| A | B |
|---|
| incentive | a reason or motivation for a decision |
| rational decision making model | a table or chart that allows a person to select one option over another |
| bank | a profit-making financial institution that offers checking, savings, and loan services to customers |
| credit union | a non-profit financial institution that offers checking, savings, and loan services to members |
| spread between interest charged and interest earned | difference between what banks charge for loans vs. what they pay for savings accounts |
| risk | the possibility of loss of value in a financial decision or investment |
| return | the possibility for a profit or increase in value of an investment |
| stock | a share of ownership in a corporation |
| bond | a loan to a corporation or government |
| mutual fund | an investment option where the investor's money is pooled with other investors and used to invest in several stocks and/or bonds |
| credit worthiness | determined by credit history and collateral |
| interest rate | the cost of borrowed money |
| credit cards | these generally charge the highest interest rates for consumer loans |
| simple interest | interest charged only on the principal of a loan |
| principal | the amount borrowed |
| compound interest | interest charged on principal AND interest |
| premium | the cost you pay to have an insurance policy |
| deductible | the amount you pay out of pocket when you need to use your insurance |
| collision insurance | automobile insurance coverage that repairs your car in the event of an accident |
| liability insurance | insurance that repairs damage you do to others if you cause an accident |
| term life insurance | an insurance policy that lasts for a specified time and pays benefits when the insured dies |
| whole life insurance | an insurance plan an individual pays for throughout their life, usually higher premiums than term life plans |
| barter | trade |
| IRA | a tax-deferred retirement plan |
