To determine the time value of depositing $100 in a savings account, a person needs to know the interest rate and
rate of inflation
Which type of financial institution usually pays the highest rate of interest on savings account balances?
credit unions
Interest earned on interest is known as
Compounded interest
Which of the following is the federal law that requires the cost of credit be disclosed to consumers in bold print or loan agreement
Truth in lending act
The cost to use someone else's money for a period of time is called the:
Interest rate expressed as a percentage
The rule of 72 is an easy way to
Calculate how fast your savings will double in value at given interest rates
If a person has $1,000 in a savings account and earns $20 a year in interest on that account, the rate of return on the money is close to
2%
Who benefits the most from inflation?
Long-term fixed rate borrowers
Which investments would you choose today if you believe interest rates will go up
Short term savings instruments
The amount a leader charges to borrow money is called the
Annual percentage rate (APPR)
A pharmacy is to drugs as the American stock exchange is to
Securities
Buying a treasury bill (T-bill) is best for investors who are looking for
a secure, low risk investment
Using a broke firm a qualified investor buys 1000 shares of a. Common stock at $50 margin this means that the
Brokerage firm will own 50% of the 1000 shares of. Stock that were purchased
What is the largest equities market in the world
New York Stock Exchange (NYSE)
Before the kiss corporation can issue stocks or bonds it must register the issue with
Securities and Exchange Commission (SEC)
The interest earned on United States Series EE Savings Bonds is
Paid in a lump sum at the time the face value on the bond is reached
As an investment, a person decides to buy a small house that has three rental apartments. The profits from this investment may be lower then expected if the
one of the apartments is not rented.
An investor bought 40 shares of ABC corporation's stock at $80 a share. Two weeks later, the investor receives notice that the corporation has approved a 2-for-1 stock split. Based on this information, the investor would own at the moment of the split
80 shares of the stock and the price of each share is $40.
A person owns a stock that pays a $2.00 a share dividend. If the person chooses to reinvest that dividend, this means that the $2.00 will go toward buying
more of the same stock.
A Dante Oil Corporation tanker collided with another ship causing a major oil spill that will destroy the environment in the area for years and will cost billions for cleanup. The price of Dante is likely to:
Decrease
A man budgeted $200 a month for clothing. This month the man spent $150 on clothing therefore that budget item is considered to have
budget variance
One of the benefits of holding an investment for over a year rather than selling it in less than a year is that the
Profits on the investment can be averaged over the length of time the investment is held
A person complains about how expensive it is to be a cigarette smoker. One of the reasons cigarettes are so expensive is that
the government imposes an excise tax on them.
The following is usually considered a variable expense:
Electric bill payment
Financial Planing Process
Includes lifetime goals/ needs to be adjusted for changing needs and goals in different stages of life
Something you are working to achieve within a defined period of time is a(an):
goal
Ben's annual income is $30,000, and he contributed $3,000 to a traditional IRA in his local bank. What is his taxable income?
$27,000
The term is best describes money left over after paying taxes, fixed and other essential living expenses is
Disposable income
John's company will Mach his pre-tax contributions to the company's retirement plan known as
401 (k)