FINA 2770 EXAM 2 RATED A+
403b - ANSWER-similar to a 401k, but only employees of certain nonprofit
organizations can participate
457 plan - ANSWER-same as a 403b and 401k plan but no 59 1/2 rule
Asset Allocation - ANSWER-The process of spreading your assets among several
different types of investments to lessen risk
Bond - ANSWER-A loan to a corporation, the government, or a municipality. Receive
periodic interest payments, and the principal is repaid at maturity. Can keep before till
maturity or sell it before maturity is reached.
catch-up provision - ANSWER-Employees over age 50 can contribute and additional
$5,500 to their 401(k) or Roth 401(k).
defined contribution plan - ANSWER-Individual account for each employee.
Equity Capital - ANSWER-Money that a business obtains from its owners; stockholders
buy shares of a company's stock
Mutual Fund - ANSWER-Investor's money is pooled and invested by a professional fund
manger. You buy shares in fund. Provides diversification to reduce risk. Funds range
from very conservative to extremely speculative. Match your needs with a fund's
objective.
Reverse Annuity Mortgage - ANSWER-A mortgage which the lender uses the
borrower's house as collateral; to buy an annuity for the borrower from a life insurance
company; also called an equity conversion. Allows borrowers (62 years or older) to
borrow against their equity. Loan is due upon the sale of property or death of owner.
Roth IRA - ANSWER-A personal savings plan; contributions are not tax-deductible;
earnings are tax-free. After 5 years, distributions are tax-free and penalty-free if you are
at least age 59 1/2. Whether you should roth or not depends n what you think your tax
bracket will be in the future. if they're gonna go up, take the hit now. if down, do the
opposite.
Straight Life Annuity - ANSWER-provides more income than any other type of annuity
but stops when you die
The Time Factor - ANSWER-the longer you are invested the better your opportunity for
increasing returns
403b - ANSWER-similar to a 401k, but only employees of certain nonprofit
organizations can participate
457 plan - ANSWER-same as a 403b and 401k plan but no 59 1/2 rule
Asset Allocation - ANSWER-The process of spreading your assets among several
different types of investments to lessen risk
Bond - ANSWER-A loan to a corporation, the government, or a municipality. Receive
periodic interest payments, and the principal is repaid at maturity. Can keep before till
maturity or sell it before maturity is reached.
catch-up provision - ANSWER-Employees over age 50 can contribute and additional
$5,500 to their 401(k) or Roth 401(k).
defined contribution plan - ANSWER-Individual account for each employee.
Equity Capital - ANSWER-Money that a business obtains from its owners; stockholders
buy shares of a company's stock
Mutual Fund - ANSWER-Investor's money is pooled and invested by a professional fund
manger. You buy shares in fund. Provides diversification to reduce risk. Funds range
from very conservative to extremely speculative. Match your needs with a fund's
objective.
Reverse Annuity Mortgage - ANSWER-A mortgage which the lender uses the
borrower's house as collateral; to buy an annuity for the borrower from a life insurance
company; also called an equity conversion. Allows borrowers (62 years or older) to
borrow against their equity. Loan is due upon the sale of property or death of owner.
Roth IRA - ANSWER-A personal savings plan; contributions are not tax-deductible;
earnings are tax-free. After 5 years, distributions are tax-free and penalty-free if you are
at least age 59 1/2. Whether you should roth or not depends n what you think your tax
bracket will be in the future. if they're gonna go up, take the hit now. if down, do the
opposite.
Straight Life Annuity - ANSWER-provides more income than any other type of annuity
but stops when you die
The Time Factor - ANSWER-the longer you are invested the better your opportunity for
increasing returns
