Consumer Math A Semester Review

Front

Define collateral, in the context of finance.

Back

Collateral is an asset pledged by a borrower to secure a loan.

Front

What is the maximum amount Jason should spend on housing and other debt if his realized income is $3200 per month?

Back

$1152

Front

What is the difference between a credit card and a charge card?

Back

A credit card allows carrying a balance; a charge card requires full payment monthly.

Front

Calculate the realized income for two weeks if you are paid $11.50 per hour, work 40 hours per week, and have involuntary deductions of FICA (7.65%), federal withholding (12%), and state withholding (5%).

Back

$693.22

Front

What does FICO stand for?

Back

Fair Isaac Corporation

Front

What is the purpose of collateral in a loan agreement?

Back

Collateral serves as security for the lender in case the borrower defaults on the loan.

Front

What percentage of income is typically recommended to be spent on housing?

Back

Typically, it is recommended to spend no more than 30% of your income on housing.

Front

What is the formula to calculate net income?

Back

Net Income = Gross Income - Deductions.

Front

What is the difference between fixed and variable expenses?

Back

Fixed expenses remain constant each month, while variable expenses can fluctuate.

Front

What is a credit score?

Back

A credit score is a numerical representation of a person's creditworthiness.