RESUME

Which will Justin most likely do with a resume?

•Submit to a potential employer

VALUES

Values are the beliefs and principles a person considers important, correct and desirable.

2

WANTS

• Wants are those things that are not vital to your survival, but make life more enjoyable.

Designer clothes, luxury cars, football tickets are considered wants.

3

NO SUCH THING AS A FREE LUNCH

• The expression “There is no such thing as a free lunch.” means that resources used for one purpose could have been used for another purpose.

4

NETWORKING

• Networking is an approach to find out about job opportunities that consists of contact with friends and family members, who might be able to connect you to a potential employer.

5

HUMAN CAPITAL

Human capital consists of:• Knowledge and skills

6

INTERNAL REVENUE SERVICE

• The governmental agency that is responsible for collecting federal taxes is the Internal Revenue Service (IRS).

7

EMPLOYEE BENEFITS

• Paid or partially paid insurance• Sick and vacation pay• Gym memberships• Flex hours• Repayment of education loans• Merchandise discounts, • Child-care.

8

PAY PERIOD

A pay period is:

The length of time an employee’s wages are calculated.

9

GROSS PAY

• Gross pay is the total amount of money earned before payroll deductions.

• Net pay is the take home pay after payroll deductions.

10

Federal Insurance Contribution Act

• FICA (Federal Insurance Contribution Act) is a tax that includes two separate taxes:

• Medicare

• Social security

11

BOUNCING A CHECK

• If you “bounce” a check when you make a purchase at a store, the following could happen:

• You will be charged a fee by the store• You will be charged a fee by your bank• Your credit score can be reduced

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CREDIT LIMIT

• The maximum amount you can charge on a credit card is called your credit limit.

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PAY YOURSELF FIRST

• “Pay Yourself First” means that money is set aside for savings before spending.

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BUDGET

• A budget is used to plan saving and spending.

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BUDGET DEFICIT

• A person that has a monthly income of $3200.00 from their employment, receives $150.00 per month in interest, and has combined expenses of $3500.00 they are best described as having a budget deficit.

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ASSETS

• Assets are things that you own that are worth money.

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LIABILITIES

• Liabilities are things that you owe money on.

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ANNUAL PERCENTAGE RATE

• The annual percentage rate (APR) is the interest rate charged on an unpaid balance expressed as a percent per year.

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SECURED WEB SITES

• The “S” in the https” on a web browser stands for secure.

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LENGTH OF MORTGAGE & REPAYMENT

The affect of a longer term mortgage on the amount of interest paid on the loan:

• A shorter mortgage loan period = higher payments and the interest paid is lower.

• A longer mortgage loan period = lower payments and the interest paid is higher.

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CREDIT REPORT/CREDIT RECORD

A credit report/credit record is:

• A written record collected by a credit agency/bureau that tracks a borrower’s bill-paying habits.

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REVOLVING CREDIT

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A credit card is an example of:

Revolving credit

HUMAN CAPITAL

The average person increase their humancapital by:• Enrolling in a training course or a

continuing education class. 

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FINANCE CHARGE

The interest paid on unpaid credit balances is the:

• Finance Charge

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PAYDAY LOANS

• Of the financial institutions studied, payday loan companies would likely charge the highest interest rate for a loan.

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MINIMUM MONTHLY PAYMENTS

• Paying only the minimum monthly payment is the most costly and least desirable payment for a revolving balance account, such as a credit card.

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ANNUAL PERCENTAGE RATE

• The annual percentage rate is the best indicator of the cost of a loan.

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HIGH RISK LOANS

The relationship between the interest rate charged to an individual and the person’s risk of nonpayment of a loan is . . .

• The higher the risk of nonpayment, the higher the interest rate.

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DANGERS OF CO-SIGNING

• The danger of co-signing a loan is: If the person doesn’t pay, you become

responsible for the debt.

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CONSUMER'S CREDIT REPORT

The following are able to review a consumer’s credit report:

-Landlords-Government agencies-Potential employers

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COLLATERAL

Collateral describes items of value that an individual can use to help back their loans, which can be sold if the loan is not paid back.

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PRIME RATE

• A prime rate is usually extended to customers in banks who have an excellent credit score and are considered stable customers.

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CREDIT REPORT &CREDIT RECORD

A credit report and a credit record are both known as a report about a person’s credit history.

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THE TRUTH IN LENDING ACT

The Truth in Lending Act is a federal law that requires creditors to disclose finance charges and interest rates in a standard, uniform manner.

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RISK AND RETURN

The general relationship between risk and return is, the higher the risk, the higher the potential return.

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STOCK

Stock is defined as shares of ownership in a corporation.

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BEAR MARKET

When referring to the general health of the economy, stock analysts use the term Bear Market for a market which is doing poorly and doesn’t have investor confidence.

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LIQUIDITY

• Liquidity is the ease with which an asset can be turned into cash.

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INVESTING CRITERIA

The following are the three most important criteria to consider when investing:

• Risk • Rate of return• Liquidity

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THE FEDERAL RESERVE

The following describe some of the activities of the Federal Reserve:

• acting as a depository service for the United States Government

• influencing interest rates• supervising and regulating commercial

banks

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BLUE CHIP STOCKS

Blue Chip Stocks are:

Stocks in large, nationally known companies that have been profitable for a long time.

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PRINCIPAL

Principal is defined as:An original amount of money invested or

lent.

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TAX EXEMPT INVESTMENT

Municipal bond interest is exempt from taxes.

Examples of taxable investments are:• Wages• Capital gains• Interest on savings accounts & CD’s.

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BALANCING A CHECKBOOK

If Marie has a balance in her checking account of $500, withdraws $100, deposits $200, and writes a check at Macy’s for $50, what is her new balance?

• $150• $350• $550• $850

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DEDUCTIBLEYou back your car into a metal fence causing $500

of damage to your car.

You have an auto insurance policy with a $200 deductible. To get your car fixed, your auto insurance company pay:

$300

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COMPREHENSIVE COVERAGE

The best description of comprehensive coverage in an auto insurance policy is:

It covers the cost of the auto repair of the policyholder’s auto if it is damaged.

Comprehensive insurance covers damage to your car if it is stolen; or damaged by flood, fire, or animals. It pays to fix your vehicle less the deductible you choose.

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WHOLE LIFE INSURANCE

A whole life insurance policy offers protection during the lifetime of the insured and builds cash value.

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SCARCITY

One consequence of scarcity is that:

People have to make choices among alternatives.

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DEBIT CARD

Using a debit card to purchase a good is most similar to using a check.

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COMPOUND INTEREST

Compound interest is the interest earned on both principle and interest.

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THE RULE OF 72

A tool used to learn how to figure out how long it will take to double your money (principal).

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CHECK CASHING

After you write and sign your check, only the payee can legally cash the check.

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PHISHING

When Internet scam artists use either pop up messages or e-mails to lure (to trick) consumers into giving a person's information, i.e. social security number, bank account number.

54

CHECK 21

The goal of “Check 21” is to decrease the amount of “float.” (Time between when the check was presented/cashed, and when it reached the bank.)

55

INCOME

The following could all be called income:

• an allowance• a paycheck• interest received from a savings

account

56

W-2 FORM

The purpose of W-2 Form is:

Itemize how much money was earned by an employee and how much was withheld and sent to the Internal Revenue Service (IRS).

57

W-4 Form

The purpose of W-4 Form is:

To allow the employer to withhold income taxes from an employee’s wages.

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OPPORTUNITY COST

Choices: what you have to give up in order to have something else.

Example: Not going to the movies, instead using that money to buy gas for your car.

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BEGIN SAVING NOW

Because it allows you to benefit from compound interest.

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STOCKBROKER

Why use stockbrokers?To deal with complex investment issues &

needing to use the brokers’ company research and data pertaining to a stock choice.

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CAPITAL GAINS

The money you earn from investments.

Example: Purchase a home for $150,000. you sell it 7 years later for $220,000.00

220,000. - 150,000 $ 70,000 = your capital gain

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RETURN AND SECURITY

You are given $5000.00 in cash to invest for one year. The account that will probably give you the best interest rate, yet keep the principle investment secure is the:

Certificate of Deposit (CD)

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MUTUAL FUND

A group of diverse stocks managed by an investment company. The following is considered an advantage of using a mutual fund:

It diversifies risks in the stock market by investing in multiple companies.

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DIVERSIFICATION

A variety of financial assets, such as stocks, bonds, savings accounts, and money market funds. This helps investors diversify their portfolio, therefore, reducing the overall risk of losing money.

65

PAY-DAY LOANS

The scheme that involves enticing people to borrow money with very high interest rates by delivering money in an emergency, and not requiring a credit check are:

The pay-day loans

66

RISKY INVESTMENT

Of the following:

A certificate of deposit at the bank

U.S. Savings Bond

A corporate bond

A U.S. Treasury Bond

A corporate bond is the most risky.

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Individual Retirement Account (IRA)

Either a Traditional or Roth IRA is it:

Retirement account that reduces tax investment account.

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CERTIFICATE OF DEPOSIT

A certificate of deposit (CD) is an insured interest earning savings instrument with restricted access to the funds. 3 months up to 5 years.

• Insured by the bank – FDIC

• Low Risk

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BODY-INJURY LIABILITY

A type of car insurance typically required by states if a driver wants to license a car:

Body-injury liability

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DEPRECIATING ASSETS

The following are examples of depreciating assets:

• Gaming systems and standard new car

71

LOST OR STOLEN CARD

If you can’t find your credit card, and you think it may have been stolen. What should you do?

Call the credit card company as soon as you are aware the card is missing.

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What is the purpose of the Federal Deposit Insurance Corporation (FDIC) &The National Credit Union Administration (NCUA)?

• Insure consumer deposits against loss:The purpose of the Federal Deposit Insurance Corporation

(FDIC) is to insure government chartered commercial banks' deposits against loss.

• A goal of the National Credit Union Administration (NCUA) is to provide insurance protection for credit unions’ deposits.

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Fixed Rate Mortgage

If you plan to purchase a home during times of expected inflation, Fixed Rate Mortgage is the best type of mortgage to pick when purchasing that home.

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FICO Score

With a 540 FICO credit score, a person will have a difficult time getting credit.

75

TERM INSURANCE

Your friend, a single parent, wants to protect her family financially in the event of her death.

She wants the most coverage for the least cost, so you recommend that she purchase term insurance.

76

LOAN RATES

Doug must borrow $12,000 to complete his college education. The following statements would contribute to reducing his loan rate:

• Parents taking out an additional mortgage on their home for the loan.

• If the loan was insured by the Federal Government.

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COLLATERAL LOAN

Susie and Sally are young and each has a good credit history. They work at the same company and make approximately the same salary. Susie has borrowed $6,000 to take a foreign vacation. Sally has borrowed $6,000 to buy a car. Who is likely to pay the lowest finance charge?

Sally, because she can use the car as collateral for the loan.

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LIFE INSURANCE

If the three scenarios shown below had the same amount of take-home pay, which would need the greatest life insurance?

• A young single woman with two young children

• A young single woman without children

• A young married man without children

A young single mom with 2 children needs the most life insurance compared to a ones with no children.

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SPENDING INSTRUMENTS

Of the following:

The instrument which is NOT typically associated with spending is the certificate of deposit.

• Cash

• Credit card

• Debit card

• Certificate of Deposit

It is an instrument that is NOT typically associated with spending.80

FINANCE RATE CHARGE

Paying the minimum balance each month on a credit card will cause the greatest dollar amount in finance charges.

CREDIT HISTORY

Banks and other lenders share the credit history of their borrowers with each other and are likely to know of any loan payments that you have missed.

82

MISSOURI AUTOMATIC DEDUCTIONS

State and Federal taxes are automatically deducted in the state of Missouri from your paycheck.

83

CREDIT HISTORY

Paying late on your car loan will negatively affect your credit rating.

84

CANCELED CHECK

A Canceled check is a check that has been cleared through the bank.

85

DETERMINING CREDIT SCORES

Several important factors used to determine credit score are:

• Whether bills are paid on time

• The amount owed on all accounts

• Number of credit cards

• Number of years a person has had credit

 

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PERSONAL FINANCE

Final Exam Study Guide

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