Coursepack Chapter 1

Question 1

Checking Accounts

Answer 1

Used for everyday purchases and banking activity - paying bills, transactions, purchases - little to interest

Question 2

Savings Accounts

Answer 2

storing money over an extended period. low interest rate

Question 3

Types of Investment Options

Answer 3

• Certificates of Deposits (CDs)
• Bonds
• Stocks
• Mutual Funds
• Exchange-Traded Funds (ETFs)

Question 4

Certificates of Deposits (CDs)

Answer 4

time deposits offered by banks with a fixed term (monthly, 3 months, semi-annual, etc.) CD interest rates are higher than savings account.

Question 5

Bonds

Answer 5

• Loans that investors provide to issuing entity
• When you purchase a bond, you are basically lending $ to issuer
• you receive coupon payments in return

Question 6

Stocks

Answer 6

buying ownership in a company, riskier than bonds and CDs

Question 7

Mutual Funds

Answer 7

pool money many investors to invest in a diversified portfolio of stocks, bonds, or other assets.

Question 8

Exchange-Traded Funds (ETFs)

Answer 8

similar to mutual funds but traded on stock exchanges.

Question 9

Difference between average tax load (effective rate) and marginal rate

Answer 9

While the effective rate gives you an overall percentage of your income that goes to taxes, the marginal rate informs you of the tax rate on your next dollar of income

Question 10

RRIF

Answer 10

the year you turn 71, you must convert all RRSPs into Registered Retirment Investment Funds (RRIFs)

Question 11

Hedge Funds

Answer 11

high-powered of mutual fund for accredited investors with net wealth above $2M.