Terms for consumers

Credit: Money borrowed to buy something now, with the

agreement to pay for it later
Service credit: an agreement to have a service performed now and
poz for it later
Usury laws: Laws setting maximum interest rates that may be
charged for loans.
Pawnbroker: A legal business that makes high-interest loans
based on the value of personal possessions pledged
as collateral.
Line of credit: A pre-established amount that can be borrowed on
demand with no collateral.
Deferred billing: A service to credit customers whereby purchases
are not billed for several months.
Loan sharks: Unlicensed lenders who charge illegally high
interest rates.
Open-ended credit: An agreement to lend the borrower an amount up
to stated limit and to allow borrowing up to that
limit again, whenever the balance falls below the
limit.
Closed-end credit: A loan for a specific amount that must be repaid, in
full, including all finance charges, by a stated due
date.
Capital: Property owned that is worth more than the
owner’s debt.
Collateral: Property pledged to assure repayment of loan.
Finance charge: Interest paid for the use of credit
Annual percentage rate (APR): The cost of credit, expressed as a yearly
percentage.
Principal: The total amount borrowed, or the unpaid portion of the
amount borrowed, on which the borrower pays interests.
Unused credit: The remaining credit avialable to you—that is, your credit
limit
minus the amount you have already spnt.
Simply interest: Interest computed on the amount borrowed (or saved) only,
without compounding.
Prime rate: The interest rate the banks offer to their best business
customers.

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Rebate: Partial refund of an amount spent.
Down payment: Part of the purchase price paid in cash up front, reducing the
amount of the loan.
Fixed-rate-loans: Loans for which the interest rate does not change over the life
of
the loan.
Revenue Money collected by the government through taxes.
(We pat taxes for the government)
Progressive taxes Taxes that take a larger share of income as the
amount of income grows.(Taxes depending on your
income, higher income higher taxes)
Proportional taxes (flat t.) Taxes for which the rate stays the same
regardless of the amount on which the tax is
imposed. (Same price of taxes for everybody
regardless of your income)
Regressive taxes Taxes that take a smaller share of income as the
amount of income grows.(Taxes depending on your
income, higher income lower taxes)
Standard deduction Stated amount taxpayers may subtract from
adjusted gross income instead of itemizing their
deductions. (You can take amount that your taxes
can be lower)
Tax brackets Income ranges to which different tax rates apply.
(Price level of taxes depending on income(5) )
Tax evasion Willful failure to pay taxes. (Breaking the law on
purpose)
Itemize The process of listing allowable deductions on a
tax return. (Put deduction on a list)
Exemption An amount taxpayers may subtract from their
income for each person who depends on their
income to live (If you have a family you feed, your
taxes can be lower)
Gross Income All the taxable income received during the year,
including wages, tips, salaries, interest, dividends,
alimony, and unemployment compensation. (All
income where you have to pay taxes)
Adjusted gross income Gross income minus allowed adjustments. (Gross
income – adjustments)
Child support Money paid to a former spouse to support
dependent children. (If you are divorced you have
to pay money for your children from ex)

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Alimony Money paid to support a former spouse. (If you are
divorced you have to pay money for your ex)
Deductions Expenses the law allows taxpayers to subtract from
their adjusted gross income to determine their
taxable income. (You can make your taxes lower if
you have more expanses)
Taxable income Income on which you will pay tax. (Income on
which you pay taxes.)
Audit An examination of a tax return by the IRS. (Test about your paying
taxes(double check) )
Liquidity ability of an asset to be converted into cash quickly
without loss of value
Maturity date the date on which an investment becomes due for
payment
Interest money paid by a financial institution for the use of
the saver’s money
Share account A saving account at a credit union
Principal A sum of money in a saving account on which
interest accrues
Compound interest Interest computed on the principal plus
accumulated interest.
Discretionary income Amount of money left over after the bills are paid.
Stockbroker Person who buys and sells securities for investor
Money market A combination savings-investment plan in which
the money deposited is used to purchase safe,
liquid securities
Certificate of deposit Deposit that earns a fixed interest rate for a
specified length of time
Securities Stocks and bonds issued by corporations or by the
government
APY Actual interest rate an account pays per year, with compounding
included
Discount bond- A bound purchased for less then its maturity value.
Annuity- A contract sold by an insurance company that
provides the investor a series of regular payments,
usually after retirement.
Diversification- An investment strategy for spreading risk of
investments.
Investing- The use savings to earn a financial return.
Inflation- A rise in the general level of prices.
Risk- Interest computed on the principal plus accumulated interest.

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Annual report- An SEC-required summary of corporation’s
financial results for the year and prospect for the
future.
Stock- Unit of ownership in corporation.
Financial advisers- An investment that represents the debt of company
or a government.
Bonds- Deposit that earns a fixed interest rate for a
specified length of time.
Mutual funds- A professionally managed group of investment
bought using a pool of money from many
investors.
Futures- Contracts to buy and sell commodities or stocks for
specified price on a specified date in the future.
Option- The right, but not the obligation, to buy or sell a
commodity or stock for a specified price within a
specified time period.
Penny stocks- Low priced stocks of small companies that have no
track record.
Common stock A type of stock that pays a variable dividend and
gives the holder voting rights.
ProxyStockholder’s written authorization to transfer his or her voting rights
t someone else, usually a company manager.
Income stocks Stocks with a consistent history of paying high
dividends.
Stock split An increase in the number of outstanding shares of
a company’s stock.
Market value- The price for which a stock is bought and sold in
the marketplace.
Leverage The use of borrowed money to buy securities.
Bull market A prolonged period of rising stock is bought and
sold in the market place.
Dividends The part of the corporation’s profits paid to
stockholders.
Preferred stock A type of stock that pays a fixed dividend and
carries no voting rights.
Growth stock Stocks in corporation that reinvest their profits into
the business so the company can grow.
Blue chip Stock of large, well-established corporations with a
solid record of profitability.
Par value An assigned (often arbitrary) dollar value printed
on a stock certificate.

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Bear market A prolonged period of risking of falling stock
prices ans a general feeling of investor pessimism.
Earnings per share A corporation’s after-tax earnings divided by the
number of shares of common stock outstanding.
Direct investment Buying stock directly from a corporation.
Short selling Selling stock borrowed from a broker that must be
replaced at a later time.
Dividend reinvestment Using dividends previously earned on the stock to
buy more shares.
Stockholders Owners of a corporation.
Capital gain An increase in the value of the stock above the
price inianally paid for it.
Junk Bond A bond with a very low rating, or rating at all.
Convertible bond A corporate bond that can be exchanged, at the
owner’s option, for a specified number of shares of
the corporation’s common stock.
Callable bond A bond that the issuer has the right to pay off
before its maturity date.
Agency bond Debt security issued by federal agencies.
Zero-coupon bond A bond that is sold at a deep discount, makes no
interest payments, and is redeemable for its face
value at maturity date.
Debenture A corporate bond not backed by collateral but only
by the general credit standing of the corporation.

Mortgage bond A corporate bond backed by specific assets as

collateral to assure repayment of the debt.
General obligation bond A municipal bond backed by the power of
the issuing state or local government to levy taxes
and borrow.
Investment-grade bond A high-quality bond considered to be a safe
investment.
Municipal bond A bond issued by a state or local government.
Face value The amount the bondholder will receive when the
bond is repaid at maturity.
Revenue bond A municipal bond issued to raise money for public-
works project and repaid by the income from the
project.
Prospectus A legal document that offers securities or mutual
fund shares for sale.

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Depreciation A decline in the value of property due to normal
wear and tear.
Family of funds A variety of mutual funds offers by one investment
company to cover a whole range of investment.
Growth fund A mutual fund whose investment goal is to buy
stocks that will increase in value over time.
Balanced fund A mutual fund that attempts to minimize risk by
investing in a mixture of stocks and bonds that
provide both current income and growth.
Front-end load A sales charge paid when an individual buys an
investment.
No-load fund A mutual fund for which investors pay no sales fee.
Duplex A building with two separate living quarters.
Income fund A mutual fund whose investment goal is to buy
stocks and bonds that pay consistently good
dividends.
Bond fund A mutual fund that invests in bonds to try to
achieve stable income with minimal risk.
Global fund A mutual fund that purchases stocks and bonds
from around the world as well as the United States.
Back-end load A sales charges paid when an individual sells an
investment.

Condominium An individually owned unit in an apartment-

style complex with shared ownership of
common areas.
Real estate Land and any building buildings on it.
Growth and income fund A mutual fund whose investment goal is to
earn returns from both dividends and capital gains.
Mortgage A loan to purchase real estate.
Index fund A mutual fund that tries to match the performance
of particular index by investing in the companies
included in that index.
Participation certificateAn investment in a pool of mortgages that have
been purchased by a government agency.
Money market fund A mutual fund that invests in sage, liquid
securities.
Real estate investment
trust (REIT) A corporation that pools the money of many
individuals to invest in real estate.

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Eviction The legal process of removing a tenant from rental
property
Fee A non-refundable charge for a service
Security deposit A refundable amount paid in advance to protect the
owner against damage or non-payment
Tenant Person who rents property from a landlord
Dormitory On-campus building that contains small rooms that
colleges rent to students
Landlord The owner of rental property
Lease A written agreement that allows a tenant to use
property for a specified time period and rent
Efficiency apartment An apartment with one large room that serves as the
kitchen, living room, and bedroom, plus a
bathroom
Insurance A method of spreading individual risk among a
large group of people to make losses more
affordable for all.\
Personal risk The chances of loss involving your income and
standard of living
Pure risk A chance of loss with no chance for gain
Risk management An organized strategy for controlling financial loss
from pure risk
Risk reduction The risk-management technique that involves
taking measures to lessen the frequency or severity
of losses
Probability The mathematics of chance; the likehood that
something will happen
Risk (insurance) The chance of financial loss from perils to people
or property
Property risk The chances of loss or harm to personal property or
real estate
Liability risk The chances of loss that may occur when your
errors or inappropriate actions result in bodily
injury to someone else or someone else’s property
Speculative risk A risk that may result in either gain or loss
Risk assumption The risk-management technique of establishing a
monetary find to cover the cost of a loss
Risk avoidance The risk-management technique of eliminating the
chance for loss by never doing the activity that
could result in the loss

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Indemnification Putting the insured back in the same financial
condintion as before the loss occurred
Insurable interest Any financial interest in life or property such that,
if the life or property were lost or harmed, the
insured would suffer financially
Insurer A business that agrees to pay the cost of potential
future losses in exchange for regular fee payments
PolicyA written insurance contract
Premium A fee usually paid at regular intervals to an insurer
for an insurance policy
Policy holder The person who owns an insurance policy
Personal property floater Insurance coverage for the insured’s
moveable property wherever it may be located
Co-insurance clause An insurance policy provision requiring
policyholders to insure their building for a stated
percentage of its replacement value in order to
receive full reimbursement for a loss
Liability coverage Insurance to protect against claims for bodily
injury to another person or damage to another
person’s property
No-fault insurance Automobile insurance in which drivers involved in
an accident receive reimbursement for their
medical and repair expanses from their own insurer
Personal injury protection
(PIP) Automobile insurance that pays for medical, hospital, and funeral
costs of the insured and passengers involved in an
accident, regardless of fault.
Umbrella liability insurance Insurance that supplements basic auto and
property liability coverage by expanding
reimbursement limits and including some risks that
were excluded in the basic coverage
Renter’s policy Insurance that protects renters from property and
liability risks
Homeowner’s policy Insurance that protects property owners from
property and liability risks
Endorsement A written amendment to an insurance policy
Attractive nuisance A dangerous place, condition, or object particularly
attractive to children
Collision coverage Automobile insurance that protects the insured’s
own car against damages from accidents or vehicle
overturning

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Comprehensive coverage Automobile insurance that protects the
insured’s own car against damages from causes
other than collision or vehicle overturning
Uninsured/underinsured
motorist coverage Automobile insurance that pays for the insuerd’s
injuries when the other driver is legally liable but
unable to pay

Tomas Baran, Junior