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Finance U4 > Topic 6 > Flashcards

Topic 6 Flashcards

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1
Q

What is expected loss

A

the average amount of loss expected

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2
Q

What is unexpected loss

A

the amount by which the actual loss might exceed what is expected

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3
Q

What is catastrophic loss

A

a loss in excess if unexpected loss

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4
Q

name 3 exampples of expected loss

A

investment, house, savings

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5
Q

What is annuity

A

a product where the customer pay a lump sum and in return, receives an agreed set annual amount for the rest of their life

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6
Q

what is a catastrophe bond

A

a bond purchased by investors who receive a good rate of interest as long as the catastrophe the bond covers does not happen

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7
Q

What happens if catastrophe happens in a catastrophe bond

A

they lose their capital and the insurance company does not have to pay them back what they invested

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8
Q

What is cyberterrorism

A

a situation where terrorists deliberately attack computer networks by uploading viruses that cause links and files to malfunction and data to be deleted

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9
Q

what is an ethical investment

A

an investment made in a company that takes into account the wider impact of its activities on society and the environment

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10
Q

what is an exogenous shock

A

a significant event that happens without warning and that has large and lasting effects on political, economic, and social systems

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11
Q

Name an example of exogenous shock

A

covid 19

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12
Q

What is gross interest

A

interest paid without tax deducted

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13
Q

what does index-linked mean

A

rising in line with inflation

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14
Q

what are islamic home purchase plans

A

methods of buying a home that are compliant with sharia law

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15
Q

what does sharia law forbid

A

muslins paying or gaining interest

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16
Q

what are the 2 islamic home purchase plans

A

ljara and murabaha

17
Q

what is loan to value

A

the ratio of the size of the loan to the value of the property

18
Q

What is a money laundering officer

A

an employee of a financial provider who must be informed of suspicious activity in the business that might be linked to money laundering or terrorist finance, reporting if necessary

19
Q

what is negative real interest rate

A

where the nominal interest rate is lower than the rate of inflation

20
Q

what is nominal interest rate

A

the actual rate of interest received by a saver

21
Q

what is a public sector

A

the collective name for organisations that are funded through taxation

22
Q

name a public sectore

A

school

23
Q

what is pure risk

A

where risk can only have a downside

24
Q

name a pure risk

A

damage

25
Q

what is real income

A

the value of people’s income in terms of goods and services

26
Q

what is real interest rate

A

the difference between the nominal interest rate received by the saver and the rate of inflation

27
Q

what is real terms

A

a value adjusted to account for changes in prices

28
Q

what is sharia law

A

rules that devout Muslims follow which in relation to personal finance, prohibit the paying and receiving of interest

29
Q

what is speculative risk

A

where risk can have either a good or bad outcome

30
Q

what is volitallity

A

changeability, as when the value of an investment moves up and down significantly in a short period

31
Q

what does exogenous shock occur with

A

without warning and has significant impact

32
Q

what does speculative risk have

A

either an upside or a downside

33
Q

what peoples wage increase more than to experience a rise in real income

A

rate of inflation

34
Q

what happens to demand for mortgage loans when there is expected higher inflation

A

demand will increase

35
Q

which body required RBS and Lloyds to undergo divestment in 2009

A

The EU competition commissioner

36
Q

What is riba in terms of islamic home finance

A

prohibition of interest

37
Q

what is muharaba in terms of islamic home finance

A

the bank buys a property, sells it to the buyer and the buyer pays for it in instalments with no late payment penalties

38
Q

what is a ljara in terms of islamic home finance

A

a buyer leases a property from a bank and at the end of the leasing period becomes the property owner

39
Q

what is Gharar

A

Uncertainty in business dealings

Finance U4 (10 decks)

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