Personal Finance WISE Test

Inflation the rise in the level of prices for goods and services
Time Value of Money the increase of an amount of money due to earned interest or dividends
Balance Sheet statement that identifies the items you own, what you owe, and your net worth
Paying Yourself First the concept of setting aside a portion of your income for savings before spending any of it
Commission a fee charged by a brokerage firm or investment bank to buy or sell securities of an investor
Potential Earning Power the amount of money you may earn over time
Finance Charge the total dollar amount of interest you pay to use credit
Compounding the process of earning interest on both the principal and any prior interest earned in your account
Medicare is a government sponsored health care coverage for the elderly
Credit Limit The maximum dollar amount of money the creditor will make available to you on your credit card
Medicaid is a government sponsored health care plan for people with low income
Grace Period the amount of time a credit card company provides before you incur finance charges
Liquidity the ability to easily convert your financial resources into cash without loss of value
Annual Percentage Yield term for the amount of interest that a $100 deposit would earn after compounding for one year (as defined by law)
401(k) sets aside a portion of your pay, plus (usually) an employer match.
Economics The study of the decisions that go into making, distributing and using goods and services.
Dealer Invoice Price Price the car dealer paid to purchase the car from the manufacturer.
Opportunity Cost A trade-off or what you are giving up when you make one choice over another.
Diversification A strategy of investing in a broad range and number of companies in order to limit the potential investment risk.
Deductible Is the amount of loss you pay out-of-pocket before the insurance company pays their portion.
Networking A way of making and using contacts to get job information and advice.
Standard of Living The measure of quality of life based on the amounts and kinds of goods and services a person can buy.
Pension A retirement plan that is funded, at least in part, by an employer.
Net Worth Difference between what you own and what you owe.
Diversification & Professional Management Advantages of a mutual fund.
Small Cap Stock A company with a market capitalization of $1 billion.
Budget Variance Difference between the budgeted amount and the actual amount spent.
Revolver The term banks use for someone who does NOT pay their credit card balance in full each month, and instead incurs finance charges.
Credit CARD Act Bans unfair rate increases, prevents unfair fee traps, protects students and young people
2-4% What percent of your outstanding balance do credit card companies require you to pay each month as your minimum?
$50 Maximum amount of fraudulent charges you are responsible for.
Greater than tax liability You would be eligible for a tax refund if the amount withheld from your paycheck is:
Bull Market A market where investors are optimistic about the economy and the potential for stock growth.
Collision Insurance you use to repair your car when you hit a light pole.
Large Cap Stock A company with a market capitalization of $300 billion.
Short Selling Selling stock you do not own, hoping to cover your position later at a lower price.
NYSE World’s largest stock exchange, containing the most blue chip stocks.
Discretionary Income Money left after paying expenses.
Homeowner’s Insurance Insurance that covers damage to your home, personal property and injuries to others.
Term Life Insurance that provides death benefit coverage for a specified period of time (usually 10-30 years).
Uninsured Motorist Insurance that covers your car that is totaled by a hit and run driver.
Owe government This is what happens at tax time if you claimed more allowances all year than you should have.
Long-Term Care You are injured in an accident and you can’t bathe, dress or feed yourself. What type of insurance would you use?
Co-pay Specific small dollar amount (about $10-$30) you pay your doctor each time you visit.
$250,000 FDIC insures up to how much per account type, per depositor.
Direct Deposit Electronic banking service that enables you to have your paycheck go right into your bank account.
Restrictive Type of endorsement that only allows you to deposit a check into your account.
Credit Union Type of financial institution that is not-for-profit and only serves its members (better rates).
The Fed Central bank of the United States, whose primary role in the U.S. economy is the regulation of the money supply.
Certificate of Deposit Type of savings account that requires you to keep your money in the account for a specific period of time.
Rule of 72 A way to quickly figure out how long it would take to double your money.
MSRP “Sticker price” or the price the manufacturer “tells” the dealer to sell a car for.
FTC The nation’s consumer protection agency that enforces laws and hears complaints.
Comprehensive Your car is stolen and then set on fire. What type of insurance do you need?
APR Percentage cost of credit on a yearly basis.
Credit Report Personal Info, Credit History, Inquiries, Public Records
28% As a general rule, you should not spend more than what percent on housing costs?
Cosigning Under the Credit CARD Act, how can an underage consumer (under 21) get a credit card?
Peril Earthquake, Flood, Fire
21 days Under the Credit CARD Act, the minimum grace period is:
only applies to new balances Under the Credit CARD Act, if banks increase your interest rate, it :
Stop Order An order to sell a stock you own at a price lower than the current market price because you want to minimize potential losses.
Dow Jones Industrial Average Market index that contains 30 of the largest companies, yet is a widely used and accurate indicator of stock market performance.
Life Insurance Factors Age, Gender, Smoking, Hobbies, Occupation, etc.
Endorsement in Full An endorsement used to transfer a check to a third party.
Traditional Savings Account A savings account with a low (no) minimum balance, ease of withdrawal, insured by the FDIC…
Basic Health Insurance Surgical, Physician and Hospital Expenses
Check Register Number, Date, Description, Debit, Check Mark, Credit, Balance
EPS Net Earnings / Shares Outstanding
P/E Price of One Share / EPS
Rate of Return Total Gain / Initial Investment
SMART goals Goals that are Specific, Measurable, Achievable, Realistic and Time-Bound
Advantages of Credit Easy to use, convenient (no cash), buy now/pay later (don’t need to save), establish credit, boost economy, etc.
Disadvantages of Credit Easy to misuse, temptation, buy more than you can afford, hurt credit, credit limit, interest and fees, etc.
Property Damage Liability & Bodily Injury Liability You cause a car accident, what part of your insurance would cover the other person’s car and injuries?

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