Personal Finance Part II – What is Security for Loans?
Security loan is the type of loan borrowers have to assign collateral to the lender to certain tangible assets such as stocks, bonds, life insurance policies, a car, or a home, in case of borrower defaulting on the loans, in order to reduce the lender’s risk.
1. Fully and partially secured loans
a) Fully secured loan
If the borrower signs over to the lender assets equal in value to the total loan, that loan is fully secured.
b) Partial secured loans
Partial secured loan is the loan that is not fully secured. Only a certain percentage of the loan is being secured by certain tangible assets.
2. Signature Loans
A borrower considered to present little risk to the lender may be asked for nothing more than a signature on the promissory note and loan application form.
3. Co-Signer
Other person may be required by the lender to sign the loan agreement. By signing, the co-signer agrees to repay any outstanding balance on the loan, if the borrower fails to do so.
4. Durable Goods
a) When consumer durables (such as vehicles, appliances, and furniture) are bought with credit loans, these articles are offered as security for the loan.
b) If the consumer obtains a loan from a bank, credit union, or trust company a chattel mortgage will be signed that transfers the ownership of the goods to the lender in case of borrower default.
5. Lien
A lien is a claim registered against certain property. If full monthly payments of condo fee is not paid to the management company, the management company may register a lien against the condo.
I hope this information will help. If you need more information of health or series of articles of the above subject at my home page at:
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Kyle J. Norton
Personal Finance………..?
1. Match the following words to its correct definition.
A. General and progressive increase in prices
B. Investment in which you are loaning money for a certain time period to the issuer
C. Individual retirement account in which a person can set aside after-tax income up to a specified amount each year, earnings are tax-free, and tax free withdrawals may be made after age 59 1/2
D. Distributions of profit a company pays you because you own stock in that corporation
E. Supplemental retirement system in the United States
F. Individual Retirement Account
G. The amount of money you make on an investment in relation to the amount of time your money is invested stated as an annual percentage
H. Quick and easy way to estimate how long it will take for you to double your money
I. Type of tax-qualified deferred compensation plan in which an employee can elect to have the employer contribute a portion of his or her cash wages to the plan on a pretax basis
J. Retirement plan for certain employees of public schools, employees of certain tax-exempt organizations and certain ministers
K. An exchange where security trading is conducted by professional stockbrokers
L. The age at which someone stops working permanently
M. Asset purchased for profit
N. An arrangement to provide income to people when they are no longer earning income
O. Collection of financial securities (stocks, bonds, cash) that is managed by a company or a person on behalf of many investors
Rule of 72
Dividend
Mutual Fund
Bond
Stock Market
Rate of Return
Inflation
Pension
Retirement
Social Security
IRA
Roth IRA
401K
403b
Investment2.
How do mutual funds reduce risk?
A) They invest in stocks
B) They provide investment diversification
C) They use an investment manager
D) None of the above
3. Your grandpa is 62 and asks you if he is eligible to collect Social Security. What do you tell him?
A) He could collect his full payment now.
B) He could have started collecting at age 59 1/2.
C) He can receive reduced payments now.
D) None of the above.
4. Which type of account is usually used when employees can have a matching contribution from their employer?
A) Roth IRA
B) Traditional IRA
C) 401k
D) 403b
5. In the future, you and your friends plan to receive Social Security after you retire. At what age can you currently plan to receive full benefits?
A) 59 1/2
B) 62
C) 65
D) 67
6. Which type of individual retirement account should you choose if you want your contributions to be tax deductible?
A) Roth IRA
B) Traditional IRA
C) 401k
D) 403b
7. When you reinvest dividends,
A) you will receive them by check
B) you will receive them by direct deposit
C) the dividends are deposited into a Certificate of Deposit
D) the dividends are used to buy more shares of stock
8. Bonds are known as
A) fixed income investments
B) equities
C) dividends
D) no load mutual funds
9. When you purchase stock in a corporation
A) you are loaning money to the corporation
B) you are technically becoming a part owner of that corporation
C) you do NOT earn the right to vote on the direction of the company
D) you have to own the stock for at least one year before you are allowed to sell it.
10. Which of the following is the oldest measure of the U.S. stock market and the most widely used indicator of stock market activity?
A) The NASDAQ
B) The S&P 500
C) The Dow Jones Industrial Average
D) The Russell 2000
11. The total value of the securities a mutual fund owns divided by the number of shares outstanding is known as the mutual fund’s
A) Face Value
B) Net Asset Value
C) Market Value
D) Yield
12. Mutual Funds called "load" funds charge a high flat fee whyou purchase the fund or sell the fund.
A) True
B) False
13. TD Ameritrade is an example of a full-service brokerage company.
A) True
B) False
14. Treasury bonds are considered to be more risky than owning stocks.
A) True
B) False
15. A Roth IRA is beneficial because your withdrawls are tax-free.
A) True
B) False
16. IRA stands for Important Retirement Assets
A) True
B) False
That’s a lot of questions. If you care to email me any particular ones you are having trouble with, I’d be glad to help you. Or, if you email me your answers, I’d be glad to check them over for you. Good luck.
References :
Good grief Kassie, you could have found the answers in the textbook by the time it took you to type out the question. Putting it into homework help might have been a better venue.
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