Finance Chapter 4 - Paper 1 Flashcards
What is a closing balance?
The money still owed on the loan at the end of every month.
What is compound interest?
Calculated on the initial amount plus any interest that may already have been added on to it.
What is a deposit?
A deposit is an amount that must be paid upfront before the loan is guaranteed.
What is a factor?
A value that shows what the repayment value will be for every R1000 of money borrowed.
What is a funeral plan?
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.
What is interest?
Money either paid to you as a reward for an investment or which you would have to pay for borrowing an amount.
What is an investment account?
An account used to save money and earn interest.
What is an investment?
A form of saving money to earn interest.
What is a loan?
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.
What is loan length?
The agreed period over which a loan must be repaid.
What is a monthly repayment?
Amount repaid on a loan every month.
What is an opening balance?
The amount of money owing on the loan at the beginning of every month.
What is a pension fund?
Contribution made to retirement by both the employer and the employee based on salary earned.
What is ‘real cost’?
The total of all the repayments made on a loan, i.e. the original loan amount + interest.
What is a repayment?
The amount that must be paid to the bank every month during the whole life of the loan.
What is a retirement investment?
Savings used to accumulate money for retirement.
What is a shared buying scheme?
A group of people pool money to buy items in bulk and qualify for greater savings.
What is a shared investment scheme?
A group of people pool money to earn a higher interest rate.
What is a bond?
Also known as a mortgage, a certificate promising to repay borrowed money at a fixed rate of interest over a specified time.
What is a benchmark?
A standard against which things may be compared.
What is a period?
a portion of time.
How does loan size influence repayments?
The bigger the loan the bigger the repayments will be.
How does loan length influence repayments?
The shorter the loan length, the higher the repayments will be.
How does the interest rate influence repayments?
The higher the interest rate, the more interest is charged each month, so the higher the monthly payment.
Which 3 criteria determine repayments?
Loan size, loan length, the interest rate.
What is a model?
Something used to represent or imitate the real thing.
What does fluctuate mean?
Rise and fall irregularly in number or amount.
What does retire mean?
Leave one’s job and cease to work.
What is a fund?
a sum of money saved or made available for a particular purpose.
What is a stokvel?
A savings or investment society to which members regularly contribute an agreed amount and from which they receive a lump sum payment.
What does pool mean?
accumulate, put together
What are members?
people that have joined the group
What is a premium?
An amount to be paid for a contract of insurance.
What is a policyholder?
A person or group in whose name an insurance policy is held.
What is inflation?
An increase in average price from one period to another.
What is a price increase?
The price of an item goes up.
What is a salary or wage increase?
The amount of income or fees goes up.
What is a marker?
An object used to indicate a position or place.
How do you calculate inflation?
[(Current cost - previous cost) divided by previous cost] x 100 = inflation
