Questions and Answers
How to solve for rate of return?
How many weeks vacation do you get when you start a job?
2 weeks
How many weeks vacation do you get when you work 5 years at a job?
3 weeks
How many weeks vacation do you get when you work 25 years at a job?
Signup and view all the answers
How much do families spend on vacation and recreation?
Signup and view all the answers
How to solve for years with APY?
Signup and view all the answers
How to solve for APY?
Signup and view all the answers
Name for consumer durables?
Signup and view all the answers
What type of debt is used by most young families?
Signup and view all the answers
Voluntary savings examples are?
Signup and view all the answers
Most entrepreneurs have a net worth of ____ times of others?
Signup and view all the answers
Percentage of new businesses that last past 5 years?
Signup and view all the answers
What are forms of long-term forced savings?
Signup and view all the answers
Percentage of new businesses that last past 15 years?
Signup and view all the answers
Investments easily converted into cash?
Signup and view all the answers
Not an example of a liquid account?
Signup and view all the answers
Taxes on annuities are due?
Signup and view all the answers
If a bank goes under what amount of money are you insured?
Signup and view all the answers
What is an annuity?
Signup and view all the answers
If you invest your money, is the interest taxable?
Signup and view all the answers
What is the minimum tax rate you will have to pay on dividends?
Signup and view all the answers
What is the maximum tax rate you will have to pay on dividends?
Signup and view all the answers
Money market accounts have varying interest rates?
Signup and view all the answers
What type of mutual fund is not open to new investors and its shares are sold on the stock market?
Signup and view all the answers
You cannot write checks against your money market account?
Signup and view all the answers
Type of stock that is cheap but risky?
Signup and view all the answers
What type of stock uses companies that pay large dividends?
Signup and view all the answers
What type of stock is a well-established company that pays dividends?
Signup and view all the answers
Type of stock that reinvests in the company instead of paying large dividends?
Signup and view all the answers
What is investment horizon?
Signup and view all the answers
Example of a fixed income asset?
Signup and view all the answers
What is true about Municipal bonds?
Signup and view all the answers
What is not true about Municipal bonds?
Signup and view all the answers
What is true about equities?
Signup and view all the answers
Which takes the longest amount of time to mature? Treasury bill, note, bond?
Signup and view all the answers
Which takes the shortest amount of time to mature? Treasury bill, note, bond?
Signup and view all the answers
Study Notes
Rate of Return
- Calculated using the formula: Profit or Loss / Investment
Vacation Weeks
- Initial job offers typically provide 2 weeks of vacation
- After 5 years, vacation entitlement increases to 3 weeks
- After 25 years, employees receive 4 weeks of vacation
Family Spending
- Families allocate approximately 10% of their income to vacation and recreation
Annual Percentage Yield (APY)
- To estimate years needed to double investment, use the formula: 72 / APY
- APY is calculated as Interest / Investment
Consumer Goods
- Consumer durables are also known as capital goods
Young Families' Debt
- Most young families primarily use installment loans for debt management
Voluntary Savings
- Examples include 401(k) plans, bonds, and savings accounts
Entrepreneurial Wealth
- Entrepreneurs have a net worth that is typically 4 times greater than that of others
Business Longevity Statistics
- Approximately 50% of new businesses survive past 5 years
- About 33% of new businesses last beyond 15 years
Long-Term Savings
- Forms of long-term forced savings include purchasing an asset, mortgage payments, social security, and pension payments
Liquid Investments
- Liquid investments can easily be converted to cash, such as a savings account
- Certificates of deposit are not classified as liquid accounts
Annuities and Taxes
- Taxes on annuities are payable when funds are withdrawn, especially if in a lower tax bracket
Bank Insurance Coverage
- Individual accounts are insured for up to $250,000, while joint accounts for married couples are insured up to $500,000
Annuity Definition
- An annuity refers to insurance payments designated for retirement savings
Taxability of Investment Interest
- Interest earned from investments is considered taxable income
Dividend Tax Rates
- Minimum tax rate for dividends is 5%
- Maximum tax rate for dividends is 15%
Money Market Accounts
- Interest rates for money market accounts can fluctuate
Mutual Funds
- Closed-end funds are types of mutual funds that are not open to new investors and trade shares on the stock market
Money Market Account Features
- It is possible to write checks against your money market account
Types of Stocks
- Penny stocks are characterized as cheap but involve high risks
- Income stocks represent companies that distribute large dividends
- Blue chip stocks refer to established companies with consistent dividend payments
- Growth stocks reinvest earnings into the company instead of issuing substantial dividends
Investment Horizon
- The term investment horizon refers to the duration of years one plans to invest
Fixed Income Asset Example
- A certificate of deposit serves as an example of a fixed income asset
Municipal Bonds
- Municipal bonds are issued by states and cities, and their interest is not subject to federal taxation
- They are considered not the safest investment option and are not backed by the U.S. Treasury
Equities
- Equities represent ownership shares in a business and do not mature, providing no guaranteed returns
Treasury Securities
- Among Treasury securities, bonds take the longest to mature, whereas Treasury bills mature the quickest.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Test your knowledge with these flashcards covering the key concepts from MoneySkill Mods 19-27. These cards focus on financial terms such as the rate of return and vacation time policies that impact workplace expectations and investment understanding. Perfect for reinforcing basic financial literacy skills.