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budget variance.

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the difference between the budgeted amount and the actual amount that you spend

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debt ratio

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shows the relationship between debt and net worth.

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debt ratio

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The lower the ratio the better off financially the person is.

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debt ratio

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calculated by dividing liabilities by net worth

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excise tax

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government imposes a tax on specific goods and services such as alcohol, cigarettes, gasoline, and airline

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capital gains

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are profits made from the sale of capital assets such as stocks and bonds

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Capital gains

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tax deferred until the asset is sold,

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Capital Gains Tax

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If held over one year are considered long-term capital gains and are taxed at a lower tax rate or in some cases are not taxed at all.

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variable expenses

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change from one period to another,examples Electricity and food expenditures

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get advice from your friends

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will help you the least in managing your money?

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Financial planning

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the process of developing and implementing a coordinated series of actions to achieve financial success.

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Financial planning

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need to be reviewed and adjusted to accommodate changing needs and goals.

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emergency fund

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Should be an important consideration when saving money

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liquidity

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being in cash or easily convertible to cash, How easily an asset can be converted into cash

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Social Security

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benefits depends on the person?s earnings over a lifetime of work

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Department store charge cards.

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open-end credit

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Department store charge cards.

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is a revolving live of credit that is offered by banks There is a limit set on the line of credit and the funds

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mortgage loan

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closed-end credit,made at a specified interest rate for a specified time period.

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collateralized loan.

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A loan that is secured by collateral, properties or assets that are subject to seizure on default.

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collateralized loan.

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When a person brings an item to a pawnshop to obtain cash, the transaction is considered

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Federal Housing Administration (FHA) loan

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insures lenders who make mortgage loans that are riskier than regular bank loans because

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uncollateralized loan

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A personal loan without assets to cover the loan amount.

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Collateral

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tangible asset that is used to secure a loan. In the case of a mortgage, the actual house or apartment serves as the collateral for that loan.

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bankruptcy

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will appear on the person?s credit report for 10 years

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Notify the credit card companies in order to negotiate a new payment plan.

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Notify the credit card companies in order to negotiate a new payment plan.

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Installment loan

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a loan repaid with interest in equal periodic payments

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dispose of a credit card

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Cut up the card, put parts in different garbage bags, and instruct the credit card company in writing or by phone to close the account

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Garnishment

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Occurs when a creditor obtains a court order requiring an employer to attach an employee's earnings in order to pay back a debt.

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rate of inflation

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determines the time value of depositing into a savings account, and the interest rate and

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Rising interest

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Can lower stock prices because of lower business profits

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Short-term savings instruments

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your money will be available to invest in a higher interest instrument in the near future.

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Short-term savings instruments

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Which investment would you choose today if you believe interest rates will go up?

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Credit unions

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Credit unions usually pay the highest rates of interest because they have lower risks and costs of operation. They are not-for-profit organizations

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Truth in Lending Act

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The Truth in Lending Act requires that the finance charge and annual percentage rate be disclosed to the consumer in advance

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Finance charge

answer

The finance charge is the amount charged by the lender for any kind of credit

question

Finance charge

answer

Finance charge = principal x stated interest rate x time (in years). The finance charge is used to calculate the annual percentage rate (APR)

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The annual percentage rate (APR)

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The true cost of credit that must be disclosed on a loan agreement

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certificate of deposit

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A long-term, fixed rate

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certificate of deposit

answer

If you believe interest rates are going to fall in the near future and remain low for a considerable period of time. You should invest in:

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Notify the lending institution about state usury laws

answer

when he believes he is being charged too high a rate of interest for a loan by a lending institution?

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usury laws

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Charging excessive interest rates on loans

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Interest rate

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The cost to use someone else's money for a period of time is

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personal property floater

answer

additional property insurance that covers the damage or loss of a specific item of high value

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personal property floater

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Would be appropriate for a woman receiving a very expensive piece of jewelry, but has homeowners insurance.

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cash value of a whole life insurance

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calculated amount of money which includes the premiums paid as well as the interest on that money.

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purpose of Insurance

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is to insure major potential losses and handle small losses from one's own resources.

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premiums

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Low cost items given to the consumer at a discount or for free.

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cash value for whole life insurance

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Policy that accumulates cash value is more expensive than a policy that does not accumulate cash value

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deductible

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the amount of money that the policy holder pays when a claim is settled.

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deductible

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250 deductible, means the person will have to pay the first $250 which will be deducted from the claim settlement paid by the insurance company.

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No insurance

answer

First get insurance against Losses resulting from an illness, accident, or disability

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Liability insurance

answer

insurance that provides protection from claims arising from injuries or damage to other people or property

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Automobile insurance

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covers motor vehicles, including automobiles, trucks, and motorcycles, the injuries to the driver and passengers

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US Treasury Department.

answer

must notify be to track large deposits, the federal government requires that deposits of $10,000 or more

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Credit union

answer

Credit unions are not-for-profit savings and lending financial institutions, owned by its members

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direct deposits

answer

money is generally deposited in their checking account sooner, Directly from your paycheck

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Certificate of deposit

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has the most predictable income?

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Certificate of deposit

answer

Most certificates of deposit (CDs) are issued with an interest rate that is fixed at a specified rate for the entire term of the deposit.

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Deposit slips

answer

list the cash deposit separately from the check as well as the total of the deposit

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A person is depositing $20 in cash and a check for $50. On the checking account deposit slip, the person should

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list the cash deposit separately from the check as well as the total of the deposit.

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How to reduce fees paid for ATM transactions?

answer

When making supermarket purchases with a debit card, a person adds $50 in cash to the transaction instead of using an ATM machine.

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Series EE savings bond

answer

financial product can you buy for $25, is safe, and will be worth $50 at a future date?

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Savings account interest

answer

Is taxable

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Money orders are:

answer

A purchased certificate to pay a specified amount to a specific payee

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Credit unions

answer

Are insured by National Credit Union Administration (NCUA),up to $100,000

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Monetary policy

answer

The Federal Reserve uses to regulate the nation's money supply?

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debit card

answer

Purchases made with your debit card are usually Deducted immediately from your checking account

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ATM (Automated Teller Machine)

answer

a computer terminal that you can use to make deposits, withdraw cash, transfer money between accounts, check your account balances, and pay some kinds of bills

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Money in the United States includes:

answer

consists of coins, paper currency, checking account balances on which checks can be drawn, savings deposits, and time deposits such as CDs and money market funds.

question

ATM Pin number

answer

You should never write any PIN on something that might be stolen. Write your PIN down and keep it in a secure place in your home.

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Financially literate?

answer

They understand the basics of personal finance and money management

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Capital gains

answer

provides an increase in assets or wealth?

question

electronic funds transfer (EFT) is:

answer

An ATM transaction,authorize a financial institution to debit or credit an account

question

Identity Theft

answer

exposes consumers to greater likelihood of fraud and/or identity theft.

question

stock split

answer

an increase in the number of outstanding shares of a corporation without changing the shareholders' equity

question

stock split

answer

A division of shares of a company into a larger number of shares. A 2 for 1 _____ allows a shareholder to double the number of shares but worth one half of their previous value.2-for-1 ______on 40 shares that is worth $80 would result in 80 shares at $40 at the time

question

treasury bill (T-bill)

answer

a secure, low risk investment

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treasury bill (T-bill)

answer

These bills are backed by the full faith and credit of the US government, therefore considered relatively risk free

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dividend reinvestment

answer

using dividends previously earned on the stock to buy more shares

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Securities

answer

All of the investments, including stocks, bonds, mutual funds, options, and commodities, that are traded.

question

Securities

answer

A pharmacy is to drugs as the American Stock Exchange is to:

question

The Securities and Exchange Commission SEC

answer

Agency created in 1934 that monitors the stock market and enforces laws regulating sales of stocks and bonds

question

The Securities and Exchange Commission SEC

answer

Before a company can raise capital by issuing stocks or bonds, it must register the stock or bond issue with the

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common stock

answer

the most basic form of ownership, including voting rights on major issues, in a company

question

preferred stock

answer

stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights

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Series EE Savings Bonds

answer

Are exempt from state and local taxes.

question

New York Stock Exchange (NYSE)

answer

The largest of these markets is the New York Stock Exchange,Also known as the "Big Board"

question

Why does a corporation issue bonds?

answer

To raise money for expansion or other company operations

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