Banking
What is the primary purpose of a savings account?
To store money in a secure place, while earning interest over time.
Helps individuals save for emergencies.
What is budgeting?
A way to Balence income, expenses, and financial goals for a amount of time.
What is credit?
The ability to buy things and pay later
What is the purpose of insurance?
Insurance helps protect you from big financial losses by covering certain risks, like accidents, illness, or damaged property.
What is investing?
Investing is the act of allocating money into assets, (like stocks, bonds, or real estate) with the expectation of gaining a profit or income.
What is the difference between a checking account and a saving account?
A checking account is for daily transactions; paying bills, using debit cards, or writing checks.
A savings account is meant to save money over time typically earns interest but has limits for withdrawal.
What is the difference between cognitive bias and dept?
Cognitive bias is systematic thinking errors that influence decision-making, potentially leading to financial missteps.
Debt is an obligation to repay a borrowed sum of money, often with interest.
What is a pre-approved loan that allows you to borrow money as needed, up to a set limit, and repay it over time?
A line of credit
What is the difference between a premium and a deductible in an insurance policy?
A premium is the amount you pay regularly to have insurance.
A deductible is the amount you pay out of pocket before the insurance starts covering costs.
What are different types of investments?
1. Stocks
2. Bonds
3. Mutual funds
4. Real Estate
6. Crypto
How does compound interest work, why is it beneficial for long term savings?
Compound interest is the interest earn not only from your original deposit, but from accumulations over time.
Long term savings benefit by growing faster.
How does endowment effect work?
By assigning more value to things that are already owned.
5 Things to consider when applying for a credit card:
How does health insurance help reduce the cost pf medical care?
Health insurance covered part or a large portion of medical bills for doctor visits, emergencies, and medication.
what are positive and negative impacts of investing?
Positive: builds wealth over time, beats inflation, creates passive income.
Negative: investments can lose value, poor decisions increase risk.
What are the main differences between monetary policy tools such as reserve requirements, discount rates, and open market operations?
Reserve requirements are rules on how much money banks must keep and not lend out.
Discount reates are interest rates the central bank charges banks to borrow money.
Open markets operations are for when central banks buys or sells government bonds to control money in the economy.
You want to anticipate all your expenses by using every dollar at your disposal, what is the best budgeting strategy?
Zero based budget
What are the differences of installment loan and revolving credit?
Installment - specific purchase, specific amount of time. Regular equal payments of principal + interest.
Revolving - open line of credit for any purchases (within the limit). Payments depend on amount borrowed.
What is the difference between term life insurance and whole life insurance?
Term life insurance covers you for a set period that pays out on expenses during death.
Whole life insurance lasts your entire life and includes savings to grow over time.
Ava starting investing $100 a month into a diversified ETF at age 22. By the time she’s 40, her investments have grown significantly due to compound interest.
what helped her grow with her investments?
She started early and was consistent with monthly payments.
What is Basel III, and how does it help keep banks safe?
Basel III is a set of international rules that makes banks hold more money in reserve to protect against losses and decrease risk.
You have stocks that have increased in value and some that have decreased. You sell increasing stocks and keep decreasing stocks, which bias does this example apply to?
Disposition bias
What is the range of credit scores and what is considered bad to best?
Ranging from 300-850 is based on an individual's credit history detailed in a credit report.
300 until 579 is considered bad.
740 until 800 is considered best.
How does insurance help the economy and reduce risk for businesses and individuals?
Insurance lets people and businesses takes smart risks without fearing total financial loss.
Liam hears a rising stock tip and puts all his savings into one company. The company performs poorly, and he losses most of his money.
why did Liam lose all his money and what should he have done?
Putting all your money in one place is risky.
He should have diversified his stocks.