Personal Finance Unit 1
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Questions and Answers

Which of the following best describes a 'money story'?

  • A collection of facts about how to invest your money.
  • A detailed financial record of all past transactions.
  • The emotions, beliefs, and experiences that shape an individual's perspective on money. (correct)
  • A fictional narrative used to teach children about finances.

What does the concept of 'trade-off' primarily involve in the context of financial decisions?

  • Investing in the stock market.
  • Negotiating to get a better deal on a purchase.
  • The act of balancing needs and wants with the available resources. (correct)
  • Trading goods and services with others to save money.

According to the basic principle of demand, what is the expected effect of a decrease in the price of a good, assuming all other factors remain constant?

  • The demand for the good will decrease.
  • The demand for the good will remain unchanged.
  • The demand for the good will increase. (correct)
  • The supply of the good will increase.

Which of the following best describes the term 'opportunity cost'?

<p>The value of the next best alternative that is forgone when a decision is made. (A)</p> Signup and view all the answers

What does ‘Scarcity’ refer to within the field of economics?

<p>A situation where resources are limited compared to the limitless desires and needs. (A)</p> Signup and view all the answers

Which of the following is NOT typically considered sensitive information?

<p>Full Name (D)</p> Signup and view all the answers

Which document is LEAST likely to contain sensitive information?

<p>Publicly available newspaper (C)</p> Signup and view all the answers

What is NOT a primary purpose of a Social Insurance Number (SIN)?

<p>Accessing personal banking services (D)</p> Signup and view all the answers

In the event of compromised sensitive information, what is typically the FIRST step one should take?

<p>Contact relevant financial institutions (C)</p> Signup and view all the answers

Which of these methods is LEAST effective for protecting sensitive information?

<p>Storing all information on a single, password-protected device (B)</p> Signup and view all the answers

Which of the following is NOT a method of protection of digital sensitive information?

<p>Distributing information widely to trusted contacts (C)</p> Signup and view all the answers

What is a key distinction between trust companies and banks?

<p>Trust companies can administer estates and trusts directly, while banks usually cannot unless it is through a separate trust subsidiary (B)</p> Signup and view all the answers

In which type of saving account would you find the ability to write checks or pay bills directly?

<p>Checking account (D)</p> Signup and view all the answers

Which of the following is NOT a typical characteristic of predatory loans?

<p>Transparent terms and conditions (B)</p> Signup and view all the answers

What is the primary purpose of a TD1 form?

<p>To determine the amount of income tax to deduct from your pay (C)</p> Signup and view all the answers

Which of these is NOT a benefit of filing an income tax return?

<p>Increase the amount of taxes you have to pay (B)</p> Signup and view all the answers

Which step in the tax filing process involves calculating your Net income?

<p>Step 3: Total Income - minus deductions = Net income (B)</p> Signup and view all the answers

What is the relationship between net income and taxable income, as defined by the tax steps?

<p>Taxable income is calculated by subtracting more deductions from your net income (A)</p> Signup and view all the answers

According to the information given, what are the 3 C's related to?

<p>Maintaining good credit scores (C)</p> Signup and view all the answers

What is the typical purpose of a T4 slip?

<p>To report your yearly earnings and deductions to the government (C)</p> Signup and view all the answers

What is the main distinction between GST and PST?

<p>GST is a federal tax while PST is a provincial or state tax (C)</p> Signup and view all the answers

Which type of savings account typically requires the highest minimum balance?

<p>Money market account (A)</p> Signup and view all the answers

If a customer needs to deposit money for a fixed term, which type of account is most suitable?

<p>Certificate of deposit (D)</p> Signup and view all the answers

Which account type generally offers the highest potential interest rate?

<p>Money market account (A)</p> Signup and view all the answers

A customer wants an account with no minimum balance requirements. Which is the most suitable option?

<p>Online savings account (A)</p> Signup and view all the answers

Which type of account might restrict the number of withdrawals you can make?

<p>Money market account (B)</p> Signup and view all the answers

If a customer values the flexibility of accessing their money at any time, which is the least suitable account?

<p>Certificate of deposit (D)</p> Signup and view all the answers

Which account type is LEAST likely to have a physical location?

<p>Online savings account (A)</p> Signup and view all the answers

A customer wants an account that is typically linked to a checking account, and bond account, with limited withdrawals. Which of the following is most suitable?

<p>Money market account (D)</p> Signup and view all the answers

Which of these types of account is a timed deposit?

<p>Certificate of deposit (C)</p> Signup and view all the answers

Which type of savings account allows the bank to lend the deposited money to other customers?

<p>Traditional savings account (A)</p> Signup and view all the answers

Which type of account always requires a minimum balance at all times?

<p>Certificate of deposit (B)</p> Signup and view all the answers

Which accounts offer similar ranges of interest rates?

<p>Online Savings Account and Certificate of Deposit (B)</p> Signup and view all the answers

For which of the following accounts is there a requirement to keep the money in the account for a specific period?

<p>Certificate of deposit (D)</p> Signup and view all the answers

Which of these account types has no limitations on withdrawals?

<p>Traditional savings account (C)</p> Signup and view all the answers

Which account type can be generally described to sit between regular savings and stock market like investments?

<p>Money market account (B)</p> Signup and view all the answers

Flashcards

Money Story

A story about how you learned and formed your beliefs about money. It's influenced by your family, culture, and experiences.

Economics

The study of how people make choices about using limited resources to satisfy their wants and needs.

Scarcity

The limited availability of a good or service. The more scarce something is, the more valuable it becomes.

Demand

The desire of buyers for a specific good or service at different prices.

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Supply

The amount of a good or service that producers are willing to offer at different prices.

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Traditional Savings Account

A type of bank account where you can deposit money and earn interest. The bank uses your deposits to lend out to others, which is how they make money.

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Online Savings Account

A type of bank account that is typically offered online. They usually pay higher interest rates than traditional savings accounts.

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Certificate of Deposit (CD)

A type of savings account that requires you to keep a certain amount of money in the account for a specific period of time, usually a year or longer. In return, you receive a higher interest rate.

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Money Market Account

A type of saving account that offers a higher interest rate, but often has a higher minimum balance requirement and limits on withdrawals.

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Sensitive Information

Information that, if disclosed, could cause harm to an individual, organization, or nation.

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Social Insurance Number (SIN)

A unique nine-digit number issued by the government to identify individuals for tax purposes.

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Documents containing Sensitive Information

Includes bank statements, credit card slips, and personal financial records.

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Information Compromise Response Plan

A plan for how to protect your information and assets in case of a security breach.

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Financial Institutions

The institutions that provide financial services like savings accounts, loans, and payment processing.

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Banks

A type of financial institution that holds money and provides basic banking services like checking accounts and loans.

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Trust Companies

A type of financial institution that offers specialized services like estate planning and trust management.

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Savings Account

A type of savings account that earns interest and typically has a minimum balance requirement.

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Scams

A type of scam that involves trying to trick people into giving up their personal information for malicious purposes.

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Income

The amount of money a person or company earns, often used as a basis for calculating how much tax they owe.

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Income Tax

The amount of money you pay to the government based on your income. It is a form of taxation.

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Tax Brackets

A system that divides income into different income ranges, each with its own tax rate. People with higher incomes often pay higher taxes.

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Social Programs

A government program that aims to help those in need, often funded through income tax.

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T4 slip

An official document that summarizes your income and taxes paid throughout the year. You need it to file your tax return.

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TD1 Form

A government form used to calculate your income tax withholdings. It helps your employer know how much tax to deduct from your paycheck.

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Tax Return

A way to submit your income tax information to the government. You must file it annually, even if you don't owe any taxes.

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Tax Filing Deadline

The deadline to file your income taxes. It's important to avoid penalties for filing late.

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Study Notes

Unit 1

  • Financial literacy is crucial for developing healthy relationship with money
  • Start small, one step at a time in learning about personal finance
  • Talk to friends, build healthy relationships with money.
  • Be honest about your financial situation, set goals and find like-minded people
  • Understanding that being rich is not equivalent to being smart
  • Prepare for potential negative feedback
  • Find a mentor who understands money management.
  • Listen more than you speak, consume more financial content, and join a group to improve financial literacy.
  • Money stories shape how we view and manage money, including impactful experiences
  • As children, we imitate behaviors, listen to advice, and acquire experiences that impact how we view and manage money, and absorb emotions about money from the parents.

Needs Vs Wants

  • Trade-offs occur when you need to choose between needs and wants based on available resources
  • Needs are essentials for survival, while wants are non-essential desires.

Economic Systems

  • Economics studies production, consumption, wealth transfer and currency
  • Scarcity arises from limited resources and limited supply
  • Demand represents the desire for goods and services at different price points.
  • Supply mirrors the quantity of goods or services offered.
  • Traditional, market, command and mixed systems
  • Understanding the concept of opportunity cost, complementary and substitutes for products and services

Unit 2 (Sensitive Information)

  • Sensitive information includes personal identification numbers, medical information, financial information, and login credentials
  • Sensitive information should be carefully protected
  • Financial documents, identification documents, educational documents, and legal documents

What to do when sensitive information compromised

  • Secure the information by changing passwords and enabling two-factor authentication
  • Notify affected parties, such as banks, and monitor for fraud
  • Report the incidence of breach to authorities, and take steps to protect yourself from identity theft by creating fraud alerts on your accounts.
  • Use security software, learn about types of scams, and consult with experts for recovery and legal advice.

Methods of Storage and Protection

  • Provide safe physical storage, such as safes and deposit boxes
  • Create encrypted digital files and folders to protect your digital information.

Unit 3 (Types of Financial Institutions)

  • Deposit-taking institutions (banks, credit unions, trust companies) act as intermediaries
  • They accept deposits, make loans to clients, and manage funds
  • Insurance companies protect individuals and businesses from losses
  • Investment institutions manage funds on behalf of others.

Trust Companies, Banks and credit unions

  • Trust companies provide various banking services, administering estates and trusts.
  • Banks offer full commercial lending powers independently of a trust company
  • Credit unions are member-owned, non-profit cooperatives, offering financial services at lower costs for their members

Indigenous Financial Institutions

  • Indigenous financial organizations serve Indigenous communities
  • They provide various financial services such as loans for business development

Types of Saving Accounts

  • Traditional savings accounts, online saving accounts, and certificate of deposits offer different interest rates and minimum balance requirements.
  • Money market accounts offer higher interest rates than traditional accounts.

Predatory Loans

  • Payday loans and car title loans are short-term loans that have a high annual percentage rate, and there are significant risks associated with them

Unit 4 (Definitions)

  • Mortgages, Principal, Collateral, Grace Period, Down Payment, Consolidation Loan, Billing Cycle and Co-Signer are key terms

Credit and Lending

  • Lenders extend credit, and borrowers repay, often with interest for the use of money.
  • Secured loans use collateral for security, while unsecured loans do not.
  • Foreign transaction fees, prime rate, term, variable rate, interest, credit limit, balance, debt, and minimum payments are key terms

Unit 5 (Income Tax)

  • Income tax is a tax on a person's income.
  • There are federal and provincial income taxes, applicable locally
  • Methods of filing, identification and other important info
  • Different types of tax filing options are electronic and traditional methods

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Financial Literacy Final Review PDF

Description

Explore the fundamentals of financial literacy in this quiz. Learn about the importance of understanding money, distinguishing between needs and wants, and building healthy financial relationships. It aims to empower individuals to improve their financial knowledge step by step.

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