Personal Finance

Why does a company issue stock?

A company issues stock when the need to raise cash for a project in exchange for giving up parts of the company.

What is the stock exchange?

A stock exchange is a place where stocks are bought and sold. There are many stock exchanges in the USA and around the world. The two major ones are the New York Stock Exchange and NASDAQ.

What are the 2 types of credit cards?

Bank credit cards and gas or store credit cards. For a gas or store credit card you must be 18 years old. Can sign without co-signer if you have sufficient income. It is a good way to establish a credit history. Easier than bank card to get and is limited to the merchant that gave you the card. Bank credit cards need to be at least 18 and show proof of income and good money management. Harder to get. It allows you to buy now, and pay later. If you don't pay off you will be charged interest.

What are two ways the bank can charge people money for making mistakes?

Banks can charge people for bounced checks for using the wrong ATM, when they don't pay back their money on time or fully they will be charged interest, and when you don't meet the requirements for your account. A bounced check is when someone writes a check for more than they have in there checking account. Banks will charge a fee and the merchant may charge a fee. Too many bounced checks will result in the closing of you account. Banks can also charge you for using ATM's that you don't have an account with. The bank that you use and the bank's ATM that you used can both charge you a fee. Banks can charge you interest if you don't pay your bills or loans on time. They can also charge you a fee if you don't meet the requirements on a accounts (such as always having a minimum balance of at least $500).

What is the difference between a common stock and a preferred stock?

Common stock is the most frequently issued stock and represents basic ownership and voting rights. It is issued before preferred stock and are usually better. They are paid dividends after preferred stockholders and if a company goes bankrupt preferred stockholders are also paid first. Preferred stock is issued after common and preferred stockholders don't have any voting rights. They also have a fixed dividend while common stock does not (bad if company grows).

What are the differences between a credit card and debit card?

Debit: issued by your bank money automatically taken from savings or checking accounts, normally used for everyday expenses, banks can charge fees per transaction, usually need a pin for financial transactions, spending limited based on checking or saving account balances (can't spend more than you have), usually no fees Benefits: you don't go into debt, don't have to pay interest Limitations: have to track your balance because if you spend more than you have you are charged a fee. If you run out of money, can't make more purchases Credit: issued by bank or business, owner can pay for items later (since the bank or business pay for them), owners can pay interest on unpaid items, normally used for larger purchases,can charge a yearly fee, spending limit based on credit limit, can charge late fees, appears on credit report Benefits: you can spend money you don't have yet, can take your time paying it back, and it is good for emergencies Limitations: you can go into debt and the banks charge interest which makes you pay more for items.

Why does the price of a stock go up or down?

If more investors are selling then buying the stock the price goes down. If more investors are buying the stock goes up.

What are market indices? Some examples?

Indices are snapshots of how the market is doing in general. There are many indices. Two of the most widely used indices are the Standard and Poor's 500 Index (tracks the 500 most popular stocks on the NYSE and is used as an indicator) and the Dow Jones Industrial Average (tracks the performance of 30 US blue chip stocks-widely followed).

How risky is it to invest in a stock?

Investing in stock is riskier than investing in bonds, real estate, gold and cash. It's very easy to lose money off the wrong stock.

What do investors look for when buying a stock?

Investors look for companies with the best possibility for strong, long lasting earnings.

How does overdraft protection work?

It is a checking account feature that automatically transfers available funds from your savings or second checking account if you overdraw it. It is like a safety net so that you are not charged a fee for writing a bounced check.

What are the different ways that people can deposit checks and transfer money?

People can deposit by going to the bank, through apps, ATM, etc.

What is a stock?

Stock is partial ownership in a company and can be held by groups, people, or other companies.

How is stock bought and sold?

Stock is usually purchased through a stockbroker (a licensed professional who advises about investments, stocks, bonds, and mutual funds). The broker gets money by getting a percentage of the transaction.

What is the FDIC and how does it help you?

The FDIC is basically an insurance company that will insure up to $250,000 of your money if your bank is insured by them. For this reason it is smart to not put over 250,000 dollars in one account so that it can all be insured. So if a fire were to happen at the bank the FDIC would pay it back.

How is a stock regulated? Examples?

The Security Exchange Commision (SEC) regulates the activity of stockholders. They help protect investors from crime and make the markets operate fairly. The Financial Industry Regulatory Authority (FINRA) also protects investors by fining individuals and programs for bad behavior (they can revoke license).

How does a checking account work?

The primary purpose of a checking account is for everyday money transactions. There is few to no restriction on the amount of withdrawals or checks per month (some checking accounts offer a limited number of "free" checks per month and charge a fee if you go over the limit). May pay interest, with some paying higher interest as your balance goes up. To open up a checking account you will need a picture ID, your social security number (or some other form of government identification), minimum opening balance (banks could let you put down only one dollar or minimum opening balance), and a parent or guardian.

How does a savings account work?

The primary purpose of a savings account is to save money for emergencies, future purchases, or to invest. The number of times you can withdraw for your savings account is limited (usually 6 or less). Savings accounts usually pay a higher interest-bearing checking account. They may require a minimum balance to avoid fee and may charge fees for too many withdrawls. You can deposit money into your savings account and withdraw money from your account. You can withdraw money from your account using a debit card at a ATM. You will need a PIN number that is a four digit code to access this.

How can you open a saving and checking account?

To start a account with a bank you will need to go into the bank and work with a banker to set up an account. To open up a account you will need a picture ID, your social security number (or some other form of government identification), minimum opening balance (banks could let you put down only one dollar or minimum opening balance), and a parent or guardian who will also have to have a picture ID and social security number.

What are the 4 major credit cards?

Visa, Mastercard, Discover, and American Express.

How do you get a credit card?

You fill out a request but you must meet the requirements for the credit card.