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Questions and Answers
Consumption primarily refers to the act of saving money for future expenditures.
False
Donating money is considered a form of consumption as it directly impacts one's lifestyle.
False
A budget is calculated by subtracting savings from income to determine total expenditures.
True
The principal is the additional charge paid by the borrower to the lender for the use of borrowed funds.
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When prioritizing spending, it is advisable to buy optional items before necessary items if funds are limited.
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Online shopping does not involve any risks if reputable websites are used.
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Personal data is at risk of being leaked or stolen during online shopping transactions.
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Savings is considered a form of investment.
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Intellectual property rights in online shopping only concern the sale of counterfeit goods.
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When borrowing, both the interest and the principal must be repaid in full by the end of the borrowing period.
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Using secure payment methods is an essential coping strategy for online shopping.
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Higher investment returns are guaranteed when taking on higher risks.
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Gaining a better understanding of cybersecurity is not a consumer responsibility related to online shopping.
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Donations are considered a primary use of money in responsible financial management.
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The costs of borrowing can include lower credit scores if debts are not repaid.
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Investment risk and return are positively correlated, meaning higher risk typically leads to higher expected returns.
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Bank deposits are associated with higher risk and lower expected returns compared to stocks.
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To prevent falling for investment frauds, one should consult financial experts after a fraudulent offer is made.
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Learning about financial management can help individuals avoid investment scams.
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Investment fraud tactics include gaining the victim's trust as a primary step.
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Fraudulent online stores often offer products at significantly inflated prices to attract buyers.
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To avoid check fraud schemes, sellers should solely rely on email confirmations of payment.
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Assessing a seller's credibility involves checking their social media presence, including the creation date of their page.
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Utilizing cash-on-delivery payment methods increases the risks associated with online shopping.
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One way to identify potential online shopping fraud is to investigate discrepancies in the seller's claimed company location.
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Credit cards allow immediate payment without borrowing from the issuing company.
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Time deposits allow immediate withdrawal of funds without restrictions.
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Life insurance is included in the services provided by financial institutions.
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Investment services exclude financial instruments like bonds.
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Bankruptcy is a potential outcome of being unable to repay debts.
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The accumulated amount is the sum of the interest and the principal.
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Overspending is defined as when a person's consumption is equal to their basic needs.
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In the context of company bonds, a person becomes a creditor when they invest.
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Cybersecurity concerns primarily involve the safety of physical assets in a company.
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Dividends are a form of return for owning a company's bonds.
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Study Notes
Different Uses of Money
- Spending money on goods and services is called consumption.
- Setting aside a portion of income for future spending is called saving.
- Investing money into tools like stocks and bonds is known as investment.
- Contributing money to charities or those in need is called donation.
Setting Priorities and Budgeting
- Needs are essential for basic living.
- Wants are not essential and may be considered luxuries.
- Rational consumption involves purchasing necessary items first and optional items only if there are funds remaining
- Overspending means spending beyond one's means and without spare funds.
- A proper budget should allocate income for spending, savings, and potential loan repayments.
- Budget Formula: Income - Savings = Expenditure
Borrowing Responsibilities, Costs, and Risks
- The amount of money loaned is referred to as the principal.
- The return the lender receives is the interest.
- The borrowing period indicates the time frame within which the borrower needs to repay the principal and interest.
- Not repaying debts on time can negatively impact credit scores and potentially lead to bankruptcy or stress.
General Financial Services
- Deposits involve placing funds in a bank account with potential interest earnings.
- Loans involve borrowing money and paying back over time with interest.
- Insurance provides financial protection against unexpected events.
- Investments aim to grow wealth over the long term.
Investment Risks and Returns
- The goal of investing is to generate returns, leading to an increase in wealth.
- Risk refers to the possibility that the actual return may be different from what was anticipated.
- Higher risk investments typically offer higher potential returns.
- Investment fraud tactics can be used to deceive individuals into making unwise investments.
Online Shopping Precautions
- Online scams can occur on unreliable websites, leading to loss of money or personal information.
- Personal data leaks or thefts can pose security risks.
- Mismatched products can lead to disappointment and potential monetary loss.
- Overspending and debt can arise from impulsive online purchases.
Coping Strategies for Online Shopping Risks
- Use trusted online shopping platforms for product information and purchases.
- Use secure payment methods to protect financial data.
- Protect personal data and avoid sharing sensitive information.
- Carefully review online purchase terms and conditions.
- Maintain awareness and avoid online shopping addiction.
Intellectual Property Rights
- Intellectual property rights encompass trademarks, copyrights, patents, and more.
- Counterfeit goods and infringing works are examples of online shopping intellectual property violations.
Combating Online Shopping Crimes
- Online shopping-related crimes can negatively impact both individuals and society.
- Criminal activity related to online shopping may include fraud and scams, data breaches, and intellectual property infringement.
Consumer Responsibilities in Online Shopping
- Enhance cybersecurity knowledge to protect oneself from online threats
- Implement network security measures
- Be mindful of legal boundaries and avoid unknowingly breaking them
Key Vocabulary
- Investing involves putting money into assets with the expectation of future returns.
- Spending refers to using money on goods and services, and overspending occurs when it exceeds affordability or needs.
- Principal represents the initial amount of money borrowed.
- Interest refers to the cost of borrowing money, paid by the borrower to the lender.
- Interest Rate is the percentage at which interest is calculated.
- Borrowing Period defines the duration of a loan.
- Accumulated Amount is the total amount owed by the borrower, including principal and interest.
- Compound Interest is calculated on both the principal and the accumulated interest.
- Dividend is the return for owning a company's stock or share.
- Inflation is a general increase in prices over time.
- Intellectual Property refers to intangible rights protecting creations like inventions or artistic works.
- Return is the profit or gain resulting from an investment.
- Risk is the possibility of loss or an unfavorable outcome.
- Cybersecurity encompasses measures to protect computer systems and networks from unauthorized access or damage.
Credit Cards
- Credit cards are non-cash payment systems that allow users to make purchases and pay later.
- Using a credit card involves borrowing money from the issuing company.
Risks Associated with Debt Inability
- Lower credit scores negatively impact future borrowing opportunities.
- Bankruptcy occurs when an individual cannot repay outstanding debts.
- Stress can arise from financial burdens and difficulty managing debt.
Borrowing Considerations
- Analyze the reason for borrowing and ensure it's reasonable and necessary.
- Assess available alternatives before deciding to borrow.
- Evaluate the risk of late repayments and ensure you can manage it.
- Determine if the borrowed amount is suitable and aligned with your financial capacity.
General Financial Services by Institutions
- Deposit services offer various types of accounts for saving and earning interest.
- Loan services provide access to different loan products for individuals and businesses.
- Insurance services offer protection against various risks, like life, health, and property.
- Investment services help manage and grow wealth through different investment options.
Deposit Services
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Savings Deposits (活期存款): These deposits allow for flexible withdrawals at any time with relatively low-interest rates.
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Time Deposits: These deposits require a predetermined holding period to be withdrawn, offering higher interest rates in return.
Loan Services
- Credit card lending allows for purchases and repayments over time.
- Personal loans provide funds for various purposes, with repayment schedules based on the borrowed amount and terms.
- Mortgages are used to finance the purchase of real estate through long-term loans.
- Overdrafts allow withdrawals exceeding account balances, often with a fee.
Insurance Services
- Life Insurance protects beneficiaries in the case of the policyholder's death.
- Medical Insurance covers various medical expenses.
- Accident Insurance provides compensation for injuries caused by accidents.
- Travel Insurance covers medical expenses, trip cancellation, and other travel-related issues.
- Home Insurance safeguards against damages to residential property.
- Critical Illness Insurance provides a lump sum payment in case of serious illnesses.
Investment Services
- Stocks represent ownership shares in a company.
- Bonds represent debt securities issued by companies or government entities.
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Description
This quiz explores fundamental concepts related to finance and consumption, including budgeting, saving, and the implications of online shopping. Test your understanding of essential financial practices and the impact of spending habits on personal finance. Ideal for students learning about economic principles and personal finance management.
