Personal Finance

Question 1

Define Commission

Answer 1

Income from acting as an agent between buyers and sellers.

Question 2

Define Disposable income

Answer 2

income after tax has been deducted (gross income – tax = disposable income).

Question 3

Define Dividend

Answer 3

A payment made to a shareholder of a company as a cash reward for investing; are derived from the final profit after all business expenses have been deducted

Question 4

Define Employee

Answer 4

A person working under the control of another, in return for a wage or salary.

Question 5

Define Employer

Answer 5

A person or organisation that employs workers under a contract of employment

Question 6

Define Fee

Answer 6

Income from providing a professional service

Question 7

Define Flexitime

Answer 7

A system that provides salaried workers with flexible working hours.

Question 8

Define Income

Answer 8

Money earned from working and the returns on investments.

Question 9

Define Interest

Answer 9

Income received from investments.

Question 10

Define Overtime

Answer 10

The excess amount of time worked

Question 11

Define Penalty Rate

Answer 11

A rate of pay that is based on when the work is performed rather than how many hours are worked.

Question 12

Define Profit

Answer 12

Income from selling goods or services minus the cost of selling the goods or services

Question 13

Define Rent

Answer 13

Income received for the use of a property.

Question 14

Define Return

Answer 14

The profit that an investor makes from an investment.

Question 15

Define Royalties

Answer 15

Income from the sale of a piece of work e.g. song

Question 16

Define Salary

Answer 16

Income received each year for a job

Question 17

Define Shareholder

Answer 17

A person who owns a share of a company and has certain rights in relation to that company.

Question 18

Define Social security

Answer 18

Payments made by the government to ensure all Australians have a liveable income.

Question 19

Define Wage

Answer 19

Income received for work done based on the hours worked each week

Question 20

Define Mortgage loan

Answer 20

An amount of money borrowed from a bank, usually to purchase property. The bank as security retains the ownership of the property until the loan is repaid.

Question 21

Define Personal loan

Answer 21

An amount of money used for a specific consumer purpose e.g. travel

Question 22

What are the sources of income and what type of payment are they

Answer 22

Working for employer-wage, salary, commission, fee
Working for yourself-profit
Payments form Gov-social security
Investing savings-interest/dividend
Renting out Property-rent
Creating something new-royalties
Playing Professional sports/gambler-prize money

Question 23

What are the types of borrowing institutions and their types of loans

Answer 23

Banks, Building Societies and Credit Unions-Mortgage loans, Personal Loans, Small business loans.
Merchant Banks- Business loans
Finance Companies-Business loans, personal loans
Insurance companies-property loans

Question 24

What are the credit card golden rules

Answer 24

• If you pay off your card each month- choose the card with the longest interest free period.
• If not, choose a no-frills card with the lowest interest rate, beware of honeymoon rates and be aware of interest.
• Then check annual fee and look at loyalty scheme.

Question 25

What does a credit card check consist of

Answer 25

• Whether you have a stable job
• Your employment history
• Address history
• Income details
• Previous credit history
• A Listing of your assets.
• A Listing of your liabilities.

Question 26

Laws that regulate financial services

Answer 26

Consumer credit code

• Legislation that is enforceable in certain situations where credit is offered.
• Situations where charges are made for credit
• Situations where the credit provider does so in the course of business.

Financial services reform act

• Commenced in 2001, Commonwealth Act
• better protection for consumers and investors in financial services industry.

ASIC- Regulates and monitors the finance industry.

Question 27

Types of insurance

Answer 27

Different types of insurance

• Life
• Income
• Health
• Home and Contents
• Public Liability- Covers the general public in the event that something happens to them while on your property.
• Travel
• Car- Compulsory third-party insurance is required by law
• Optional Insurance