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econ > unit 1 > Flashcards

unit 1 Flashcards

1
Q

what is the first thing you should look at when getting a credit card? 

A

The annual percentage rate 

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2
Q

what is annual percentage rate? 

A

what percent you pay on outstanding debt 

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3
Q

how does having money in a savings account help the economy? 

A

it makes funds available to others 

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4
Q

what is the purpose of a mutual fund? 

A

they are professionally managed investment programs that diversify holdings 

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5
Q

What does it mean to have a portfolio that is diversified?

A

holdings in several different companies 

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6
Q

why are municipal bonds attractive to investors?

A

They are safer because governments can tax people 

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7
Q

What is the difference between a stockholder and a bondholder?

A

stockholders own part of a company while a bond holder is a creditor 

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8
Q

what has the best return on investment? 

A

individual stocks

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9
Q

what is the Dow Jones industrial average? 

A

it is the number one indicator of the stock market health 

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10
Q

what is not a liquid investment? 

A

Bonds are not liquid 

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11
Q

what advice would you give someone close to retirement in regard to the types of investments they should make

A

they should be less risky with investments

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12
Q

what is a real interest rate? 

A

this is your interest rate, after subtracting the rate of inflation 

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13
Q

what is the rule of 72? 

A

this finds how long it will take an investment to double. Divide 72 by interest rate. 

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14
Q

What is compounding?

A

interest on both initial principle and the accumulated interest 

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15
Q

what is an example of a risky investment and a low risk investment

A

collectibles are a high risk investment while bonds are low risk investment

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16
Q

what are the five components of a credit score? 

A

payment history, debt amounts, length of credit history, new credit inquiries, and credit mix 

17
Q

what is the most important component of a credit score? 

A

payment history 

18
Q

what is revolving credit? 

A

Credit cards 

19
Q

what is a FICO score? 

A

your individual credit history 

20
Q

what is credit utilization?

A

The amount of credit borrowed relative to the amount of credit available 

21
Q

what does pay yourself first mean? 

A

saving and investing for the future 

22
Q

what is dollar cost averaging?

A

an investment strategy of putting a consistent amount of money in on a regular basis, regardless of share price 

23
Q

what is not key when looking for a stock? 

A

how long it has been around for

24
Q

what is a dividend? 

A

money paid by a company to its shareholders 

25
Q

what is interest? 

A

The cost of borrowing money 

econ (4 decks)

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