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.</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.</p> Signup and view all the answers

    Which of the following is NOT typically considered sensitive information?

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

    Which document is LEAST likely to contain sensitive information?

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

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

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

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

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

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

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

    Which account type generally offers the highest potential interest rate?

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

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

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

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

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

    Which of these types of account is a timed deposit?

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

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

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

    Which accounts offer similar ranges of interest rates?

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

    Which of these account types has no limitations on withdrawals?

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

    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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    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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