1506685
| Question | Answer |
| Down Payment | Good faith deposit made by a buyer to underline their commitment to complete the deal. In mortage agreements down payment is the difference between the purchase price of a property and the loan amount. Also called earnest money. |
| Assets | Something valuable that an entity owns, benefits from or has use of, in generating income. |
| Liabilities | A claim against the assets, or legal obligations of a person or organization, arising out of past or current transactions or actions. Liabilities require mandatory transfer of assets or provision of services at specified dates or in determinable future. |
| Five C's of Credit | Judgmental factors which in theory bankers use to evaluate the quality of a small business or personal loan. 1. Character of Applicant. 2. Capital-Stable and Accurate base 3.Capacity to generate cash flow adequate enough to cover debt-service. 4. More than adequate valuable assets for pledging as collateral. 5. Economic and other conditions conducive to the applicants plans. |
| Interest | A fee paid for the use of another party's money. To the borrower it is the cost of lending money, to the lender it is the income generated from lending it. |
| APR | Standardized method of quoting the effective interest rate (actual cost of credit) on consumer loans. Includes all fees and takes into account the continual reduction of principal amount through amortization. |
| Credit Score | The number listed on a consumer credit report that represents a statistical summary of the information. The credit bureau is the firm that sells, collects and stores this information for a fee. |
| 401(k) | Employee sponsored employee benefit scheme supported by the US tax code. Under this plan a limited amount of an employee's before tax salary is deposited into a tax-deferred plan retirement where it accumulates free of tax. |
| W-2 | Wage and tax statement. A tax form prepared by an employer and given to an employee to be filed with their 1040 form, listing wages earned during that year, federal and state taxes withheld and social security tax information. |
| 1099 | The IRS form for the annual reporting of dividend and interest payments made to investors. |
| Roth IRA | A tax qualified savings account for individuals that allows the account holder to set aside money for retirement. The contributions to a Roth IRA account are fully taxable at the time they are deposited, but tax free when they are withdrawn. |
| Collateral | Specific asset pledged as a secondary or subordinate security by a borrower or guarantor. |
| Floating check | Interval between the day a check is written (decreasing the firms cash balance) and the day the amount is actually deducted from the firms bank balance. |
| Gross Amount | Total amount of income earned annually prior to taxes. |
| Dollar cost averaging | Investment strategy that seeks to minimize risk by reducing the average cost per share. Under this plan an investor invests a set amount in securities regardless of the markets up or down movements. He or she therefore buys more securities when the price is low and less when it is high. This approach often yields greater returns over the long-term than the attempts to predict stockmarket behavior. |
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