Financial Literacy
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each of the black spaces below before clicking
on it to display the answer.
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| Financial Institution | A group that channels savings to investors (i.e. banks, insurance
companies, savings, loan associations and credit unions)
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| Savings | Dollars that become available for investors to use when others save
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| Interest | payment made for the use of borrowed money
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| Interest Rate | The price of credit to a borrower
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| Federal Reserve System (FED) | Privately owned, publicly controlled, central bank of the
United States
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| Federal Deposit Insurance Corporation (FDIC) | The U.S. government institution that
provides deposit insurance on the depositor’s account
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| Credit Unions | nonprofit services cooperatives that accepts deposits, makes loans and provides financial services
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| Risk | a situation in which the outcome is not certain, but the probabilities can be
estimated
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| Passbook Account | The most common savings account. Typically a low minimum
balance and used as an emergency fund
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| Money Market Deposit Account | A savings account with higher interest. Easy but
infrequent withdrawals
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| Money Market Mutual Fund | A low risk account where deposits are invested into a pool
of short-term financial accounts
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| Certificate of Deposit (CD) | A savings account that a depositor pays a certain amount
with a fixed interest rate for a certain period of time
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| Demand Deposit Account (DDA) | An account whose funds can be removed by writing a
check. No need to request for approval for the funds
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| Creditors | Persons or institutions to whom money is owed
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| Collateral | Something of value that a borrower lets the lender claim if a loan is not repaid
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| Secured | a loan that is backed up with collateral
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| Unsecured | a loan guaranteed by a promise to repay it
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| capital formation | the transfer of money from households to businesses and government through investments and loans
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| 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;
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| unlimited liability | requirement that an owner is personally and fully responsible for all losses and debts of a business; applies to proprietorships, general partnerships
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| limited life | situation in which a firm legally ceases to exist when an owner dies or quits, or a new owner is added; applies to sole proprietorships and partnerships
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| partnership | unincorporated business owned and operated by two or more people who share the profits and have unlimited liability for the debts and obligations of the firm
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| limited partnership | form of partnership where one or more partners are not active in the daily running of the business
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| corporation | form of business organization recognized by law as a separate legal entity with all the rights and responsibilities of an individual,
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| stockholder | people who own a share or shares of stock in a corporation; same as shareholders
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| stocks | certificates of ownership in a corporation; common or preferred stock
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| dividend | checks paid to stockholders, usually quarterly, representing portion of corporate profits
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| preferred stock | form of stock with no voting privileges; has a higher claim on corporate income and assets than does common stock
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| common stock | most basic form of corporate ownership, generally with one vote per share for stockholders
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| portfolio diversification | strategy of holding different investments to minimize risk
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| mutual fund | company that sells shares of a portfolio of securities, e.g., stocks and bonds issued by other companies
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| stockbroker | person who buys or sells securities for investors
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| maturity | life of a bond, length of time funds are borrowed
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| defaulted | unable to repay borrowed money
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| premiums | price for insurance that must be paid monthly, quarterly or annually
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| deductible | amount paid before insurance can be paid
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| fixed rate mortgage | interest rates do not change over time
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| adjustable rate mortgage (ARM) | interest rates will vary over time
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| hybrid morgage | has features from fixed and adjustable rate mortgages
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