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?
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How much do families spend on vacation and recreation?
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How to solve for years with APY?
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How to solve for APY?
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Name for consumer durables?
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What type of debt is used by most young families?
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Voluntary savings examples are?
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Most entrepreneurs have a net worth of ____ times of others?
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Percentage of new businesses that last past 5 years?
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What are forms of long-term forced savings?
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Percentage of new businesses that last past 15 years?
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Investments easily converted into cash?
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Not an example of a liquid account?
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Taxes on annuities are due?
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If a bank goes under what amount of money are you insured?
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What is an annuity?
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If you invest your money, is the interest taxable?
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What is the minimum tax rate you will have to pay on dividends?
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What is the maximum tax rate you will have to pay on dividends?
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Money market accounts have varying interest rates?
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What type of mutual fund is not open to new investors and its shares are sold on the stock market?
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You cannot write checks against your money market account?
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Type of stock that is cheap but risky?
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What type of stock uses companies that pay large dividends?
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What type of stock is a well-established company that pays dividends?
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Type of stock that reinvests in the company instead of paying large dividends?
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What is investment horizon?
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Example of a fixed income asset?
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What is true about Municipal bonds?
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What is not true about Municipal bonds?
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What is true about equities?
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Which takes the longest amount of time to mature? Treasury bill, note, bond?
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Which takes the shortest amount of time to mature? Treasury bill, note, bond?
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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
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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.
