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PersonalFinLiteracy
Ch19 Personal Financial Literacy
| financial institution | group that channels savings to investors; includes banks, insurance companies, savings and loan associations, credit unions |
| savings | the dollars that become available for investors to use when others save |
| interest | payments made for the use of borrowed money |
| interest rate | the price of credit to a borrower |
| Federal Reserve System | privately owned, publicly controlled, central bank of the United States |
| Federal Deposit Insurance Corporation | the U.S. government institution that provides deposit insurance on the depositor's account |
| credit unions | nonprofit service cooperative that accepts deposits, makes loans, and provides other financial services |
| risk | a situation in which the outcome is not certain, but the probabilities can be estimated |
| Demand deposit account | account whose funds can be removed by writing a check and without having to gain prior approval from the depository institution |
| creditors | persons of institutions to whom money is owed |
| collateral | something of value that a borrower lets the lender claim if a loan is not repaid |
| secured | loan that is backed up by collateral |
| unsecured | loan guaranteed only by a promise to repay it. |
| capital formation | the transfer of money from households to businesses and government through investments and loans |
| sole proprietorship | unincorporated business owned and run by a single person who has rights to all profits and unlimited liability for all debts of the firm |
| unlimited liability | requirement that an owner is personally and fully responsible for all losses and debts of a business |
| limited life | situation in which a firm legally ceases to exist when an owner dies, quits or a new owner is added: |
| partnership | unincorporated business owned and operated by two or more people who share the profits and have unlimited liability for the debts and obligation of the firm |
| limited partnership | form of partnership where one or more partners are not active in the daily running of the business, and whose liability for the partnership's debt is restricted to the amount invested in the business |
| corporation | form of business organization recognized by law as a separate legal entity with all the rights and responsibilities and of an individual, including the right to buy and sell property, enter into legal contracts, and to sue and be sued. |
| stockholders | persons who own a share or shares of stock in a corporation; same as shareholder |
| stocks | certificates of ownership in a corporation; common or preferred stock |
| dividends | checks paid to stockholders, usually quarterly, representing portion of corporate profits. |
| prefered stock | form of stock without vote, in which stock holders get their investments back before common stockholders |
| common stock | most common form of corporate ownership, with one vote per share for stockholders |
| portfolio diversification | strategy of holding different investments to protect against risk |
| mutual fund | company that sells shares of a portfolio of securities, e.g., stocks and bonds issued by other companies |
| stockbroker | person who buys or sells securities for investors |
| maturity | life of a bond, length of time funds are borrowed |
| municipal bonds | a type of investment, often tax exempt, issued by state and local governments: known as munis |
| Treasury bills | United States government obligation with a maturity of a few days to 52 weeks |
| Treasury notes | United States government obligation with a maturity of 2 to 10 years |
| Treasury bonds | United States government bond with maturity of 30 years |
| savings bonds | low-denomination, non-transferable bond issued by the federal government, usually through payroll savings plans |
| Individual Retirement Accounts | retirement account in the form of a long-term time deposit, with annual contributions not taxed until withdrawn during retirement |
| defaulted | act of not repaying borrowed money |
| premiums | monthly, quarterly, semiannual, or annual price paid for an insurance policy |
| deductible | an amount you pay before the insurance company pays |
| type of financial aid for college | Direct Subsidized, Unsubsidized & PLUS loans |
| Federal Work Study program | part-time employment at a university that you attend |
| Nontraditional Methods of Paying for College | Join the military, employer reimbursement, CLEP exams, High School AP coursework |
| Costs and Benefits of Renting | you have rights, should have renters insurance, location is key, first/last & security deposit required |
| Cost and Benefits of Buying a House | you maintain it, mortgage responsibility & appreciation or depreciation of home value |
| types of Insurance | car, home owners, health, disability & life |
| Bankruptcy | Chapter 7 is the most common, trustee is appointed and all assets are taken to pay off debts. Chapter 13 a trustee is appointed and a repayment plan is implemented. Some assets are kept |
| Credit Cards | have high interest and will take a long time to pay back at minimum payment. They will positively and or negatively affect credit score |
Created by:
PeaceIDABaker
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