MONEY MANAGEMENT

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MONEY MANAGEMENT

• UNIT 4 TEST REVIEW
• PLANNING FOR YOUR FUTURE
• SAVINGS AND INVESTING

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CHAPTER TENSAVING FOR YOUR FUTURE

• QUESTION
• Financial security begins when you start doing
  what?

• ANSWER
• SAVING MONEY!

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CHAPTER TENSAVING FOR YOUR FUTURE

• QUESTION
• List three expected items that most people save
  money for?

• ANSWER
• HOUSE, CAR, VACATIONS etc

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CHAPTER TENSAVING FOR YOUR FUTURE

• QUESTION
• You need to have some savings to take care of the
  unexpected things that life throws at you. Name
  three unexpected items that you might need your
  savings for

• ANSWER
• UNEMPLOYMENT, ACCIDENT, SICKNESS

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CHAPTER TENSAVING FOR YOUR FUTURE

• QUESTION
• The amount of money you have left after your
  bills is paid is referred to as your ___________?

• ANSWER
• DISCRETIONARY INCOME

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CHAPTER TENSAVING FOR YOUR FUTURE

• QUESTION
• The amount of money deposited into your savings
  account is known as the __________?

• ANSWER
• PRINCIPAL

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CHAPTER TENSAVING FOR YOUR FUTURE

• QUESTION
• Money paid by the financial institution to the
  save for the use of their money is known as what?

• ANSWER
• INTEREST

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CHAPTER TENSAVING FOR YOUR FUTURE

• QUESTION
• When interest is computed on the original
  principal plus accumulated interest, it is called
  what?

• ANSWER
• COMPOUNDING INTEREST

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CHAPTER TENSAVING FOR YOUR FUTURE

• QUESTION
• In class we discussed a few ways people save
  their money. Name one

• ANSWERS
• REGULAR SAVINGS ACCOUNT
• CERTIFICATE OF DEPOSIT
• MONEY MARKET FUND

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CHAPTER TENSAVING FOR YOUR FUTURE

• QUESTION
• When assets can be easily converted into cash
  without a loss in value they are called what?

• ANSWER
• LIQUID

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CHAPTER TENSAVING FOR YOUR FUTURE

• QUESTION
• Name a pro and a con about putting money into
  a regular savings account?

• ANSWER
• PRO HIGH LIQUIDITY
• CON LOW INTEREST RATE

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CHAPTER TENSAVING FOR YOUR FUTURE

• QUESTION
• In class we discussed five factors that you
  should consider when setting up your savings. Can
  you name any of them?

• ANSWERS
• LIQUIDITY
• SAFETY
• CONVENIENCE
• INTEREST EARNING POTENTIAL
• EARLY WITHDRAW PENALTIES

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CHAPTER TENSAVING FOR YOUR FUTURE

• QUESTION
• THE MOST IMPORTANT THING TO REMEMBER FROM THE
  CHAPTER ON SAVINGS IS TO DO WHAT?

• ANSWER
• PAY YOURSELF FIRST!

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CHAPTER TENMANAGING YOUR INVESTMENTS

• QUESTION
• Once you have a safe cushion put away in
  regular savings, you can start doing more serious
  investing. What does the book consider a safe
  cushion?

• ANSWER
• 3-6 MONTHS OF EXPENSES

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CHAPTER TEN MANAGING YOUR INVESTMENTS

• QUESTION
• A measure of uncertainty about an investment is
  known as?

• ANSWER
• RISK

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CHAPTER TENMANAGING YOUR INVESTMENTS

• QUESTION
• The rise in the general level of prices over time
  is known as __________________?

• ANSWER
• INFLATION

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CHAPTER TENMANAGING YOUR INVESTMENTS

• QUESTION
• In order to research possible investments you
  need to find solid financial information. Name
  three possible sources for this info

• ANSWERS
• NEWSPAPERS
• FINANCIAL MAGAZINES
• ANNUAL REPORTS
• ONLINE FINANCIAL WEBSITES

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CHAPTER FOURTEENMANAGING YOUR INVESTMENTS

• QUESTION
• Represent ownership in a corporation.

• ANSWER
• STOCKS

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CHAPTER FOURTEENMANAGING YOUR INVESTMENTS

• QUESTION
• One unit of ownership is known as

• ANSWER
• A SHARE

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CHAPTER TWELVE INVESTING IN STOCKS

• QUESTION
• Stocks that are sold in multiples of 100 are
  called?

• ANSWER
• ROUND LOTS

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CHAPTER TWELVE INVESTING IN STOCKS

• QUESTION
• A class of stock in which the owner of the stock
  shares directly in the success or failure of the
  business. Most stocks are of this type.

• ANSWER
• COMMON STOCK

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CHAPTER TWELVE INVESTING IN STOCKS

• QUESTION
• Portion of the profits that are redistributed to
  the shareholders of a corporation.

• ANSWER
• DIVIDENDS

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CHAPTER TWELVE INVESTING IN STOCKS

• QUESTION
• Type of stock where dividends are fixed and the
  owners of this stock gets paid first if the
  business goes down. This type of stock is much
  harder to find.

• ANSWER
• PREFERRED STOCK

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CHAPTER TWELVE INVESTING IN STOCKS

• QUESTION
• Stocks that have a consistent history of paying
  high dividends are known as?

• ANSWER
• INCOME STOCKS

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CHAPTER TWELVE INVESTING IN STOCKS

• QUESTION
• Companies that REINVEST their profits into the
  business so that they can grown and expand are
  known as ______________?

• ANSWER
• GROWTH STOCKS

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CHAPTER TWELVE INVESTING IN STOCKS

• QUESTION
• When a stock sells for less than 5 per share it
  is called a ________________?

• ANSWER
• PENNY STOCK

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CHAPTER TWELVE INVESTING IN STOCKS

• QUESTION
• Stocks of well-established, and usually
  profitable companies, are called
  __________________?

• ANSWER
• BLUE-CHIP STOCKS

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CHAPTER TWELVE INVESTING IN STOCKS

• QUESTION
• A stock that remains stable even when the economy
  is bad is known as a _________________________?

• ANSWER
• DEFENSIVE STOCK

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CHAPTER TWELVE INVESTING IN STOCKS

• QUESTION
• _____________________ reflects the price that
  investors are willing to pay for a share of stock
  at that moment.

• ANSWER
• MARKET VALUE

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CHAPTER TWELVE INVESTING IN STOCKS

• QUESTION
• What are the two ways you can make money with
  stocks?

• ANSWER
• THE STOCK PRICE CAN GO UP
• YOU CAN GET A DIVIDEND

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CHAPTER TWELVE INVESTING IN STOCKS

• QUESTION
• How much money you make on an investment is known
  as?

• ANSWER
• THE RETURN ON INVESTMENT (ROI)

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CHAPTER TWELVE INVESTING IN STOCKS

• QUESTION
• A marketplace where stocks and other securities
  are bought and sold is called what?

• ANSWER
• A SECURITIES EXCHANGE

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CHAPTER TWELVE INVESTING IN STOCKS

• QUESTION
• The largest organized exchange in the United
  States is?

• ANSWER
• THE NEW YORK STOCK EXCHANGE

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CHAPTER TWELVE INVESTING IN STOCKS

• QUESTION
• When brokers are used to buy and sell stocks, BUT
  THERE IS NO EXCHANGE, the transaction is?

• ANSWER
• OVER-THE-COUNTER (OTC)

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CHAPTER TWELVE INVESTING IN STOCKS

• QUESTION
• What is the largest OTC Market in the U.S.?

• ANSWER
• THE NASDAQ

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CHAPTER TWELVE INVESTING IN STOCKS

• QUESTION
• Strategy you use if you think a stock price is
  going to drop?

• ANSWER
• SHORTING A STOCK OR SELLING SHORT

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CHAPTER TWELVE INVESTING IN STOCKS

• QUESTION
• Occurs when a company increases the number of
  shares they have outstanding, but lowers the
  selling price of the stock in direct proportion.

• ANSWER
• STOCK SPLIT

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CHAPTER THIRTEENMUTUAL FUNDS REAL ESTATE

• QUESTION
• Type of investment where investors from around
  the world pool their money together to buy
  stocks, bonds, and other securities.

• ANSWER
• MUTUAL FUND

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CHAPTER THIRTEENMUTUAL FUNDS REAL ESTATE

• QUESTION
• What are three reasons why people invest in
  mutual funds?

• ANSWER
• Convenient
• Provides Diversification
• High Liquidity
• Usually less risky than the stock market

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CHAPTER THIRTEENMUTUAL FUNDS REAL ESTATE

• QUESTION
• Type of mutual fund that invests in companies
  that are still growing.

• ANSWER
• GROWTH FUND

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CHAPTER THIRTEENMUTUAL FUNDS REAL ESTATE

• QUESTION
• Type of fund that invests in companies that pay
  consistently good dividends.

• ANSWER
• INCOME FUND

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CHAPTER THIRTEENMUTUAL FUNDS REAL ESTATE

• QUESTION
• Type of fund that invests in a mixture of stocks
  and bonds. The purpose is to reduce risk while
  maintaining both income and growth.

• ANSWER
• BALANCED (or MIXED EQUITY) FUND

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CHAPTER THIRTEENMUTUAL FUNDS REAL ESTATE

• QUESTION
• Type of fund that holds stocks or bonds that
  react the same as the stock or bond markets as a
  whole do.

• ANSWER
• INDEX FUND

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CHAPTER THIRTEENMUTUAL FUNDS REAL ESTATE

• QUESTION
• Type of fund that invests in short-term corporate
  and government bonds. Considered to be the most
  safe but generally speaking pay the lowest
  interest rates.

• ANSWER
• MONEY MARKET FUND

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CHAPTER THIRTEENMUTUAL FUNDS REAL ESTATE

• QUESTION
• What type of investment has historically proven
  to give the best returns and give you the best
  defense against inflation?

• ANSWER
• REAL ESTATE

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CHAPTER THIRTEENMUTUAL FUNDS REAL ESTATE

• QUESTION
• When buying real estate you usually have to pay
  some money up front in order to secure the loan.
  This is known as what?

• ANSWER
• A DOWN PAYMENT

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CHAPTER THIRTEENMUTUAL FUNDS REAL ESTATE

• QUESTION
• Down Payments usually have to be at least how
  much?

• ANSWER
• 20 OF THE TOTAL PRICE

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CHAPTER THIRTEENMUTUAL FUNDS REAL ESTATE

• QUESTION
• The difference between what you can sell the
  house for and what you owe on is it is referred
  to as what?

• ANSWER
• EQUITY

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CHAPTER THIRTEENMUTUAL FUNDS REAL ESTATE

• QUESTION
• What are two HUGE benefits to investing in real
  estate?

• ANSWER
• EXCELLENT RETURN ON INVESTMENT
• GREAT TAX BENEFITS

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CHAPTER THIRTEENMUTUAL FUNDS REAL ESTATE

• QUESTION
• What is the biggest con of investing in
  real-estate?

• ANSWER
• LOW LIQUIDITY IT CAN BE HARD TO CONVERT YOUR
  INVESTMENT BACK INTO CASH

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MATH PROBLEMS

• Be able to
• Compute return on investment
• Figure out dividend calculations
• Perform compounding interest calculations
• It will help if you have a calculator with you
  for the test tomorrow! ?

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STUDY, STUDY, STUDY

• GOOD LUCK!