unit 1.7 - providers

Question 1

AER

Answer 1

annual equivalent rate is the interest rate that will be earned on the money in one year and tajes into account how often the provider pays the interest, the effect of compounding the interest and any fees and charges

Question 2

assets

Answer 2

things that a person or a business owns.

Question 3

cash card

Answer 3

card used to withdraw cash from arms or branch counters

Question 4

cash isa (individual savings account

Answer 4

account that pays interest tax-free on cash savings up to a certain level

Question 5

chancellor of the exchequer

Answer 5

the British cabinet minister responsible for financial and economic matters and in a charge of the treasury.

Question 6

cheque

Answer 6

written instruction to the provider to pay an amount from one person to another person or organisation.

Question 7

common bond

Answer 7

interest or circumstance shared by a group of people.

Question 8

communication channel

Answer 8

medium through which information is transferred to its intended recipient. in financial services, it refers to the way a customer can contact their provider and manage their account. (Distribution channel)

Question 9

credit card

Answer 9

card that allows the holder to make purchases. Transactions are paid by the card provider. Card holder repays the amount owed to the provider in instalments or in one payment. Provider charges interest on cash withdrawals is made and on purchases after a certain period.

Question 10

credit union

Answer 10

mutual organisation (that’s owned by its members) that providers a range of financial products to its members. Members of a credit union must share a common bond (e.g. all work in the same area)

Question 10

credit union

Answer 10

mutual organisation (that’s owned by its members) that providers a range of financial products to its members. Members of a credit union must share a common bond (e.g. all work in the same area)

Question 10

credit union

Answer 10

mutual organisation (that’s owned by its members) that providers a range of financial products to its members. Members of a credit union must share a common bond (e.g. all work in the same area)

Question 11

current account

Answer 11

bank or building society accounts where people store their money in a form of an electronic balance and withdraw it to make payments.

Question 12

demutualisation

Answer 12

process whereby a mutual organisation (eg building society) legally becomes a shareholder-owned joint stock company (eg a bank)

Question 12

DEBIT CARD

Answer 12

card that can be used to withdraw cash, make face-to-face transactions, online or over the phone.

Question 13

direct debit

Answer 13

electronic payment out of an account.

Question 14

dividend

Answer 14

payment of profits from a company to its shareholders, (often twice yearly) either as cash or as further shares or reacquisition of shares

Question 15

financial conduct authority (FCA)

Answer 15

one of the 2 main regulators in the UK. Responsible for regulating the conduct of business and setting rules for businesses to follow.

Question 16

financial services compensation scheme

Answer 16

compensation scheme that pays compensation to account holders up to a certain amount per provider if the provider goes into default.

Question 17

insurance

Answer 17

products that give financial protection against certain events.

Question 18

interest rate margin

Answer 18

difference between the interest rate that a bank charges on borrowing products and interest paid on savings

Question 19

life assurance

Answer 19

type of insurance policy that pays out a sum of money if the insured person dies.

Question 20

life cover

Answer 20

same as life insurance

Question 21

mortgage

Answer 21

loan taken out to pay for a property, usually over a long period of time

Question 22

mutual organisation

Answer 22

an organisation owned by its customers, who are also members, rather than shareholders

Question 23

NS&I

Answer 23

National savings and investments , a provider that is backed by the treasury. It offers savings and investments products to the public.

Question 24

OVERDRAFT

Answer 24

facility that allows an account holder to withdraw more money than what is in their account. Authorised overdraft os agreed with the bank in advance with limits. Exceeding this is an unauthorised overdraft, and may not be authorised.

Question 25

personal loan

Answer 25

product that allows someone to borrow a fixed amount over a fixed period at a fixed interest rate.

Question 26

premium bond

Answer 26

lottery bond, by NS&I, entered into a monthly prize draw with tax-free prizes or ‘premiums’. Bonds must be held for a colander month after the month in which they were purchased, and retain an equal chance of winning until cashed in.

Question 27

prudential regulation authority (PRA)

Answer 27

One of the 2 main regulators of financial products in the UK. The PRA, through regulation, sets standards/policies which it expects firms to meet and monitors compliance against these.

Question 28

Public limited company (PLC)

Answer 28

large company whose shares are sold and traded to the general public. The shareholders have limited liability, up to the value of their investment , for the company’s debts.

Question 29

rate of return

Answer 29

amount a save gains in interest on their savings. 0.2% APR is lower rate of return than 0.4% APR

Question 30

savings bond

Answer 30

savings product held for a fixed period. The holder can only make a limited number of withdrawals, or none, without incurring a penalty.

Question 31

standing order

Answer 31

electronic payment out of an account. Standing order are used to make regular payments of the same amount.

Question 32

stocks and shares

Answer 32

stocks shares and equities are words used to describe an investment that gives the holder part ownership of a company. If the company value increases, so does your share, if it decreases, your shares do as well. Shares are bought and sold on stock exchanges

Question 33

travel insurance

Answer 33

A product providing coverage for unexpected events such as trip
cancellation, medical expenses, travel delays and other losses
incurred while travelling.

Question 34

treasury

Answer 34

her majesty’s treasury, the government department responsible for development and implementation of financial and economic policy.