Topic 7: Using money to make money Flashcards

1
Q

What do you have to consider when you take a risk on something?

A

You have to consider whether the potential reward is worth it.

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2
Q

What is the balance of risk and reward?

A

When it comes tot take risks with money, you have to ask yourself the same question: is the reward worth the risk? We call this the balance of “risk and reward”.

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3
Q

Which potential reward is greater: investing money in shares or putting it into a bank or building society?

A

Investing money in shares is taking a risk with money but the potential rewards are much greater than those of an ordinary savings account.

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4
Q

What are you risking with investing your money in shares?

A

By investing your money in shares, you are taking a chance that the company in which you have bought shares will be successful. If the company does well, you will receive part of the profits. dividends and the value of your initial investment cold increase however, the opposite could happen and you could potentially lose all of your initial investment.

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5
Q

What does the National Savings and Investment sell and manage?

A

The NS&I sells and manages Premium Bonds as a way in which people can save money and have fun of a price draw every month.

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6
Q

What do Premium Bonds do?

A

The interest that is earned on all Premium Bonds is used to fund cash prices. When people hold Premium Bonds, they are swapping the interest rate that they could earn on the money in the savings product for the chance of winning a big prize.

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7
Q

Why and how will bondholders always get their money back?

A

People can cash in all or some of their Premium Bonds at any time. Because NS&I is basked by HM Treasury, the original amount of money that people put into Premium Bonds is 100% safe.

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8
Q

What is the minimum and maximum amount of money people can put into Premium Bonds?

A

The minimum amount of money that people can put into Premium Bonds in £100 with the maximum holding of £30,000.

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9
Q

What it the purpose of the lottery?

A

The purpose of the Lottery is to raise money for good causes and to collect Lottery duty (a form of tax) for the government.

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10
Q

Where does the £1 that people pay for a Lotto ticket go to?

A

50p - goes to the winners’ fund
28p - goes to good causes
12p - goes to the government in a tax called “lottery duty”
5p - paid to the retailers who sell Lotto tickets
4 and 1/2p - used by Camelot to pay the costs of operating the Lotto
1/2p - goes to Camelot as profit

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11
Q

What sorts of good causes has the Lotto money gone to?

A

Good causes in the arts, sports, heritage, health, education, environment, community and charity sectors.

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12
Q

What are the chances of any one ticket winning the Lotto Jackpot?

A

1 in 13,983,816 (1 in 14 million)

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13
Q

What are the overall odds of winning any prize?

A

1 in 54

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14
Q

What happens if you match 3 numbers?

A

If you match 3 numbers, you win £10

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15
Q

What risk do people take when they gamble?

A

When people gamble, they take the risk that they could lose the money with which they play. If you do not win anything, you lose all of your money you paid.

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16
Q

What is a stake?

A

Other forms of gambling involve money placed as a bet, called a “stake”.

17
Q

Why do people gamble?

A

Gambling can be addictive. When they lose a bet, some gamblers then try another bet with higher potential winnings, to try to win back the money that they have already lost.

18
Q

What does getting paid a dividend depend on?

A

Whether a dividend is paid and how much it will be depend upon the company’s performance and whether it makes a good profit.

19
Q

What is a very risky investment?

A

Buying stocks and shares in a particular company can be very risky, because the investor could lose all of their money if fails.

20
Q

What isn’t a very risky investment?

A

Buying into a pooled investment (such as a unit trust) that is, a fun in which many investors put their money together to buy a range of stocks, shares and bonds.