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Unit 3 Flashcards

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1
Q

After-Tax Basis

A

The value of an asset after accounting for taxes already paid.

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2
Q

Agility Skill

A

The ability to adapt in a changing environment to achieve desired results.

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3
Q

Application Deposit

A

Used in case your application is accepted but you decide not to move in to your rented dwelling. If you are rejected by the landlord, you will receive this deposit back.

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4
Q

Appraisal Fee

A

Cost for a written document describing the value of property.

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5
Q

Asset Allocation

A

An approach in which you include different investments into one portfolio.

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6
Q

Bond

A

Represents a contractual loan to corporations and governments.

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7
Q

Brokerage Account

A

An account with an investment company into which you deposit money and then use that money to buy stock.

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8
Q

Business Risk

A

The possibility that a company in which you invest will be forced to close.

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9
Q

Cash Account

A

The most common and requires you to pay, in advance, for all securities purchased.

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10
Q

Cash Advance

A

Service provided by credit card companies that allows cardholders to withdraw cash.

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11
Q

Certificate of Deposit

A

A savings product that is generally purchased with one lump-sum dollar amount.

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12
Q

Closing

A

The last step in the home-buying process is closing the deal, commonly referred to as settlement.

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13
Q

Closing Costs

A

All fees and related expenses associated with the purchase of a home, including mortgage origination fees, points, legal costs, taxes, transfer fees, and other expenses.

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14
Q

Commercial Real Estate

A

Land and buildings used by businesses and other income-producing activities (e.g., office buildings, hotels, apartment buildings, warehouses, malls, and factories).

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15
Q

Coupon Payment

A

The dollar amount of interest that the bond issuer will pay the bondholder.

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16
Q

Coupon Rate

A

The contractual interest rate that the bond issuer has agreed to pay the bondholder.

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17
Q

Dedicated Savings Account

A

A popular variation of a traditional certificate of deposit.

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18
Q

Deposit Advance

A

A short-term loan that is automatically repaid when the next qualifying electronic deposit is made (such as the next paycheck).

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19
Q

Depreciation

A

A term used to describe the decline in value of a used asset.

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20
Q

Direct Consolidation Loan

A

Allows students to consolidate all of their federal student loans into one easy-to-manage loan.

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21
Q

Direct PLUS Loan

A

Federal student loans available to graduate and professional students. Direct PLUS loans are also available to parents of undergraduate students to help pay for education expenses in excess of the capped amounts available through the other federal student loan programs. Interest on the loan is added to the loan balance, or students can pay the interest only, until they are no longer attending school and payments begin. Students do not need to show financial need.

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22
Q

Direct Subsidized Loan

A

Federal student loans made to undergraduate students who demonstrate a financial need. As long as the student is enrolled in school for more than half-time, interest on these loans is paid by the federal government, making these loans the best value if you have to borrow.

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23
Q

Direct Unsubsidized Loan

A

Federal student loans made to undergraduate, graduate, and professional students. Interest on these loans is added to the loan balance until payments begin—which is usually 6 months after graduation. The annual amount a student can borrow is capped. Students do not need to show a financial need.

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24
Q

Discounted Dividend Valuation Model

A

A calculation to determine if a stock is fairly priced.

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25
Diversification
To spread your investments across different types of assets as a way to manage financial risk.
26
Effective Interest Rate
The amount of interest actually earned on an investment.
27
Emergency Fund
Holds money that is specifically set aside, in an easily accessible account, for the purpose of being available to address unexpected financial needs.
28
Emergency Fund Ratio
Indicates whether you have sufficient resources in case of an emergency, such as losing your job or becoming seriously ill.
29
Equity
The value of the asset less any debt associated with that asset.
30
Face Value
The amount of money a bond issuer (the borrowing corporation or government) will pay to the bondholder (the investor lending the money) on the maturity date.
31
Foreclosure
The process of a mortgage lender taking possession of a house and any equity in the house because a borrower did not meet payment obligations under the loan agreement.
32
Good Faith Estimate
A document that details the following information: loan type
33
Grace Period
The amount of time allowed to pay a bill without incurring interest or penalties.
34
Guarantor
Someone, like a parent or relative, who agrees to pay your rent in case you fail to make rental payments.
35
Index Fund
Passively managed mutual funds.
36
Inflation
The average annual increase in prices from year to year.
37
Inflation Risk
The danger that rising prices in the economy will erode purchasing power. Also called purchasing power risk.
38
Installment Loan
The borrower receives the full amount of the loan upfront in a single lump sum. These loans are designed to be repaid over a fixed period of time through regular payments and consist of two general types: fixed installment loans and variable installment loans.
39
Interest Rate Risk
The chance that general interest rates will increase, which will reduce the value of most investments.
40
Investment
An asset that you purchase to reach long-term goals.
41
Investment Portfolio
Individual stocks that collectively represent the total investment assets of an individual or entity.
42
Junk Bond
A bond with a rating lower than BBB, which is an indication that the firm or government may have trouble making interest payments in the future
43
Lease
A financial agreement between you and the dealership where you agree to pay a certain price for the right to drive the car for a set period of time.
44
Limit Order
Tells the brokerage firm to only buy (or sell) at a specific price or better.
45
Liquidity
How quickly you can convert an asset into cash.
46
Liquidity Risk
Occurs when you cannot sell something you own because of a weak market, meaning others aren’t willing to buy what you are selling.
47
Loan Origination Fees
An expense paid to a lender for providing a loan.
48
Loan Points
A fee paid to reduce a mortgage interest rate
49
Margin Account
A type of brokerage account that allows an investor to purchase investments with borrowed money.
50
Market Capitalization
The price of a stock multiplied by the total number of shares in the marketplace.
51
Market Index
An unmanaged grouping of stocks that has been identified as representative of some aspect of the economy or stock or bond market.
52
Market Order
Instructs a brokerage firm to buy (or sell) at the current market value; the fastest way to transact trades in an account.
53
Maturity Date
The length of the loan contract for a bond, which could be a few months, years, or several decades into the future.
54
Money Market Savings Account (MMSA)
Combines the benefits offered by savings and checking accounts, including FDIC and NCUSIF insurance protection up to $250,000 for individuals.
55
Mortgage
A special type of loan that is secured by real property—land and all improvements on a piece of land, including a personal residence.
56
Mutual Fund
Investments that pool individual investors’ money for the purpose of hiring a professional investment manager to make investment decisions and providing sufficient investment capital to purchase a large investment portfolio, thereby reducing some investment-related risk.
57
Owner
Entitled by law to share in the profits of the firm.
58
P/E Ratio
A stock valuation tool that is calculated by dividing a stock’s price per share (P) by the earnings per share (E).
59
Payday Loan
A short-term loan designed to be repaid within a few weeks when the borrower receives a paycheck.
60
Peer-to-Peer (P2P) Lending
Allows a borrower and lender to come together via the Internet. Popular P2P lending platforms include LendingClub, Peerform, and Prosper.
61
Personal Line of Credit
A loan issued by a bank that is accessed by a customer via a debit card or check
62
Personal Loan
Typically a small-dollar debt that can be used to pay bills or make purchases.
63
Pet Deposit
A separate fee imposed by a rental agreement that is intended to offset damages caused by animals living in the rental property.
64
Portfolio
A grouping of investments, generally from a number of asset categories, into one place: a retirement plan, a brokerage account, or a mixture of mutual funds or exchange traded funds.
65
Pre-Tax Basis
Contributions to savings accounts that lower taxable income
66
Preapproved
The lender has verified your credit, income, and other important facts and has indicated how much you are able to borrow for the purchase of a house.
67
Problem Solving Skill
The ability to define problems clearly, explore ideas, and create effective, ethical, and evidence-based solutions.
68
Productivity Skill
The ability to strategize, organize, and plan to best manage your priorities and time.
69
Qualifying Distribution (from a Roth IRA)
A dispersal from a Roth IRA after an account holder is 59½ years of age or older and the Roth IRA account has been open for at least 5 years.
70
Real Estate
Refers to land, buildings, and other structures permanently attached to the land.
71
Real Estate Investment Trust (REIT)
An investment that provides a way to add real estate to your investment portfolio at a relatively low cost.
72
Reletting Fee
A fee required by the landlord to cover the cost of renting the apartment again before the lease termination.
73
Renter’s Insurance (sometimes called ­Tenant’s Insurance)
Similar to a homeowners ­policy except that it is designed to provide you with property replacement and liability coverage rather than insurance to replace your residence.
74
Residential Real Estate
Includes dwellings that are individually owned and where people live (e.g., houses, condominiums, and duplexes).
75
Roth IRA
An individual retirement savings account that has two significant advantages: Investments held in the account accumulate earnings on a tax-deferred basis and money pulled from the account is tax-free if certain conditions are met.
76
Rule of 72
Provides an estimate of how long it will take you to double your money, calculated by dividing 72 by the interest rate.
77
Sales Load
A one-time commission paid to an investment salesperson either when a mutual fund is purchased or sold.
78
Savings
Money you put aside for short-term goals.
79
Savings Account
An interest-bearing asset that allows you, as the account owner, to earn a small return on your deposit.
80
Secured Loan
A loan that is backed by collateral.
81
Security Deposit
Money paid in advance to cover the cost of excess damage you might cause while living in the house or apartment.
82
Short Sale
The process whereby a lender takes back the home and forgives any amount owed. The amount forgiven is usually considered taxable income.
83
Stock
Represents your degree of ownership in a company. Also referred to as shares or equity.
84
Stock Exchange
Organized markets where buyers and sellers conduct stock transactions, sometimes in person but mostly electronically.
85
Stock Market
Where you can buy certain stocks (known as publicly traded stocks)
86
Stockbroker
Registered representatives, or account managers. Also known as investment representatives.
87
Stop Order
Directs the brokerage firm to buy (or sell) only when the price falls below a set point. Sometimes known as a stop-loss order.
88
Tax-Deferred Earnings
There is no tax assessed on the earnings in the account in the year that the earnings are received.
89
Technology Skill
The ability to confidently and efficiently use technologies to complete goals and tasks and maintain a competitive advantage.
90
Title Insurance
Insurance that protects either the lender or the borrower in case someone says they have a claim on the property after you’ve purchased it.
91
Traditional IRA
An investment account that allows someone to save for retirement on a tax-deferred basis
92
Underwater
The state of owing more on a mortgage than the current fair market value of a house, generally a short-term problem.
93
Underwriter
A firm such as an investment bank that helps other companies raise money
94
Unsecured Loan
Sometimes called signature loans because there is no collateral involved in the lending process.
95
Use Asset
Things that people purchase with the primary intent to use and maintain their current lifestyle (e.g., clothing, furniture, and electronics).
96
Value
The combination of the price paid and the quality of the item purchased.
97
Volatility
The value of an asset fluctuating up and down or the variability of returns over time.

Personal Finance (4 decks)

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