Financial Planning Modified Semester

Front

What does it mean when an account is tax-deductible?

Back

Contributions to the account reduce your taxable income for the year, potentially lowering the amount of taxes you owe.

Front

What is an interest-bearing checking account and its typical interest rate?

Back

An account that pays interest on your balance while allowing regular transactions, with rates typically ranging from 0.01% to 0.50%.

Front

What is the highest interest rate a general savings account can earn?

Back

10%

Front

Why is the interest rate important when opening a savings account?

Back

Because the interest rate determines how quickly your money grows over time, with compound interest offering the benefit of earning interest on both your initial deposit and previously earned interest.

Front

What is the process of distributing resources among various assets to optimize returns or minimize risk called?

Back

Allocation

Front

What is the process of spreading out a loan into fixed payments over time, covering both interest and principal?

Back

Amortization

Front

What does APR stand for?

Back

Annual Percentage Rate

Front

What is an annuity?

Back

A financial product that provides a series of payments made at equal intervals.

Front

What does "capital" refer to?

Back

The financial assets or resources used for investment, production, or increasing wealth.

Front

What is a capital gain?

Back

The profit from selling an asset when the selling price exceeds the purchase price.