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Grade 10- Business > Unit 4 Test Material > Flashcards

Unit 4 Test Material Flashcards

1
Q

What is saving?

A

It means safely putting money aside for future use

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2
Q

What is a savings plan?

A

a systematic or regular method of putting money aside to reach a financial goal

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3
Q

What is a savings account?

A

It is a type of savings plan. It is safe and liquid, but have low yields. Are based on an interest rate.

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4
Q

What is a Term Deposit or Guarenteed Investment Certificate (GIC)

A

They are forms of a savings plan. You deposit a fixed sum of money for a specific amount of time at a fixed interest rate. You cannot “cash in” your GIC until it has matured, but term deposits can be cashed in early.

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5
Q

What is a registered retirement savings plan (RRSP)?

A

It is a form of savings plan used to encourage people to save for retirement by allowing you to invest a portion of a yearly income without paying income tax on it. When you do retire, your income tax rate will be lower.

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6
Q

What is a registered education savings plan (RESP)?

A

it is a type of savings plan similar to an rrsp except it saves for post secondary education. Anyone can contribute to it and when the student withdraws the money, they will pay little to no tax on it. Alos, the government of Canada will add 20% each year (up to $500)

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7
Q

How do savings work?

A

when you deposit your money in a financial institution (bank) you actually lend them your money and you get interest

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8
Q

What is interest?

A

It is the money you receive over time for letting others borrow your money.

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9
Q

What is principal?

A

the money you originally deposited and the amount that the interest is calculated on.

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10
Q

What is a yield?

A

the interest expressed as a percentage of the original investment, usually over a year. AKA a rate of return.

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11
Q

What is risk?

A

the chance that you might lose your investment. Usually the higher the risk, the greater the yield. The lower the risk, the lower the yield.

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12
Q

What is investing? What is an advantage and disadvantage?

A

using your savings to earn an extra income. Advantage: can provide a higher yield. Disadvantage: yield is not guaranteed.

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13
Q

What does diversify mean?

A

good investors diversify their investments which means that they spread their investments across several forms of investment which spreads the risk.

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14
Q

What is a Canada Savings Bond?

A

It is like a loan from you to the government of Canada and they will pay you the price of the bond plus interest.

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15
Q

What is a maturity date?

A

the date when the bond is due and paid.

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16
Q

What is the face value?

A

it is the amount that appears on the front of the bond and it is the price that the government promises to pay you at the price and maturity date.

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17
Q

What is a bond?

A

a promise to repay borrowed money on a specific date in the future with interest. Businesses use bonds to get start up money to increase and expand then they pay it when their company is more established.

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18
Q

What is a bull market?

A

it happens when the demand for stocks is low and the stock prices are high.

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19
Q

What is a bear market?

A

it is when the offers to sell stocks are higher than teh number of orders to buy stocks.

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20
Q

What is a dividend?

A

It is a sum of money given to a company’s shareholders from the company’s profits. The part of the companies profits after taxes that each shareholder recieves.

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21
Q

What are some advantages and disadvantages of common stock?

A

Advantages:
- can attend meetings and vote in the companies decisions
- will share the company’s profit after bondholders and preferred shareholders
Disadvantages:
- if the share values fall, then they could lose money and any dividends would be very unlikely.

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22
Q

What are some advantages and disadvantages of preferred stock?

A 
Advantages:
- paid first if a company makes a profit
- less risk because prices tend to be more stable 
Disadvantages: 
- no big gains since it is safer. 
- no voting rights in the company
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23
Q

What is a blue chip company?

A

It is a company with long records of regular dividend payments, stable growth patterns and active trading of their shares

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24
Q

What is an ask price?

A

it is the lowest selling price that an investor is willing to accept for that stock.

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25
Q

What is a bid price?

A

it is the highest price that anyone is willing to pay currently for a certain stock

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26
Q

What is a mutual fund?

A

a pool of money from many investors that is set up and managed by an investment company to buy and sell securities of other corporations

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27
Q

What is real estate?

A

it is land or anything attached to it

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28
Q

What is a collectible?

A

It is any item of personal interest of a collector that ca increase in value over time.

29
Q

Where is the true value in money?

A

in its purchasing power!

30
Q

What happens as a result of inflation?

A
  • prices tend to rise and a dollar buys less and less

- this means that consumers lose purchasing power when inflation occurs

31
Q

When does inflation occur?

A

When a government loses control of its money

32
Q

What is money management?

A

it refers to the daily financial activities connected to using your limited income to satisfy all your needs and wants. It means budgeting!

33
Q

What are the 6 factors that influence Buying decisions?

A
  1. Income
  2. Price
  3. Status
  4. Current Trends
  5. Customs and Habits
  6. Promotion
34
Q

What is the income factor?

A

a low income family will spend a larger portion of its income on basic necessities. People with children or aging parents make different decisions than people without. Families with discretionary income will invest, travel and spend more on entertainment.
OOORRRR :)
Your income will change how you spend your money because it will be easier or harder to fulfill your basic needs and wants

35
Q

What is the price factor?

A

Price influences the type, quality and quantity of the products or services that consumers buy.

36
Q

What is the status factor?

A

Some people feel that owning the latest and greatest things make them better. Often called conspicuous consumption.

37
Q

What is legal tender?

A

a form of payment or currency that a nation’s government produced, often called “fiat” currency. 2 types of legal tender in Canada are coins and bank of Canada notes (bills)

38
Q

What are 4 reasons that newly changed bills would be issued?

A
  1. To update security features
  2. To update Canadian culture
  3. Replace lost or damaged notes
  4. Switching from bank notes to coins more often (perhaps it is more cost effective)
39
Q

What are some security features on the Bank of Canada notes?

A
  • holographic stripe
  • watermark portrait
  • puzzle numbers
  • security thread/ dashes
  • raised ink
40
Q

What is the current trends factor?

A

for many, clothing is seen as an indication of popularity so people spend more on it. “Buying to belong” is a common buying motive and strategy in advertising.

41
Q

What is the customs and habits factor?

A

Customs that influence what we buy include: family, religion, community, weddings, etc. Habits are behaviors that are done repetitively and often without thought

42
Q

What is the Promotion factor?

A

are designed to influence spending by educating and creating desire for those products or services. Lifestyle advertising shows attractive, healthy, successful people and tell you if you buy their product, you could be like them too.

43
Q

What is the security feature of the raised ink?

A

If you rub the bill, you can feel different textures on the large text and shoulders of the portrait

44
Q

What is the security feature of the metallic stripe?

A

When you tilt the bill, the stripe down the side changes colour and is shiny. The leaves on the bill appear to move too.

45
Q

What is the security feature of the ghost image or watermark?

A

If you hold the bill up to the light, a face will appear that looks ghost-like

46
Q

What is the security feature of the puzzle number?

A

When the bill is held up to the light, random looking dashes fill in and form a number matching the value of the bill.

47
Q

What is the security feature of the dashes or security thread?

A

if you hold the bill to a light, the dashed line down the side will form a solid line that matches up perfectly.

48
Q

What is comparison shopping?

A

comparing the prices of products to pay the least amount of money for the same product that meets your wants and needs

49
Q

What are the factors of comparison shopping? (3)

A
  1. Price and Quality
  2. Features
  3. Services
50
Q

What is price and quality? (comparison shopping)

A

selecting the least expensive product that best suits your wants and needs. If the product is high quality and will last longer, you may end up spending less money in the long run.

51
Q

What is features? (comparison shopping)

A

the features can be the most important consideration. Usually more features= more money, less features=less money.

52
Q

What is services? (comparison shopping)

A

some retail stores offer delivery and a warranty. A warranty is the promise that the product is of a certain quality and bad parts will be replaced for free.

53
Q

What is income?

A

money that an individual or business receives from various sources such as wages, sales, interest or dividends.

54
Q

What is the order that income comes in?

A
  1. Gross Income
  2. Disposable Income
  3. Discretionary Income
55
Q

What is gross income?

A

the total amount of income received by a person before deductions

56
Q

What is disposable income?

A

the amount of income that is left over after deductions of income tax, Canadian Pension Plan (CPP), and Employment Insurance (EI). It is the amount available to spend on necessities.

57
Q

What is Discretionary income?

A

the amount of income left over after necessities have been paid for. Used to buy luxury items.

58
Q

How do you calculate income?

A
  1. Take your gross income and subtract income tax, CPP and EI
  2. This is your disposable income. Subtract cost of necessities (ex. rent, groceries,etc. )
  3. This is your discretionary income.
59
Q

What is credit?

A

the privilege of using someone elses money for a period of time. It is widely accepted as a substitute for cash.

60
Q

What is a creditor?

A

any person or business that grants a loan or sells on credit (the bank)

61
Q

What is a debtor?

A

any person or business that buys on credit or receives a loan (you!)

62
Q

What are some advantages of consumer credit?

A
  • convenient because you can buy and use goods and services and pay later
  • not heavy like coins
  • if it is lost, there are preventative measures that can be taken to ensure no money is lost
  • monthly statement lists all purchases which helps you budget and track spending
  • very helpful during emergencies when you don’t have enough cash
63
Q

What are some disadvantages to consumer credit?

A
  • can get carried away and buy too much
  • impulse buying exists
  • comparison shopping decreases
  • can lead to financial difficulties because interest rates are very high (ex. 18%)
64
Q

What are retailer credit cards? (point form)

A
  • created to avoid charges and fees from other companies
  • can also use credit deals to entice customers to buy at their store rather than at competition stores
  • creates loyal customers
65
Q

What is the cost of credit?

A

the interest that borrowers pay for credit. Ex. a card with an interest rate of 15% has a 15% Cost of Credit

66
Q

What are the 6 factors that influence the interest cost of credit?

A
  1. Amount of money borrowed
  2. The term for repaying the loan
  3. Current interest rates
  4. Inflation and general economic conditions
  5. Security or collateral
  6. Credit rating
67
Q

Why do short term loans have lower rates? (point form)

A
  • allows banks to better predict interest rates, economic conditions and inflation rates with better accuracy
  • long term rates are riskier because it is harder to predict these.
68
Q

What is credit rating? (point form)

A
  • a banks evaluation of a person’s ability to assume and pay back debt
  • if a person borrows and repays successfully, a bank will be more willing to lend more money
  • if a person has no record of borrowing, they are either inexperienced or unreliable
69
Q

How do you calculate credit?

A
  1. Multiply your balance by the monthly interest. This gives you the monthly interest payment
  2. Subtract your monthly interest payment from your monthly payment to get your amount paid on balance
  3. Take your beginning balance and subtract the amount paid on balance to get the ending balance
  4. The ending balance for the first month becomes the starting balance for the next month

Grade 10- Business (4 decks)

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