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 peoples 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 of
individuals.
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 businesss 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 the
rise 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 and
selling
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 are
greeted 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 pro
Duracell, 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 petroleums 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 anticipating
what may come to be in the
future.
Many companies like Honda are
exploring 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
companys financial position.
Fiscal year: A period of 12 consecutive months, not always the same calendar year
Net 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 companys 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
Owners equity: The amount of money the owner invested when starting the business plus any
accumulated profits
Income statement: The financial statement that reports a businesss 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
Hos 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 free
using some social medias
Generally inexpensive
Often ignored
May not be seen as
often
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 pay
attention
Advertisements cant
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), this
would 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 companys 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 America
Languages: Spanish, Portuguese, various aboriginal dialects
Cities
Buenos Aires
Sao Paulo
Lima
Bogot
Rio De Janeiro
Santiago
Salvador
Resources: Agriculture, Forestry, Fishing, Mining, Drilling
Tension: Cartels, Guerilla, Freedom fighters
Europe
Languages: 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
Asia
Languages: 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
Oceania
Languages: 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 African
Dialects
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 countries
1. 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
IMFs (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 countrys total value of its imports and the
total value of the exports.
The Lexus and the Olive Tree
The 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 Money
Each 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 werent 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. Many
houses 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 bubble
Goldman 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 Eurozone
As 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 those
countries. 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 zones
A 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
Defintions
Income: 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 persons 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