Topic 1

Question 1

Assets

Answer 1

Things that a business/person owns

Question 2

Bank Rate

Answer 2

Interest rate that the bank of England uses when it lends money to other banks. Providers take account of bank rate when deciding how to set interest rates on their own products.

Question 3

bankruptcy

Answer 3

a situation in which a person cannot pay their debts and is the subject of a court order that shares their assets between creditors

Question 4

budget

Answer 4

plan of expected incomings and outgoings over set time period. Is also a term given to governments annual spending plan, which the Chancellor sets out in the house of commons each year

Question 5

cash-flow forecast

Answer 5

plan of expected incomings and outgoings over several time periods, such as next 3 months or year

Question 6

contingency plan

Answer 6

plan to deal with unexpected changes in income/expenditure

Question 7

Credit union

Answer 7

A mutual organisation (that is, owned by its members) that provides a
range of financial products to members, eg savings accounts and
personal loans.

Question 8

Deficit

Answer 8

Where expenditure exceeds income

Question 9

Discretionary
expenditure

Answer 9

Spending on products and services that people want now, and savings
towards items they aspire to buy in the future; it is spending or
saving that people can choose to do or not.

Question 10

Disposable income

Answer 10

The amount of money left over once mandatory and essential
expenditure has been paid out.

Question 11

Essential
expenditure

Answer 11

Spending on items required to live, eg rent or mortgage repayments,
food and drink, water supplier, gas and electricity

Question 12

Financial capability

Answer 12

Being able to manage personal finances effectively

Question 13

Fixed interest

Answer 13

Paying the same rate of interest until the end of the savings,
investment or loan term.

Question 14

flexible financial planning

Answer 14

Making financial plans to cover wants, needs and aspirations over the
medium to long term, which make allowance for unexpected
expenses and changes in circumstance (eg by including saving and
insurance).

Question 15

Hire purchase

Answer 15

type of secured consumer credit, to finance items e.g. cars, involves borrower replaying over number of years

Question 16

Income protection insurance

Answer 16

policy that allows people to manage risk of loss of earnings over a long erm. pays out a monthly income to insured people who have suffered accidental injury / long-term illness and therefore cant work

Question 17

individual savings account

Answer 17

account thats pays intrest tax-free. Can pick to save entire money in cash, or in stocks and shares, or mix both.

Question 18

Inflation

Answer 18

general rise in prices, which means the purchasing power of money falls

Question 19

insolvency

Answer 19

situation in which a person cannot repay what the owe because their debts are greater than their assets

Question 20

insurance

Answer 20

products that give financial protection against certain events.

Question 21

investments

Answer 21

money thats paid into financial products . the aim is that the value of the product will grow over time so the person will receive a high return

Question 22

Mandatory
expenditure

Answer 22

Compulsory outgoings; they do not necessarily apply to everyone but
if they do apply, they must be paid.

Question 23

Money-purchase pension scheme

Answer 23

pension scheme in which the value of the fund available at retirement is based on the contributions made by an employee which are invested.

Question 24

Mortgage

Answer 24

A loan taken out to pay for a property, usually over a long term such
as 25 years

Question 25

Mortgage payment protection insurance

Answer 25

an insurance policy intended to cover mortgage repayments in the event or illness or unemployment

Question 26

national insurance contributions

Answer 26

money deducted from the pay of people who are employed or self-employed and is used by the gov to fund state pensions and other benefits

Question 27

non financial investments

Answer 27

investments in items such as fine wines, art ect

Question 28

notice account

Answer 28

account for which the holder has to tell the provider in advance if they want to withdraw their money. if they do not give the provider notice, they can lose interest on your savings

Question 29

pension

Answer 29

income that people recieve after retiring from work

Question 30

personal debt

Answer 30

debt owed by individual consumers

Question 31

recession

Answer 31

period of at least 6 months in which the amount of good and services the country is producing is shrinking

Question 32

repossession

Answer 32

legal process where a finanical institution takes ownership of an asset because loan repayments relating to the asset have not been met.

Question 33

savings bond

Answer 33

saving product held for a fixed period. e.g. two years.

Question 34

shares

Answer 34

also known as ‘equities’, investments that represent part-ownership in a company.

Question 35

sustainable personal finance

Answer 35

achieving and maintaining a balance between personal income and expenditure to satisfy needs, wants and aspirations.

Question 36

flexible financial plan is …

Answer 36

balanced
informed
able to adapt to changing products/services
fluid
realistic