Finance Chapter 4 - Paper 1

Question 1

What is a closing balance?

Answer 1

The money still owed on the loan at the end of every month.

Question 2

What is compound interest?

Answer 2

Calculated on the initial amount plus any interest that may already have been added on to it.

Question 3

What is a deposit?

Answer 3

A deposit is an amount that must be paid upfront before the loan is guaranteed.

Question 4

What is a factor?

Answer 4

A value that shows what the repayment value will be for every R1000 of money borrowed.

Question 4

What is a funeral plan?

Answer 4

A type of insurance policy where members pay monthly into the plan and receive a fixed amount to cover funeral expenses in the event of their death.

Question 5

What is interest?

Answer 5

Money either paid to you as a reward for an investment or which you would have to pay for borrowing an amount.

Question 6

What is an investment account?

Answer 6

An account used to save money and earn interest.

Question 7

What is an investment?

Answer 7

A form of saving money to earn interest.

Question 8

What is a loan?

Answer 8

A sum of money borrowed on condition that this money will be repaid with interest within a fixed period of time and at a certain interest rate.

Question 9

What is loan length?

Answer 9

The agreed period over which a loan must be repaid.

Question 10

What is a monthly repayment?

Answer 10

Amount repaid on a loan every month.

Question 11

What is an opening balance?

Answer 11

The amount of money owing on the loan at the beginning of every month.

Question 12

What is a pension fund?

Answer 12

Contribution made to retirement by both the employer and the employee based on salary earned.

Question 13

What is ‘real cost’?

Answer 13

The total of all the repayments made on a loan, i.e. the original loan amount + interest.

Question 14

What is a repayment?

Answer 14

The amount that must be paid to the bank every month during the whole life of the loan.

Question 15

What is a retirement investment?

Answer 15

Savings used to accumulate money for retirement.

Question 16

What is a shared buying scheme?

Answer 16

A group of people pool money to buy items in bulk and qualify for greater savings.

Question 17

What is a shared investment scheme?

Answer 17

A group of people pool money to earn a higher interest rate.

Question 18

What is a bond?

Answer 18

Also known as a mortgage, a certificate promising to repay borrowed money at a fixed rate of interest over a specified time.

Question 19

What is a benchmark?

Answer 19

A standard against which things may be compared.

Question 20

What is a period?

Answer 20

a portion of time.

Question 21

How does loan size influence repayments?

Answer 21

The bigger the loan the bigger the repayments will be.

Question 22

How does loan length influence repayments?

Answer 22

The shorter the loan length, the higher the repayments will be.

Question 23

How does the interest rate influence repayments?

Answer 23

The higher the interest rate, the more interest is charged each month, so the higher the monthly payment.

Question 24

Which 3 criteria determine repayments?

Answer 24

Loan size, loan length, the interest rate.

Question 25

What is a model?

Answer 25

Something used to represent or imitate the real thing.

Question 26

What does fluctuate mean?

Answer 26

Rise and fall irregularly in number or amount.

Question 27

What does retire mean?

Answer 27

Leave one’s job and cease to work.

Question 28

What is a fund?

Answer 28

a sum of money saved or made available for a particular purpose.

Question 29

What is a stokvel?

Answer 29

A savings or investment society to which members regularly contribute an agreed amount and from which they receive a lump sum payment.

Question 30

What does pool mean?

Answer 30

accumulate, put together

Question 31

What are members?

Answer 31

people that have joined the group

Question 32

What is a premium?

Answer 32

An amount to be paid for a contract of insurance.

Question 33

What is a policyholder?

Answer 33

A person or group in whose name an insurance policy is held.

Question 34

What is inflation?

Answer 34

An increase in average price from one period to another.

Question 35

What is a price increase?

Answer 35

The price of an item goes up.

Question 36

What is a salary or wage increase?

Answer 36

The amount of income or fees goes up.

Question 37

What is a marker?

Answer 37

An object used to indicate a position or place.

Question 38

How do you calculate inflation?

Answer 38

[(Current cost - previous cost) divided by previous cost] x 100 = inflation