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Financial Lit


Credit Money borrowed to buy something now with the agreement to pay it later
service credit an agreement to have a service preformed now and pay for it later
Usury laws laws setting max interest rates that may be charged for loans
pawnbroker A legal business that makes high-interest loans based on the calue of personal prossessions pledged as collateral
line of credit A pre-established amount that can be borrowed on demand with no collateral
deferred billing A service to credit customers whereby purchases are not billed for several months
loan sharks unliscenced lenders who charge illegally high interest rates
open-ended credit An agreement to lend the borrower an amount up to a stated limit and to allow borrowing up to that limit again, whenever the balance falls below the limit.
close-end credit A loan for a specific amount that must be repaid, in full, including all finance charges, byu a stated due date.
capital Property owned that is worth more than the owner's debt.
collateral property pledged to assure repayment of a loan
finance charge total dollar amount of an interest and fees you pay for the use of credit
Annual Percentage rate the cost of credit expressed as a yearly percentage
debt collector a person or company hired by a creditor to collect the overdue balance on an account
credit bureau a business that accumulates stores and sells credit info to business subscribers
capacity A responsible attitude toward licing up to agreements, often judged on evidence in the person's credit history
credit history A complete record of a person's borrowing and repayment preformance.
discrimination treating perople diferently based on predjuice rather than individual merit
credit rating a measure of creditworthiness based on an analysis of the consumer's financial history
title a legal document that establishes ownership
closing costs the ecpenses incurred in transferring ownership from buyer to seller in real estate transaction
Multiple Listing Service (MLS) A real estate marketing service in which agents from many real estate agencies pool their home listings and agree to share comissions on the scales
market value highest price that a property will bring on the market
fixed-rate-mortgage mortgage on which the interest rate doesn't change during the term of a loan
acceptance formal agreement to terms of an offer, forming contract between the parties
deed legal doc that transfers the title of real property from one party to another
offer formal doc that expresses interest in entering into a contract with someone else
equity difference between the market value of property and the amount owed on it
counter offer an offer in response to another offer
ernest money portion of the purchase price that the buyer deposits as evidence of good faith to show that the purchase offer is serious
lein financial claim on property
adjustable-rate mortgage (ARM) mortgage for which the interest rate changes in response to movement of interest rates in the economy as a whole
points mortgage finance charge paid by the borrower at closing with each point being equal to 1 % of the loan amount
dormitory on campus building that contains many small rooms that colleges rent to students
housing co-ops same idea as a dorm but you're responsible for cleaning, maintenence, and cooking in exchange for a lower rent
efficency apartment (studio apartment) one large room that acts like a kitchen, living room, bedroom, and dining room
townhouse 2 story apartment
deposit at least one months rent amount in case of renter moving out with out paying or damaging the property. Secures your apartment.
duplex a building with two separate living units
condo individually owned apartment style homes with shared ownership of a common area
security deposit refundable amount paid in advance to protect the owner against famage or non-payment
landlord owner of the rental property
tenant person who rents from the landlord
lease written agreement that allows a tenant to use property of a specified period and rent
Fee non refundable charge for a service
discount bond A bond purchased for less than its maturity value
annuity contract sold by an insurance company that provides the investor a series of regular payments, usually after retirement
diversification an investment strategy for spreading risk among different types of investments
investing the use of savings to earn a financial return
inflation a rise in the general level of prices
risk the chance that an investments value will decrease
annual report An SEC-required summary of a corporation's financial results for the year and prospects for the future
stock a unit of ownership in a corporation
financial advisor professional investment planners who are trained to give investment advice
bond an investment that represents the debt of a company or a government
mutual fund a professionally managed group of investments brought using a pool of money from many investors
futures contracts to buy and sell commodities or stocks for a specified price on a specified date in the future
option the right, but not obligation, to buy or sell a commodity or stock for a specified date in the future
penny stocks low priced stocks of small companies that have no track record
Rule of 72 Technique for estimating the number of years required to double your money at a given rate of return
liquidity the ability of an asset to be converted into cash quickly without loss of value
maturity date the date on which an investment becomes due for payment
interest money paid by a financial institution for the use of the saver's money
share account a savings account at a credit union
principle a sum of money in a savings account on which interest is earned
compound interest interest computed on the principle plus accumulated interest
discretionary income the amount of money left over after the bills are paid
stockbroker a person who buys and sells securities for investors
money market account a combination savings-investment plan in which the money deposited is used to purchase safe liquid securities
certificate of deposit (CD) A deposit that earns a fixed interest rate for a specified length of time
securities stocks and bonds issued by corporations or by the government
annual percentage yield (APY) The actual interest rate an account pays per year with compounding included.
estate all that a person owns, less debt owed, at the time of the person's death
defined-benefit plan a company-sponsored retirement plan in which employees recieve, at a normal retirement age, a specified amount based on wages earned and number of years of service
reverse mortgage a loan against the equity in the borrower's home in which the lender makes tax-free monthly payments to the borrower
individual retirement account (IRA) a retirement savings to set aside up to $2,000 per year and delay paying tax on the earnings until they begin withdrawing it at age 59.5 or later
will a legal document that tells how a decedent wished his or her property to be distributed after death
heirs people who recieve property from someone who has died
heirs people who recieve property from someone who has died
trust a legal document that empowers a trustee to control property for ultimate distribution to a beneficiary
estate tax a federal tax on property transferred from deceased people to their heirs
inheritance tax a state tex on a heir who recieves oproperty from a deceased person's estate
keoogh plan a tax-deferred retirement savings plan avaliable to self-employed individuals
defined-contribution plan A company-sponsored retirement plan in which employees may choose to contribute part of their salary as a tax-deferred investment
estate planning preparing a plan for transferring property during one's lifetime and at one's death
codicil a legal document that makes small changes to a will
power of attorney a legal document authorizing someone to act on your behalf
gift tax a tax on a gift of money or property, to be paid by the giver, not the reciever of the gift.
insurance a method of spreading individual risk among a large group of people to make losses more affordable for all.
personal risks the chances of loss involving your income and standard of living
pure risk a chance of loss with no chance for gain
rish management an organized strategy for controlling financial loss from pure risks
risk reduction the risk-management technique that involves taking measures to lessent the frequency or severity of losses
probability the mathematics of chance; the likelihood that something will happen
risk the chance of financial loss from perils to people or property
property risks the chances of loss or harm to personal property or real estate
liability risks the chance of loss that may occur when your errors or inappropriate actions result in bodily injury to someon else or damage to someone else's property
speculative risk a risk that may result in either gain or loss
risk avoidance the risk-management technique of eliminating the chance for loss by not doing the activity that could result in the loss.
risk assumption the risk-management technique of establishing a monetary fund to cover the cost of a loss
indeminification outting the insured back in the same financial condition as before the loss occured
insurable interest any financial interest in life or property such that, if the life or property were lost or harmed, the insured would suffer financially.
insurer a business that agrees to pay the cost of potential future losses in exchange for regular fee payments
policy a written insurance contract
premium a fee usually paid at regular intervals to an insurer for an insurance policy
policyholder the person who owns an insurance policy
pre-approval finding out how much money you will be qualified to borrow before making a purchase
VIN (Vhecile identification number) how you can learn the history of a car
lemon a car with substantial defects that the manufacturer has been unable to fix after repeated attempts
lemon laws allow you to get a new car or your money back
lisense tag fee fee paid for emissions testing and tag fee
title a legal document that establishes ownership
Created by: gabgab10