pay less in interest and
pay debts off quicker

A

Avalanche method

INTFL (7 decks)

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