Essentials of Mathematics 12 - Personal Finance

This sub-organizer contains the following sections:
Prescribed Learning Outcomes
Suggested Instructional Strategies
Suggested Assessment Strategies
Recommended Learning Resources

PRESCRIBED LEARNING OUTCOMES

It is expected that students will solve consumer problems involving insurance, mortgages and loans

It is expected that students will:

• solve problems involving different types of insurance
• determine the costs involved in purchasing a home, including gross debt service ratio
• solve problems involving different types of mortgages

SUGGESTED INSTRUCTIONAL STRATEGIES

Purchasing insurance and acquiring a mortgage involve important decision-making skills that will pay an important role in every student’s future. By analysing various types of insurance and mortgage scenarios and considering additional cost factors, students are better able to make informed financial decisions.

• Brainstorm a class list of types of insurance (e.g., renter’s, home-owner’s, life, health, dental, eye-care, long-term disability).
• Have students discuss in small groups, research, and report on the following questions:
  • Why purchase life insurance?
  • How much life insurance is needed in various situations?
  • What types of life insurance are available?
  • Why do smokers pay more for life insurance?
  • Why do people pay more for life insurance as they age?
• As a class, discuss home-owner’s insurance, including:
  • deciding how much insurance is needed, including contents coverage
  • the importance of reviewing exactly what is covered by a particular life insurance plan
  • the difference between standard and comprehensive home-owner’s insurance
  • the need for renter’s insurance
• Have students research the following terms, and provide a brief definition for each: down payment, inspection fee, mortgage, application fee, service charges, legal fee, closing cost, land transfer tax, assets, debt-equity ratio, liabilities.
• Ask students to make a list of additional costs to a mortgage beyond the cost of the building. Have them include reasons for buying a home within their price range.
• Discuss gross debt service ratio and demonstrate how it is used by financial institutions to determine eligibility for loans:
  
  
  
  
• Conduct a class discussion on types of mortgages, including closed, open, convertible, fixed-rate, and variable-rate.
• Have students analyse the relationships between principal, length of term, and interest rate using a mortgage calculator.

SUGGESTED ASSESSMENT STRATEGIES

To make wise financial decisions when purchasing insurance or acquiring a mortgage, consumers must understand the mathematics involved. Assessment should center around real-life scenarios involving premium and amortization tables and the use of spreadsheets. Look for evidence of students’ abilities to analyze situations so they can make informed decisions.

Observe

• While students are working on problems involving insurance or mortgages, look for evidence that they can:
  • use the appropriate terminology (e.g., standard and broad insurance, comprehensive coverage, guaranteed replacement cost, N/C [not covered], deductible, down payment, mortgage, equity, appraisal, principal, amortization period, gross debt service ratio, net worth)
  • distinguish between the various types of insurance
  • distinguish between closed, open, convertible, fixed-rate and variable-rate mortgages
  • correctly calculate gross debt service ratio and net worth
  • identify an appropriate insurance plan and mortgage plan
  • identify additional costs involved in purchasing a home
  • use amortization tables

Collect

• Have students investigate real-life situations in purchasing an insurance plan or a mortgage plan. Assess their work for the extent to which they:
  • accurately determine the factors involved
  • set up and fill a spreadsheet to determine insurance cost, additional costs, mortgage
  • interpret the results from the insurance and mortgage calculation

Question

• After students have analyzed a real-life situation, ask them to answer the following questions:
  • what would happen if _____?
  • what if _____ had happened instead?
  • what does this information suggest?

RECOMMENDED LEARNING RESOURCES

Comprehensive learning resources for this course are currently under development. As an interim measure, schools are encouraged to use the teacher-developed learning resources distributed to schools (student and teacher resources). Please note that the student materials require photocopying for student use.

Video

• The ABC’s of Personal Finance

Software

• Math Tools

© 2000 Copyright. All Rights Reserved. Curriculum Branch.
Maintained by: Mathematics Coordinator
Revised: November 22, 2000

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