Compen$ation
Common form of compensation that is paid out biweekly or monthly. *Not per hour*
What is a salary?
Characteristic of an investment that captures how quickly it can be sold at a fair market price.
What is liquidity?
Tax levied on individuals' job earnings
What is an income tax?
Type of account typically offers a higher interest rate than a checking account and is used for storing money not needed for daily expenses.
What is a savings account?
The risk that a borrower will be unable to pay back the interest or principal on their debt?
What is default (or credit) risk?
Type of compensation plan where employee receives payment based on their sales.
What is commission?
Long-term debt securities issued by corporations or governments that often pay a fixed rate of interest over their life.
What are bonds?
This dollar-for-dollar reduction is given for specific expenditures, like adopting a child, and directly reduces the amount of taxes you owe.
What is a tax credit?
What is 3-6 months?
The risk that the value of a fixed income investment will decline when interest rates rise.
What is interest rate risk?
Employer sponsored retirement plan that allows employees to save and invest a piece of their paycheck before taxes are taken out. Often, the employer matches part of the employee's contributions.
What is a 401-k plan?
The principle that suggests that $1 today is better than $1 in the future because the money can grow if it earns interest over time.
What is the time value of money?
What is Form W-4?
A payment/investment stream that has equal, periodic payments for a set period of time.
What is an annuity?
The risk that the value of a foreign investment will change when the value of the country's currency changes.
What is foreign exchange risk?
Type of retirement plan where the employee receives a defined benefit at retirement.
What is a pension plan?
Type of bond that is attractive because its interest payments are often tax-exempt.
What are municipal bonds?
Describes the tax on profits from the sale of assets held for more than a year, typically taxed at a lower rate than ordinary income.
What is a capital gains tax?
Type of tax-advantaged savings account that is primarily used for education costs.
What is a 529-plan?
Risk that if one institution/industry fails, the entire financial system could collapse.
What is systemic risk?
Benefit plan that allows employees to set aside money on a pre-tax basis to pay for eligible medical expenses
What is a health savings account (HSA)?
This graph shows the relationship between interest rates and time to maturity of debt securities, often used as a predictor of an economic recession when it inverts.
What is the yield curve?
Enacted in 2017, this US tax reform bill included cuts to the corporate tax rate and changes to various deductions and tax brackets.
What is the Tax Cuts and Jobs Act?
The price of any financial asset should be equal to the ______________ of the cash flows it generates over time.
What is present value?
Risk that a country will default on its debt or other obligations.
What is sovereign risk?