Final Exam Study Sheet

Financial Literacy

Need vs. Want

Short-term goals

Intermediate goals

Long-term goals

Values

Opportunity cost

Financial planning or Budgeting- allows you to figure out how much money you are getting and spending

Items you want may not be included in a budget

Satellite decisions – buying one thing that creates the need to purchase another item

Financial planning- every decision made today affects decisions made in the future.

Medium of exchange

Compounding how to calculate (2 scenarios) and know that it represents the time value of money

When do you make the most money in interest compounding yearly, monthly and daily?

Rule of 72

Savings account

Depository institution – what to look for in terms of investing your money – higher interest rates for their savings accounts

Certificate of deposit

Early withdrawal penalty

Checking accounts

Deposit slip

How do the following affect your checking account vs. the bank? Calculations

Outstanding deposit

Outstanding checks

Debit card transactions

Transfer of money into your savings

Service charges

Credit card

Credit score

Fraudulent credit card charge

Credit card limit

Using credit wisely

Calculate minimum monthly payment on credit card and interest payment

Property taxes

Market value vs. assess value of homes

Sales tax

Payroll taxes vs. income taxes

Earned income vs. unearned income

Self-employment tax

Market value vs. assessed value

Medicare

Direct deposit

Gross Pay

Net Pay

Deductions

W-4

W-2

1040EZ

Identity theft

Unemployment and earnings vs. educational attainment

Stafford (federal) loans

Subsidized vs. unsubsidized loans

Scholarships

529

Grant

Fixed vs. variable interest

Investment

Stocks, sale of stocks, past performance of stocks

Dividends

Diversification

Dow Jones industrial average

Mortgage

15 year vs. 30 year mortgage – interest vs. equity

Purchase a car vs. lease

Truth in Lending act

Phishing for bank information

Bonds

Calculate bond principal and interest

Volatile

Risk vs. return in investing

Mutual funds

Investment philosophy

Compare contrast stocks vs. bonds

Problems:

1. Write a smart goal filling in the missing information

2. Calculate the balance on your credit card

3. Net worth

4. Payroll problems on salary, commission, and hourly – calculate gross pay (income), calculate deductions, and calculate net pay

5. Compare and contrast 3 savings instruments a certificates of deposit (CD) with a % APR that compounds annually, money market account with a % APR that compounds quarterly, and savings statement savings accounts with a % APR that compound monthly

You have to total and compare and contrast to answer questions on which one would you choose and support your answers with reasons