Financial Math Study Guide for Test 2

Front

What is the maximum percent of your monthly gross income you should have set aside to pay debt payments?

Back

36% of your monthly gross income should be set aside for debt payments.

Front

What is the range of a GREAT credit score?

Back

A GREAT credit score ranges from 760 to 800.

Front

Which type of account would you expect the lowest rate of return on?

Back

Christmas Club Savings typically offers the lowest rate of return among savings and investing accounts.

Front

What should Hunter consider when deciding to lease or purchase a vehicle?

Back

Hunter should consider his average mileage; leasing is a good option if his mileage is under the lease contract.

Front

What are the five basic types of savings and investing accounts?

Back

Savings accounts, certificates of deposit, Christmas club accounts, mutual funds, and ETFs.

Front

What is the purpose of a Christmas Club Savings account?

Back

A Christmas Club Savings account helps individuals save money specifically for holiday expenses.

Front

What is a certificate of deposit (CD)?

Back

A CD is a savings account with a fixed interest rate and fixed date of withdrawal, typically offering higher interest than regular savings.

Front

What is the difference between leasing and purchasing a vehicle?

Back

Leasing involves paying for the use of a vehicle for a set period, while purchasing means buying the vehicle outright.

Front

What is the significance of a credit score?

Back

A credit score indicates a person's creditworthiness and affects their ability to borrow money.

Front

What is an ETF (Exchange-Traded Fund)?

Back

An ETF is a type of investment fund that is traded on stock exchanges, similar to stocks.