Finance Test 2

Front 1

Depreciation

Back 1

loss in value an asset experiences over time, in cars depreciation is a function of not only mechanical wear but different designs

Front 2

Used Cars

Back 2

good financial decision, previous owner takes the loss

Front 3

New Car

Back 3

Not a good financial decision

Front 4

ADM (additional dealer markup)

Back 4

never pay this charge

Front 5

Add-ons

Back 5

Example: Rust proofing, not necessary

Front 6

Leasing a car

Back 6

most expensive option

Front 7

State of Indiana

Back 7

liability insurance is required

Front 8

one way to get rid of a car (especially when its at its point of collapse)

Back 8

donate it

Front 9

3 kinds of auto financing

Back 9

from bank (lowest)
Third party financing (most expensive)

Front 10

dealership financing car

Back 10

normally not the best financing rates

Front 11

car lease

Back 11

from 2-4 years

Front 12

Gap insurance

Back 12

owe more on it than what it is worth

period of time where you will owe more than the car is actually worth thanks to instand depreciation, if you total the car during this time they will pay you for the value of the car, not how much you actually paid

Front 13

umbrella policy

Back 13

kicks in after auto and homeowner insurance is exhausted

Front 14

guaranteed replacement value

Back 14

your auto or home is replaced exactly how you had it

Front 15

term-life insurance

Back 15

protection for a period of time, generally least expensive type of life insurance

Front 16

Annual renewable term

Back 16

type of life insurance that goes up in price a little each year

or

10 year level term-set amount for 10 years, then goes up

Front 17

whole life insurance

Back 17

same protection as term life insurance, but with savings account

Front 18

guaranteed replacement insurance

Back 18

pay to replace to the same quality that it was

Front 19

Renter's Insurance

Back 19

replaces possessions, but not buildings

Front 20

Risk pool

Back 20

more people you have in your group, the lower the cost of Insurance

Front 21

Group health insurance

Back 21

costs less because of the larger pool

Front 22

Health Savings Account (HSA)

Back 22

what you use to pay for out of pocket expenses (what your insurance doesn't cover)

Front 23

Usual and Customary Fees List

Back 23

a list of fees that the insurance company says it will pay for health care services

Front 24

Captive Agent

Back 24

your state farm agent, represent 1 company

Front 25

Insurance rider

Back 25

special provision or attachment, often covers jewelry, art, or computer

Front 26

flexible life insurance

Back 26

part term, part whole life, but flexible

Front 27

tax credits

Back 27

better than tax deductions

Front 28

standard deduction

Back 28

amount allotted by the IRS for taxpayers who do not itemize deduction. It is a lump-sump deduction that comes off the taxpayer's income to lower the amount that will eventually be taxed

Front 29

Itemized deductions

Back 29

used clothing to good will, calculate individual allowable deductions

Front 30

marginal tax rate

Back 30

the tax rate you pay on the last dollar of income. It is useful in determining what additional income will mean from a tax perspective

Front 31

Enrolled agent

Back 31

5 year training, NOT the highest education level

Front 32

1040 EZ

Back 32

simplest tax form

Front 33

Tax Audit

Back 33

examination by IRS agents

Front 34

Tax Saving Strategy

Back 34

reduce your AGI (Adjusted gross income) do this through an IRA

Front 35

Tax Audit

Back 35

2 red flags that trigger tax audit:
hiding income
having off shore bank accounts & too many deductions

Front 36

One Tax withheld from paycheck

Back 36

social security tax

Front 37

Need based financial aid

Back 37

takes into account family finances

Front 38

cost of attendance

Back 38

4 factors:
tuition
books
room&board
supplies

Front 39

Associates Degree

Back 39

2 years
(one way to save money)

Front 40

EFC (Expected Family Contribution)

Back 40

how much the family plans to contribute to student's college

Front 41

FAFSA

Back 41

Free Application for Student Aid

Front 42

4 types of financial aid

Back 42

grants: free money
work study money: wash dishes&use to pay tuition
stafford loans
scholarships

Front 43

subsidized stafford loans

Back 43

no interest charged while in school

Front 44

unsubsidized

Back 44

interest gains while in school