Specimen paper A

Question 1

Which of the following is an example of a ‘want’?

Answer 1

Jewellery (B)

Question 2

Which of the following is an example of an aspiration for a young adult?

Answer 2

Getting a good job.
This is an aspiration, as it is something to achieve over a period of time.

Question 3

An investment, when compared to a savings product, is generally:

Answer 3

more risky but can bring in a higher return.

Question 4

Advertising can carry:

Answer 4

both explicit and implicit messages.

Question 5

Which of the following helps people to decide their general approach to financial matters?

Answer 5

Values.

Question 6

A budget is a personal financial plan that usually covers a period of:

Answer 6

One month.

Question 7

Which of the following is most likely to be a medium-term goal of someone aged 40?

Answer 7

move to a larger house.

Question 8

The main purpose of a budget, as part of a financial plan, is to:

Answer 8

Avoid getting into financial difficulties.

Question 9

Opportunity cost can be defined as the:

Answer 9

Cost of something in terms of what has to be given up to achieve it.

Question 10

Which of the following is not an example of a significant, life-changing event?

Answer 10

A car failing an MOT.

Question 11

Which of the following financial products is the most appropriate for someone to use as ‘rainy day’
money?

Answer 11

Instant access savings account.

Question 12

Medium-term and long-term financial planning is carried out because people want to achieve their:

Answer 12

Aspirations.

Question 13

James, aged 35, is buying his first property for £150,000. The mortgage would usually be repaid
over a period of:

Answer 13

25 years.

Question 14

Gethin and Nia are both in their twenties and would like to start planning for their retirement. At what
age should they start putting money aside towards their retirement planning?

Answer 14

As soon as possible.

Question 15

When considering returns in savings accounts, the ‘real’ return takes into account the interest rate
and:

Answer 15

Inflation.

Question 16

In the UK, a number of benefits have been replaced by a single monthly payment for some people
who are out of work or on a low income.
This is known as:

Answer 16

Universal Credit.

Question 17

Which of the following organisations provides advice and guidance to an individual dealing with
personal debt?

Answer 17

MoneyHelper.

Question 18

Which of the following best describes a financial footprint?
It is a record of:

Answer 18

all of a person’s financial transactions.

Question 19

The relationship between risk and reward is based on the idea of:

Answer 19

high reward/high risk

Question 20

Which of the following financial products carries the lowest risk?

Answer 20

Premium Bonds

Question 21

Which of the following factors is applicable to an investment trust but not a unit trust?

Answer 21

Allowed to borrow money.

Question 22

People who are willing to borrow money in order to buy a property are best described as having:

Answer 22

an average degree of risk tolerance.

Question 23

When a person passes risk to someone else, for instance by taking out an insurance policy, this is
known as risk:

Answer 23

transfer.

Question 24

Ranesh and Geeta have two small children and want to put some money aside each month for the
long-term. They are both risk tolerant. Which of the following are they most likely to choose?

Answer 24

Unit trust.

Question 25

Which of the following is not an investment product?

Answer 25

Property.

Question 26

Which of the following taxes might be paid when an individual sells a valuable painting?

Answer 26

Capital gains tax.

Question 27

Which of the following is covered up to £85,000 by the Financial Services Compensation Scheme?

Answer 27

Bank deposits.

Question 28

What is the annual ISA allowance for an adult paying into a stocks and shares ISA and a cash ISA,
in the same tax year?
They:

Answer 28

can contribute up to a maximum allowance in one or both types of ISA.

Question 29

When borrowing money to buy a property, the ratio of the money borrowed to what the property is
worth is known as the:

Answer 29

Loan-to-value (LTV).

Question 30

Hire purchase agreements are regulated by the:

Answer 30

Consumer Rights Act.

Question 31

Under which law is it forbidden to borrow or lend money for interest?

Answer 31

Sharia law

Question 32

What is meant by a halal investment?
It must:

Answer 32

pay out dividends twice a year.

Question 33

Derived demand is where a financial product is demanded because it enables people to:

Answer 33

achieve their wants.

Question 34

Which of the following is not available from MoneyHelper?

Answer 34

Face-to-face advice at a number of centres.

Question 35

A financial adviser who can only recommend certain types of product from one provider, or a limited
number of providers, is called:

Answer 35

A restricted adviser.