Personal Finance Exam 1 Study Guide

Personal Finance Exam 1 Study Guide - Annuity a steady...

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Annuity : a steady stream of payments over a specific time period Business (Economic) Cycle : wavelike pattern of rising and falling economic activity Compound Interest : interest earned that earns additional interest Employee Benefit : compensation other than cash payments Expansion : production is high, unemployment low, sales high, prices low Federal Funds Rate : rate banks charge one another on overnight loans Financial Literacy : knowledge of being smart about money Financial Success : achievement of desired financial aspirations Flexible Spending Account : tax-sheltered employee benefit, paid with pretax dollars Future Value : value of asset in the future GDP : value of all goods and services produced in the US regardless of ownership Inflation : steady rise in general level of prices Interest : the price of money Marginal Tax Rate : tax rate at which your last dollar earned is taxed Opportunity Cost : value of the next best alternative that is forgone Personal Finance : study of financial success, how people spend save protect and invest Present Value : current value of asset that will be received in future Pretax Dollars : money that hasn’t been taxed Purchasing Power : a measure of goods that one’s income will buy Qualified Retirement Plan : tax-deductible contribution, tax-deferred growth Real Income : income measured in constant prices relative to some base time period Rule of 72 : length it takes to double money, approximation not exact answer Tax-Sheltered Income : exempt from income taxes in current year but taxed later Time Value of Money : money now is not equal to money later Accredited Financial Counselor : passed two exams and abides by code of ethics Assets : everything you own that has monetary value Balance Sheet : describes financial condition on specific date Cash-Flow Statement : summary of income and expenses over specific period
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Personal Finance Exam 1 Study Guide - Annuity a steady...

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