Answers


  1. Account Full Name Types of holdings (e.g., chequing account, GIC, etc.) Is the principal deducted from taxable income? Is the interest earned tax-free?
    TFSA Tax-Free Savings Account Savings Accounts, GICs, or Mutual Funds No Yes
    RRSP Registered Retirement Savings Plan Savings Accounts, GICs, or Mutual Funds Yes No, but the tax on the interest is deferred until the money is removed from the RRSP.
  2. A blank axis where Risk is along the horizontal and Possible Returns is along the vertical. Risk cannot be negative. The following have no risk: GICs, Savings Accounts, Chequing Accounts, where your possible returns are positive. GICs provide greater returns than savings accounts, which provide higher returns than chequing accounts. Mutual funds are higher risk but include a range of possible returns including negative values.

    This graph shows only the rate of return, not the purchasing power. If inflation is considered, the actual purchasing power of money in chequing or savings accounts decreases in most years.

    1. The bank interest would be \($288\).
    2. The new lender charges an annual rate of \(3.2 \%\).
  4. The accumulated amount in Joshua's account will first be greater than in Zaira's account in the \(23\)rd year.
  5. Swetha originally invested \($12~805.71\).
  6. The result is the same for each situation. Doubling any one of the principal, interest rate, or time will double the amount of interest earned.
  7. The account will have \($4875\).
  8. Option 2 yields the most money (Option 1: \($5715\); Option 2: \($5731.92\))