Business Final Exam Doc-2

8/12/2019 Business Final Exam Doc-2

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Business Final exam Doc On this test

Definitions: 20 key definitions from the year, (from past few tests) matching

Multiple choice: 40 mostly reworded questions from other tests

Scenario about kid spending his money, hap hazard, come up with balance statement (10) and answer

questions about how to improve personal finance situation (10). Read carefully

Business plan: ten components of business plan and talk about what they communicate

What is business Business: Individuals or organizations that attempt to earn a profit by providing

products that satisfies people’s needs and wants.

Product: A good, service or idea that supposedly provides a benefit or

satisfaction.

Good: Tangible, a physical product produced, distributed and sold.

Service: Intangible, a non-physical product performed and sold.

Consumer Products: Products designed and made available for the needs and wants ofindividuals.

Industrial Products: Products designed and made available for the needs and wants of

businesses.

Consumer: The person who uses the goods or services purchased.

Producers: The business developing, manufacturing and delivering the goods and

services required.

Interdependence: Consumers and producers depend on one another. Consumers need

the goods and services to live and prosper, producers need the

consumers to exist (generate profit).

Manufacturer: A business that produces goods.

Supplier: A business that provides, directly sells, goods to the consumer.



Market: All of the potential customers, individuals and/or organizations for a

product that have the purchasing power, the authority and the

willingness to buy.

Supply: The number of products available, or readily available, for distribution

and sale.

Demand: The number of products that consumers are willing to purchase.

Business Ethics: The study of what is right and wrong in the field of business.

Economics: The study of the distribution of resources within society including the

operation and interaction of industrial, financial and business systems.

Socialism: The government owns and operates business.

Capitalism: Private individuals own and operate business. (Free Enterprise, Free

Market System, Laissez Faire)

Oligopoly: The market structure that exists when there are very few businesses

selling a product.

Monopoly: The market structure that exists when there is only one business

providing a product in a given market.

Production: Is the process of converting a business’s resources into goods and

services.

Factors of Production: Elements involved in the process of production; land, capital, labor,information, and entrepreneurship.

Natural Resources: Material extracted from the natural systems of the planet (for now), not

made by people.

Labor: The physical and mental abilities used by individuals and organizations

to produce goods and services.

Financial Resources: The funds used to acquire the natural and human resources needed to

produce and provide products.

Capital: The funds and acquired resources used to produce and provide

products.

Information: Data and records of business operations, customers and competitors.

Entrepreneurship: The activity of people who bring together all the factors of production

to start a business.



Marketing: All the business activities used to plan, price, promote and distribute

goods or services.

Finance (accounting): Managing money through tabulating and recording accurate

statements.

Human Resources: The services a business offers to their employees to maintain morale,

set behavioral standards and resolve disagreements.

Management: Planning, organizing and controlling all business activities.

Sole Proprietorship: A business owned and operated by one person.

Unlimited Liability: The responsibility of a sole proprietorship business owner being

responsible for the paying all the debts of the business.

Partnership: Two or more individuals own and operate the business together. `

Corporation: A legal entity that exists independently of its owners (shareholders).

Shareholders: The individuals who buy and own shares in a company. They elect a

board of directors who direct the affairs of the corporation.

Private Corporation: Shares are not offered to the public.

Public Corporation: Shares can be bought or sold to the general public through the stock

exchanges.

Crown Corporations: A business which is owned by the government; it often provides a

unique service.

Non-profit Organizations: A group of individuals that may provide goods and services but do not

have the fundamental purpose of earning profit.

Limited Liability: As a shareholder being liable for the amount of money you invested in

the corporation but not the full debts of that corporation.

Co-operatives: Businesses owned and operated by a group of individuals with a

common interest; startup costs are shared among the members.

Franchise: An independently run business affiliated with a larger organization

(which controls some of the operational decisions under a contractual

agreement).

Small Business: Is one that is independently operated, not dominant in its field and

meets certain size limits in terms of employees and sales.



Franchise Agreement: The written contract between the franchise seller and franchise buyer

permitting the buyer to use the name, products and packaging while

obeying certain specifics and restrictions.

Globalization: The process evolving technology contributing to the decline in

importance of local financial, economic and political systems and therise in importance of worldwide financial, economic and political

systems.

Standard of Living: Refers to the number of goods and services enjoyed by the population

of a country.

Gross Domestic Product: Is the annual total value of final market goods produced and services

provided in a country, often calculated per capita (per person).

Quality of Life: Combines material standard of living with social and environmental

factors.

Profit: The difference between what it costs to design, manufacture, distribute

and sell a product and the price a customer pays. OR

The difference between the total cost to a business of designing,

manufacturing, distributing and selling all products (expenses) and the

total amount of money earned by a business (revenue).

Expenses: The costs of conducting business; wages, supplies, taxes, payments.

Revenue: The money that a business receives from the sale of goods and services.

Income: The amount of money an individual earns.

Qualities of a successful business

Quality Definition Example

Market Research The means in which companies

investigate what their

consumers

Facebook`s advertising strategies

Using your data and ```likes`` to

direct specific ads at you

Risk Taking Taking chances that have the

potential for a positive or

negative outcome

Dragons den, wealthy

proprietors invest in small

companies brought to them by

entrepreneurs

Investment Putting money into stocks or Mutual funds, Mutual funds are



bonds examples of

Marketing The total of activities involved in

the transfer of goods from a

producer to consumer including

advertising shipping storing andselling

Product placement in movies,

The Greatest movie ever sold

Innovation Introducing new and/or

improved products or methods

Dyson vacuums, new technology

that was better than ever before

Organization Organization is a structure in

which things or people operate

Ikea, structured stores to make

things accessible but at the same

time ensure you go through

every department

Professionalism Having a professional status,methods, character or standards

(employment and quality of

product)

Porsche, the way that you aregreeted and treated as a

consumer

Hiring practices The means in which a company

gains and promotes employees

Disney, taking the top graduates

from Sheridan college

Reliability Capable of preforming its main

function, dependable

Lenovo, My Lenovo computer

crashes and shuts down

programs less frequently than

my parents MacBook proDuracell, marketing themselves

as reliable

Perseverance Seeing something through William Boeing is not an example

of perseverance because he sold

his burgeoning aircraft business

after merely a few years

Responsibility Having accountability for a duty

in case one of your duties is

performed incorrectly

British petroleum’s reaction to

oil spill, Took full responsibility

and made efforts to clean up the

gulf of Mexico

Adaptability Able to adjust readily to different

conditions

Forza Motorsport, allowing

consumers to buy packs with

new cars as they are released



Ethics Having a system of moral

principles and executing this

The CEO of Costco is willing to

take massive salary cuts while

ensuring their employees are

paid well at all levels

Vision The act or power of anticipatingwhat may come to be in the

future.

Many companies like Honda areexploring the world of

alternatively powered cars, using

fuels like hydrogen to power

machinery that would otherwise

use petroleum products

Market Niche Something that sets your

product/ companies apart

ESPN, a Channel tailored to

Sports

Accounting & Marketing Definitions

Accounting: A system used to keep record of revenue and expenses, accounting records are kept

according to strict principles and rules.

Financial statements: Formal documents that use a standard format to provide key information about a

company’s financial position.

Fiscal year: A period of 12 consecutive months, not always the same calendar yearNet worth: The difference between what you own (assets) and what you owe (liabilities). To asses net

worth a person can create a personal balance sheet and a business can create a balance sheet

(Statement of financial position)

Assets: Anything owned by the company that has monetary value

Liabilities: Anything of monetary value owed by the company

Fundamental accounting equation: Assets- Liabilities=net worth

Balance sheets: a financial statement that shows the company’s assets liabilities and net worth

Accounts receivable: Money for which as company has billed its customers, but has not yet received

Accounts payable: Money that the business owes to other businesses

Owner’s equity: The amount of money the owner invested when starting the business plus any

accumulated profits

Income statement: The financial statement that reports a business’s income and expenses for a fiscal

period

Revenue (income): Any money earned by a business



Costs (expenses): Any money used by a business

Balance sheet Income statement

How to write a Balance sheet

First tally assets

Create a table or list, write the item names on the left and values on the right

Example

Ho’s Chinese food

Noodles $ 4000

Rice $ 2000

Shrimp $ 6000

Chicken $ 4000

Furniture $10000

Total $26000

Then do the same for Liabilities

Bank loan $ 9000

Bill for rice $ 1000

Hydro bill $ 200

Total $10200

Then calculate the owners’ equity

Equity=Assets-Liabilities



Advertising mediums chart

Media Advantages Disadvantages

Newspapers Local

Can write more content

Can easily stand out

Accessible Relatively inexpensive

(depending on

newspaper

General interest

Less used medium

Older use group

Magazines Far reaching to groups

Colourful

Popular

Specific topic of

magazine- Allows to

advertise directly to

target market

Expensive

Often overlooked

Radio Accessible

Far reaching within a

specific area (cars,

shops, arenas, offices)

No visuals

Changing channels

Losing popularity

Television Popular

Guaranteed numbers

Far reaching, can be

international

Expensive

Skipping over

commercials

Internet Incredibly popular

Can advertise for freeusing some social medias

Generally inexpensive

Often ignored

May not be seen asoften

Direct mail Works well, if reader can

open

Potency: able to include

much information In one

piece

Targeted

Expensive

Usually discarded (not

read)

Outdoor advertising Can be free or very low

cost

Easily seen Can be large and eye

catching

Potential to not be seen

as often

People may not payattention

Advertisements can’t

have too much written

content

People can vandalize

(will have impact on ad

or campaign if viral)



Unable to target

Print advertisements

When one looks at print advertisements, they may not notice, but there are many subtle subconscious

messages present. One can analyze print advertisements in context to the Colors, moods, lines, people,

stereotypes and targets present, but also about the story that is being told and the messages being sent

(Written, implied or subconscious).

For example

In this advertisement one could talk about the mood and colors, and how that makes the advertisement

seem and what it makes the target market think, and how this connects to the product.

The advertisement has deeper tones of typically feminine colours that make it seem mystical and

romantic, it would make the target market, young adult females in relationships think about settling

down into the stereotypical glamorous life of being a parent, (or so Honda wants one to think), thiswould relate to the product because it is a minivan, which seems to have become a symbol of

parenthood.

The advertisement also depicts class, something associated with the vehicle in particular, because it is

priced above the rest of its class.

Lines



Sight lines point us directly to the car, and helps center the ad or add mood, ( a confrontational ad will

make one feel more in tune with the person in the ad.) The directional lines in the add help point our

eyes in places, with the rose petals leading from the people to the car, to the text in the bottom right

hand corner of the advertisement.

Story

The story in this advertisement is of a couple, who feel that they are in love and are thinking of getting

married or are already, and starting a new life together. The story is set around the minivan as their

chariot, their gateway to the life that they have been dreaming of.

Stereotyping

The product being advertised is a stereotype in its self for the setting, a young couple, drawn to start a

family would be particularly interested by the van, and they would see it as a major part and step in

their lives.

Review questions

1. Describe two qualities of a successful business

A Successful business is adaptable, innovative, well planned, well accounted, well

managed, has good employment, is able to use judgment and take good risks, well

marketed, accessible, perseverant, has good customer service and has appropriate

quality and pricing.

2. How can decreasing supply of a good impact a substitute good?

The decreasing supply of a good will impact a substitute good positively because there

will be more demand for that good as a result of a lack of a the product that causes less

demand.

3. How can decreasing supply of a good impact a complementary good?

The decreasing supply of a good will impact a complimentary good negatively because

there will be less demand for that good as a result of a lack of the product that causes

its demand.4. Can stages in the business cycle be identified by employment statistics? Why?

Yes, the stages in the business cycle can be identified by employment statistics, because

as business perform better their demand for employment will increase, and as they do

poorly their employment will decrease.

5. Identify a market that has limited competition. Why is there limited competition? How does this

impact business?

Telephone service providers have limited competition because it is more difficult for

companies to join the market. This is better for competition because there will be fewer

small companies eating up their business.

6. What are the pros and cons of affirmative action? Is affirmative action necessary to ‘correct’unfair systematic and subconscious hiring practices?

Affirmative action is the encouragement of increased representation of women and

minority-group members especially in employment, the advantages of affirmative action

are that the workplace will become more diverse, and this may attract consumers from

different genders and races. It may also cause your business to gain a better reputation

in terms of ethics. However, affirmative action may create reverse discrimination, and



affirmative action can be seen as discerning to minorities. Affirmative action is

necessary to correct unfair, systematic and subconscious hiring practices, but it may

cloud the fact that companies need to hire for the best employee

7. What is the difference between direct and indirect competition?

In direct competition, the competition exists between two or more businesses that

produce similar products. In indirect competition, the competition exists between

companies that make substitute goods, like Pens and Pencils.

8. Describe the marketing mix

The marketing mix is product, product, place and promotion, all of the aspects of

marketing.

9. How do sightlines help deconstruct the meaning and purpose of a print advertisement?

Sightlines draw attention to aspects of the advertisement, whether they are looking at

you, giving the advertisement more personal meaning, something in the picture, or offv

the distance, they give definition to the advertisement and direct your eyes to texts or

items in the advertisement.

10. What is the difference between publicity and advertisement?

The difference between publicity and advertisement is that publicity costs less, however

in advertisement you are more able to control what is being said about your company.

11. How does advertising on television differ from advertising on the internet? Which is more

important and effective?

Advertising on television will be more seen, but also costs more, internet advertising has

a possibility to be seen more, although unlikely, and in which case will cost more.

Usually Internet advertising is much less expensive than a television spot. Television

advertising is more effective, and more important.

12. How can a business benefit from accurate and insightful accounting practices?

Accurate and insightful accounting practices will benefit the business because it will

provide information about the businesses operations financially, and allow the business

to see how to improve their practices.

13. What is the difference between a balance sheet and an income statement?

A balance sheet displays what the company is worth, while the income statement shows

how much the company has made and spent over the course of a specific period of

time.

Entrepreneurship

Definitions

Entrepreneurship: The activity of people who bring all of the factors of production together to

start a company



Networking: The Process of meeting people in a formal, semi-formal or casual environment for

the purpose of establishing connections

Business plan: A description of how the various ideas and the resulting products and services

lead to profits. It can include various information, including goals, markets, investments,

finances, costs, challenges, background, marketing, timeline and projections (among others)

Aptitude: Natural talents or intelligence

Mission statement: Presents the aims, objectives and general principles of a business or a

person

Risk tolerance: The degree on feels comfortable with taking chances

Integrity: A personal commitment to keep promises and be honest

Initiative: The willingness to start an idea or project and work had to achieve goals

Dragons den

In dragons den, contestants pitch their companies through their “revolutionary” product or

service to a board of investors; the dragons.

They often ask the dragons for funding and direction

Contestants offer a specific share of their company for an amount that they must receive, or

they walk away

When they are done with their pitch, the dragons ask questions and dissect their companies

They evaluate the people and their ideas, and often change the valuation

They make an offer to their terms, often including contingencies, but only if they like the

company.

Qualities of a good entrepreneur

Aptitude

o The entrepreneur must be suited to their job, housing the right skills and interests to

work well ad effectively in their company.

Leadership

o The entrepreneur must be a good and strong leader, able to communicate well to his or

her employees, as well as being highly capable to direct various operations of their

company

Creativity

o The entrepreneur must be able to solve problems creatively and effectively. They will

also often to come up with good and creative ideas, for various parts of their company.

Innovation



o The entrepreneur must be able to come up with good and original ideas, and constantly

innovating products and services that they may create.

Networking

o The entrepreneur must have a large and strong network, giving them contacts to use as

resources.

Risk tolerance

o The entrepreneur must be able to take smart risks, and be confident in his or her

decisions.

Perseverance

o An entrepreneur must be able to stick to his company, in good times and bad

o Entrepreneurs are not thwarted by their defeats. They look at defeat as an opportunity

for success. They are determined to make all of their endeavors succeed, so will try and

try again until it does. Successful entrepreneurs do not believe that something cannot

be done.

Confident

o The entrepreneur feels that they can succeed and that they are worthy of success. They

are confident with the knowledge that they will make their businesses succeed. They

exude that confidence in everything they do.

Competitive

o Many companies are formed because an entrepreneur knows that they can do a job

better than another. They need to win at the sports they play and need to win at the

businesses that they create. An entrepreneur will highlight their own company’s track

record of success.

International Business Definitions

Globalization: The process of evolving technology contributing to the decline in importance of local

financial, economic and political systems and the rise in importance of worldwide financial, economic

and political systems.

Balance of power: An international system wherein there are multiple states of relatively equivalent

power, no one state can dominate the reminder.

Liberalism: The approach to international business relations where the underlying moral approach is the

belief in the general good nature of people and governments, international law and international

cooperation are the primary tactics, force is used as a last resort.



Realism: The approach to the international relations when the underlying moral approach is the belief in

the general selfish nature of people and governments; international law and international cooperation

are viewed with skepticism or as a means to an end, the projection of military power and the use of

force are important considerations.

Exporting: Is the sale and shipping of products or raw materials to other states.

Importing: Is the purchase of products or raw materials from other states.

Balance of trade: The comparison between the total value of imports and the total value of exports.

Competitive advantage: The notion that some countries are better equipped to make and sell particular

goods and services.

Balance of payments: the total flow of money going into the country minus the total flow of money

leaving that country

Foreign subsidiary: A company set up in another country but a parent company.

Transitional business: Businesses that operate in multiple countries, making use of the various specific

conditions of each country to maximize profit. (Usually corporations)

Tariff barrier: Slows the entry of foreign goods by making them more expensive that domestic goods

Non-tariff barrier: Restricts trade, without being a tax, often through a quota

Embargo: A halt to trading with another state usually for political purposes, like with the US and Cuba in

the 1950s.

Foreign exchange rate: This rules how much of one currency can be purchased by another

Export (free) processing zone: An area where goods are manufactured free from the interference of

customs officials and high taxation

Free trade: The elimination of trade barriers

Globalization North America

Languages: English, French, Spanish

Cities

New York

Los Angeles



Toronto

Vancouver

Atlanta

Miami

Houston

Boston Detroit

Mexico City

Resources: Drilling (oil), Agriculture, Mining, Forestry

Tension: North Korean Missile Crisis, Terrorism, Cartels

South AmericaLanguages: Spanish, Portuguese, various aboriginal dialects

Cities

Buenos Aires

Sao Paulo

Lima

Bogotá

Rio De Janeiro

Santiago

Salvador

Resources: Agriculture, Forestry, Fishing, Mining, Drilling

Tension: Cartels, Guerilla, Freedom fighters

EuropeLanguages: Spanish, Portuguese, English, French, Swedish, Greek, Italian, Bulgarian, Romanian, Hebrew

Cities

London, Manchester, Birmingham, Glasgow

Paris

Rome, Milan, Naples

Barcelona, Madrid

Berlin, Frankfurt, Hamburg

Lisbon

Stockholm Geneva, Zurich

Brussels

Resources: Forestry, Fishing, Mining, Drilling, Agriculture

Tension: Eurozone struggle, political tension in Greece and Cypress



AsiaLanguages: Hindi, Mandarin, Cantonese, Japanese, Korean, Filipino , Arabic

Cities

Delhi, Mumbai, Hyderabad

Shanghai, Guangzhou, Hong Kong, Beijing Seoul

Tokyo, Osaka

Moscow

Singapore

Manilla

Resources: Agriculture, Forestry, Fishing, Mining, Drilling

Tension: North Korean Missiles, Islamic conflicts

OceaniaLanguages: English

Cities:

Sidney, Melbourne, Perth

Auckland

Resources: Driling, Mining, Fishing, Agriculture

Tension: Racial violence/ tension

Africa

Languages: English, Arabic, Afrikaans, French, Portugese, Spaish, Swahili, Other traditional AfricanDialects

Cities:

Cairo, Alexandria

Johannesburg, Cape town

Marrakesh

Algiers

Resources: Oil, Mining, Fishing, Agriculture

Tension: Radical Islamic, Kenya and Somalia, North and South Soudan, Libyan uprising, Liberian civil war

Superpower countries1. USA

2. Eurozone



3. China

4. Canada

5. Japan

6. India

7. Russia

8. England

9. Brazil

IMF

In a 1944 conference in Bretton Woods NH, an idea of an International Monetary Fund, to

ensure economic stability of The International Monetary System and the system of exchange

rates. The IMF is essential for promoting sustainable economic growth, increased living

standards and reduced poverty. The IMF constantly surveys and issues Special Drawing rights

that can supplement reserves of member countries in the event of an economic downturn. The

IMF’s (financial) resources are provided by its members. The 2009 G20 summit tripled the IMF

resources to $750 billion (USD).

World Bank

An international cooperative organization established in 1945 under the Bretton Woods

Agreement to assist economic development, especially of backward nations, by the advance of

loans guaranteed by member governments.

Currency value vs. International trade The stronger a currency, the more ability a country has to purchase goods internationally.

The weaker a currency, the easier to sell goods in foreign markets

Balance of payments vs balance of trade

The balance of trade is a comparison between a country’s total value of its imports and the

total value of the exports.

The Lexus and the Olive TreeThe Lexus and the olive tree is a book by Thomas L. Friedman that describes our globalized world. He

uses the olive tree and a Lexus because they are polar opposites in terms of globalization.

Lexus



The Lexus, often described as the Japanese Mercedes is a Luxury car produced by a Toyota subsidiary

(Lexus). Lexus offers a product line very similar to companies like Audi, adopting many of the standards

that they operate under, and creating a similar product.

This represents a very key part of globalization. The Lexus is symbolic of the abilities to copy or recreate

a similar product anywhere in the world.

Olive tree

The olive tree is a staple food source in The Mediterranean and the Middle East. Olive trees are

recorded in many religious texts. Olive trees must be kept in the same spot for a long time before they

can produce fruits. They do not fare well when moved.

This is anti-globalization because it may only be used in one place, it will not prosper in other climates

and is part of natural tradition; older styles of production.

Monarchs of MoneyEach year, a group of important figures in the financial industry and economics gather in Switzerland to

make up the world central bank. They lead various other central banks and government treasuries.

When the market crashed they introduced a program called quantitative easing to recover the

economy, it included

Lowering central bank interest rates

Printing more money

Encouraging spending and saving instead of saving

Their policy was seen as a monumental economic experiment. It caused:

House prices around the world, especially in prime locations to rise

A fear of another bubble burst

The German Central bank to describe Quantative easing as sinful

Economic collapse in Greece and Cypress

o People in cypress have had their bank accounts seized as a result of Germany

pushing the EU central Bank.

Lecture

In an average (99%) Area of America

After the cold war, The American government, under the Bush and Clinton administrations gave the

American public an idea that they all could own nice homes, no matter what job they had, and no

matter how bad their credit was.



So they could do that the government kept down payments and interest rates low, as well as eliminating

many restrictions so people could afford things like that.

This caused house prices to go up, and people started to use that to their advantage; they took out

home equity loans to buy things and pay bills. This put them further in debt, and gave them less

collateral in their homes.

At the same time in Investment banks:

Banks and bankers that gave the home equity loans and mortgages figured out a way to make some

short term cash. They decided to bundle up the loans that weren’t great and sold them to other banks

and companies as investments (many ending up in pension funds).

The bank paid a rating agency to rate theses subprime mortgage packages as prime, each one getting

AAA or AA ratings. These ratings made the banks even more money.

The big picture

As the interest rates rose, people had trouble making their payments, resulting in foreclosure. Manyhouses went up for sale, and with a large supply of these homes, the housing prices went down.

Now, the banks lost a lot of their money. So, they called Washington DC and told him that they were

about to have a financial meltdown. Washington gave the banks tons of taxpayer money and made

them pay it back at extremely low interest rates. The bankers who were responsible then took a lot of

this money and put it back in their pockets, as pure profit.

The US Federal reserve gave the banks $700 billion, much of it went to big bonuses for their executives.

The bailout and the bubbleGoldman Sachs is an American Multinational investment banking firm that is very powerful and

influential in the world finance and economic industries.

The Troubled Asset Relief Program was a US government program to purchase assets and equity from

financial institutions, and by this strengthen the financial industry. It was signed by George W. Bush in

October 2008 and was a component of the government trying to suppress the subprime mortgage

bubble burst, and keep the market from crashing.

The bailout is seen as a highly controversial plan by numerous economists, many have argued the

government pumping $700 billion into the financial sector was a big mistake, and that they could have

used that money better to stabilize the economy.

The bailout fixed one bubble, but inflated another.

Many banks and bankers took their bailout and did not put it to good use, and the bailout money should

have had specific terms, that would restrict the banks to putting the money to good use.



The EurozoneAs you may or may not know, many European countries are economically bonded by the euro, an

international currency that is not doing very well. The Eurozone threatens the Canadian economy

because:

Canada Has an excellent relationship with many countries in Europe, and we frequently trade with thosecountries. A worse economic situation in those countries means less trade with them.

It could also have a chain reaction, causing the whole world economy to crash because the Eurozone is

tied in with many other countries and markets.

Free trade zonesA free trade zone is set generally set up in developing countries by their governments to promote

industrial and commercial exporting. In addition to providing the benefits of a free trade show, these

zones offer other incentives such as tax exemptions and exemption of business regulations.

Personal finance DefintionsIncome: The amount of money an individual earns.

Saving: Not using, and safely storing a portion of personal income, in order to have money in the future.

Interest: A percentage earned from money saved/invested

Service charges: Fee applied for banking transactions

Investment: Purchasing or buying (a) product/service/business/stocks/bonds that are expected to

appreciate in value

Bonds: Governments (usually) borrowing money from individuals and agreeing to pay it back with

interest at a date in the future.

Fixed income investment: A guaranteed return on an investment (purchase that will appreciate in value)

Stocks: an investment in a company through owning a small share of that company. Stocks can go up

and down in value and also can pay dividends

Stock options: An employee taking some percentage of pay or bonus in company shares

Bonus: An extra amount of money paid to an employee, usually once per year.

Social assistance: Government programs that provide income for individuals who are unable to work or

do not earn enough from work.

Pension: A program paid during years of employment which provides income upon retirement.



Deductions: Money that an employer or the federal government takes from pay, often automatically,

usually mandatorily, sometimes non mandatory

Gross pay: Your (usually bi-weekly) money earned prior to deductions: all of the salary you get

Net pay: your (usually biweekly) money earned after deductions: the salary after deductions

Income tax: Money (Either directly deducted from pay by employer of calculated on an annual, bi-

annually, quarterly, basis by individuals or accountant) paid to the federal and provincial government for

the purposes of services.

Tax credit: An amount of money that can be deducted from taxable income

Property tax: Is the tax that owner of real estate pay to the municipal government based on the value of

their dwelling.

Sales tax: A percentage of retail purchase added to the total cost and directed towards the provincial or

federal government.

Mortgage: A loan for a house

Variable interest rate: A percentage at which a loan saving or investment accumulates interest;

fluctuates with rate set by a central bank

Fixed interest rate: A percentage at which a loan savings or investments accumulate interest; the rate

remains the same despite fluctuations in the economy

Down payment: An initial amount of money paid that represents a percentage of a larger purchase.

Personal finance q&a

What type of investments would you be comfortable with and why?

Generally I am most comfortable with low risk investments such as bonds, GICs and lower risk/ blue chip

stocks. I feel comfortable with lower risk investments because I know that if there is an economic

downturn my investments will be relatively safe. OR I feel very comfortable

with the current and future economic system and generally, I feel comfortable with most of or all of the

current options for investments.

In searching for a job is there more to consider than salary? Explain.

There is much more to consider than salary when job hunting. People job hunting should take into

consideration what the company has to offer, in terms of facilities and benefits, and also what pensions

that are available for them to invest in. They should also consider where the company is situated, and

the stability of the job.



What are the benefits of health insurance and pension plans?

The benefits of health insurance are that if someone has a medical expense that is not covered by their

government healthcare, such as certain dental surgeries or therapies, they will not be out of pocket for

that expense. The benefit of a pension plan is that when you choose to go into retirement, after paying

into that plan for a set amount of time, you will still be able to have an income.

What is the difference between disposable income and discretionary income?

Discretionary income is the money one earns after tax and paying into their pension, while disposable

income is the amount of money that one has left after all of their bills are paid.

What expenses will you have at age 20 that you do not have now?

At age 20 I could possibly have to pay tuition, I also may have transportation related expenses, such as

fuel, insurance and maintenance of cars, or a bus pass. Depending if I go to university abroad, I could

have expenses for food, I may also have entertainment expenses.

What expenses will you have at age 35 that you do not have now?

At age 35, I will most likely be completely independent, and have to pay for transportation, food,

housing and all of my entertainment, without the assistance of anyone. At this time I will likely not have

to pay my tuition, but I may have to pay off my student debt.

What factors influence the value of a home?

Many factors such as location, size, features, property features, type of home, age of home, curb appeal,

the presence of toxic, and or dangerous substances in the home, the interior layout, interior finishes and

the interior appeal.

Where in Toronto will you find more valuable homes? Are all cities like this?

In Toronto, the closer a property is to our main street, Yonge, the higher its value will likely be. This is

true in most cities, likely because of the number one rule of real estate; location, location, location.

How can a home be a short term investment?

Why is a car a bad investment?

A car is generally a bad investment because it depreciates in value, and has numerous expenses, such as

maintenance and insurance, even if it spends all of its time under a blanket in a garage.

What leads to changes in interest rates?

The health of an economy is the largest factor in the change of interest rates.

How do interest rates impact the average person?



Interest rates can affect an average person’s expenditure, because if they do not have fixed interest

rates, the rates of interest on their liabilities will be higher, giving them less disposable income.

What are bull and bear markets?

What are individual problems associated with credit debt?

The individual problems associated with credit debt are being chased by collection agencies, garnisheed

wages and bankruptcy

What are the macroeconomic problems associated with credit debt?

What are acceptable and unacceptable uses of a line of credit?

It is acceptable to use your line of credit for mandatory expenditures that one may for whatever reason,

not be able to pay for during the month. A line of credit should be used very responsibly because it is

the bank demonstrating their trust in you.

How did bad mortgages lead to the recent economic collapse in the US?

Bad mortgage rates cause people to default on their mortgages, and thusly, many filed for bankruptcy

and had their homes foreclosed. This itself is identified as a recession.

How did the economic collapse influence the housing prices in the US?

It caused them to go down because more properties were for sale and people had less money to buy

them with,

How did Canada avoid the collapse?

Canada ensured that our mortgages were better regulated.

Mock-up of application scenario (Purchasing cars)

Be able to determine which car to buy, and be able to explain why to buy it

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2012 Ford Mustang Shelby 2008 Lexus is 250 2010 Chevrolet suburban 2500

MSRP: $62,000 MSRP: $36,000 MSRP: $59,000

Price: $51,000 Price: $21,000 Price: $42,000

Condition: Used Condition: Used Condition: Used

Mileage: 4,000 Mileage: 73,000 Mileage: 24,000

L/100km: 11 L/100km: 4.1 L/100km: 11.8

Dealer: MVL Toronto Dealer: Impound (Toronto

police services)

Dealer: Chevrolet of Sudbury

Other information: Track driven

Other information: Other information:

Ex police vehicle

The best vehicle is in fact the Shelby. because, it is at a reputable dealership, and although it may

not be as practical, or fuel efficient, it has low mileage and also has a significantly reduced price.

This one is a bit harder

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2002 Dodge ram 2006 Chrysler 300 SRT 2001 Jaguar XJ8

MSRP $48,000 MSRP $43,000 MSRP $61,000

Price $10,000 Price $14,000 Price $ 12,000

Condition Used Condition Used Condition Used

Mileage 138,000 Mileage 80,000 Mileage 103,000



L/100km 12 L/100km 10 L/100km 9

Dealer Private Dealer Heritage Ford Dealer Kumars used cars

Other information

Missing tailgate

Other information

One owner

Other information: Rebuilt

form write off

Documents

Business Final Exam Doc-2