Question

Dany needs help with some personal finance concepts and has turned to you for help. Insert the correct word from the choice of words at the end of this Mini-Case 1 to complete the sentence (note: not all words will be used): (8 marks -1 mark each)

• Pooled investments is an investment fund that pools together money from many investors; it provides for diversification, _______________________________________, and marketability.

• When applying for life insurance, the information you provide about your medical history and lifestyle is used to determine your eligibility for coverage and your ______________________.

• ______________________________________ insures against costs of damage to your car resulting from an accident in which the driver of your car is at fault.

• A ___________________________ is a gift that results from the instructions provided in a Will.

• A person specified in a Will to receive part (or all) of an estate is called a ___________________________________. For life insurance proceeds, this person receives the insurance payment directly upon the death of the insured as it does not form part of the estate.

• The ______________________________________ is the dollar value of the Estate assets that will be distributed to the surviving spouse before assets are distributed among all potential beneficiaries.

• The ______________________________________ is written solely in the handwriting of the testator and it does not require any witnesses.

• Sarah is leaving for vacation and will be travelling around the world for six months. She has decided to leave her brother, Aaron in charge of her affairs to pay her bills and take care of her home while she is away. Sarah should have a notary prepare a ______________________________________ to allow Aaron to make specific decisions on her behalf.

Exchange-Traded Funds (ETF)	High ratio mortgage	Convertible mortgage
Beneficiary	Diversification	Enduring Power of Attorney
Closed mortgage	Liquid asset	Asset
Locked-In Retirement Account (LIRA)	Defined Contribution Pension Plan (DCPP)	Defined Benefit Pension Plan (DBPP)
Preferential share	Opportunity costing	Annuity
Collision insurance	Old Age Security (OAS)	Personal Balance Sheet
Average tax rate	Registered Retirement Savings Account (RRSP)	Tax-Free Savings Account (TFSA)
Mutual Fund	Return on Investment (ROI)	Conventional mortgage
Annuity Due	Notarial Will	Mortgage
Current asset	Bequest	Limited Power of Attorney
Term insurance	Marginal tax rate	Whole life insurance
Budgeting	Money management	Disability insurance
Credit management	Stop payment	Holograph Will
English Form Will	Home Equity Line of Credit	Premium
Overdraft	Credit cards	Consumer Price Index (CPI)
Lifelong learning plan (LLP)	Net Asst Value (NAV)	Prime rate
Amortization	Economies of scale	Compound
Reverse mortgage	Segregated funds	Open mortgage

Answer 1

1: Liquid asset: Liquid asset refers to the property of pooled investments that the investments can easily be withdrawn & converted to cash as required.

2: Premium : Premium refers to the cost that will have to be paid to get the insurance :

3. Collision insurance : It insures against costs of damage to an automobile resulting from an accident

4: Bequest: It is a gift (property etc.) given by will.

5: Beneficiary : the person named in a legal document to inherit money

6. Preferential share

7. Holograph Will : It is written solely in the handwriting of the testator

8. Limited Power of Attorney : It is an authorization that will permit her brother to perform specific functions on behalf of her.