FIN 101 test 1
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This 2 page Test Prep (MCAT, SAT...) was uploaded by ConnorBilancio on Monday February 22, 2016. The Test Prep (MCAT, SAT...) belongs to FIN 101 at Ball State University taught by Daniel Haffner Boylan in Fall 2016. Since its upload, it has received 52 views. For similar materials see Personal Finance for Fiscal Wellness in Business at Ball State University.
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Date Created: 02/22/16
Holistic approach- Looks at every aspect of your life and considers what will work and won’t work. Cost of Living- Describes general increase in cost of goods and services. Defined benefit plans- Calculates retirement plans using a formula that applies a percent to an average salary. Defined Contribution Plans- Provide opportunity to invest pre-tax dollars regularly deducted in group of mutual funds and other investments. Financial Independence- Valid goal that may mean different things to different people. Time value of money- Basically another word for inflation. Net worth statement- Listing of all you own and all you owe. Assets- items and accounts you own Liabilities- Debts you we Debt-to-income- How much debt to the relative income you make. Fixed expenses- Is the same amount every payment unless contacted. Variable expenses- cost varies depending on what you’re paying for. Discretionary expenses- cover items and services. Usually apparel for work or hygiene Emergency Cash reserve- ready supply of cash in bank products or money market mutual funds at hand when needed. ATM networks- Give you access to your bank account when needed to withdraw money at your convenience. Demand deposit- Account at a financial institution with no penalties for early withdrawal or minimum wait. Spread- Gaps of interest rates from lenders Liquidity- How fast assets can be turned into cash Financing- borrowing money to purchase a good or service Equity- difference of assets value and what you owe on the asset Upside down- the situation when more is owed on an asset than the assets loan value. Pay-day loans- an organization that lets you get advancements on your check while having to pay back huge interest rates Discharge- when the bankruptcy court completes the process of eliminating debts from your responsibility Default- a person owing money that fails to make required payments. Foreclosure- Legal process of seizing your house for not paying your mortgage or taxes. Depreciation- loss in value and asset experiences over time Capitalized Cost- The actual price of the item you may be purchasing. Residual value- what the car will be worth at the end of the lease Three goals in life- Retirement, college, financial independence Types of planners- Fee based and commission Signs you are in middle class- Home ownership, automobile ownership, college education for kids, retirement security, health care coverage, family vacation Three major financial statements- Income statement, balance sheet, cash flow statement Financial institutions- Federally chartered banks, state chartered banks, savings and loans banks, credit unions, online institutions, mutual funds, brokerage firms Good debt- items appreciate in value, provide for quality of life Bad debt- depreciate in value, short lived, often consumable Improve credit- Get a credit card, use an old credit card, utilities, prepaid, goodwill, and dispute old negatives Repair credit- list all debit, pay on all credit cards, pay extra while available, stop taking on new debt, and get help when needed 4C’s of credit- Character, Capacity, Capital, and Collateral Buying a home- Location, affordability, second homes, real estate agents Why we move- Home is too small, job relocation, closer to family, neighborhood is declining, and home is too large Four mistakes selling a home- Price, it is the first date, I can’t, and choose wisely How to flip a house- Know the market, assess the area, lowball on everything, backup plan