Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Business > Unit 3 - A4 - Ms Powell > Flashcards

Unit 3 - A4 - Ms Powell Flashcards

1
Q

What are the different types of borrowing?

A
  • Overdraft
  • Personal loans
  • Hire purchase
  • Mortgages
  • Credit cards
  • Payday loans
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is Overdraft?

A

A short-term loan which can be used to pay bills if you are short of cash. You arrange with the bank to borrow money up to an agreed amount when the balance on your current account reaches zero

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are the advantages of Overdraft?

A

-Usually free to set up. You only pay interest on the money you borrow

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are the disadvantages of Overdraft?

A

-Interest is high and you will be charged a fee to use your overdraft. If you go over the limit or have an unarranged overdraft, there will be penalty charges

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are Personal Loans?

A

Loans that can be used to buy expensive items, such as household goods or a car. You borrow a fixed amount and pay it back in set monthly instalments usually over a period of one to five years, at a fixed rate of interest.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are the advantages of Personal Loans?

A

-Monthly instalments allow you to plan your expenditure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are the disadvantages of Personal Loans?

A

-There may be arrangement fees, which can add to the cost. If you fail to make payments on a secured loan, you may lose the asset it is secured against.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is Hire Purchase?

A

This is usually used to buy a car. You put down a deposit, then pay monthly instalments over a period of one to five years. During the payment period, you hire the car; once the instalments are paid, you own the car.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What are the advantages of Hire Purchase?

A

-This allows you to buy an expensive item at an amount you can afford.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are the disadvantages of Hire Purchase?

A

-While you are paying you cannot sell the care due to not owning it. If you fall behind with payments, the lender may repossess the car.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is a Mortgage?

A

This is usually used to buy a car. You put down a deposit, then pay monthly instalments over a period of one to five years. During the payment period, you hire the car; once the instalments are paid, you own the car.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are the advantages of Mortgages?

A

-This allows you to buy an expensive item at an amount you can afford.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What are the disadvantages of Mortgages?

A

-An increase in interest rates may affect your ability to pay back the mortgage. The property is used as security for the loan. If repayments are not made, the property can be repossessed.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are Credit Cards?

A

Cards you can use this to buy goods and services in shops, online, by post and on the phone. You may spend up to the amount of the credit limit on your card. At the end of each month, you will receive a statement showing how much you owe.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are the advantages of Credit Cards?

A

-If you pay the full amount each month, you will pay no interest.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What are the disadvantages of Credit Cards?

A

-If you pay the minimum amount shown on the statement, you will be charged interest on the outstanding amount. Interest rates are higher than a personal loan.

17
Q

What are Payday Loans?

A

This is a short-term loan, usually for small amounts, often when people need cash to pay bills between paydays. A fee is charged.

18
Q

What are the advantages of Payday Loans?

A

-Can help with cash-flow problems.

19
Q

What are the disadvantages of Payday Loans?

A

-Very expensive way to borrow.

20
Q

What are the different types of Saving and Investments?

A
  • Individual savings accounts (ISAs)
  • Deposit and savings -accounts
  • Premium bonds
  • Bonds and gilts
  • Shares
  • Pensions
21
Q

What are the 4 types of ISA?

A
  • Cash ISA: a savings account where interest paid tax-free
  • Stocks and shares ISA: fund are invested in shares or bonds, and profits/returns earned are tax-free.
  • Innovative finance ISA: Interest is earned from lending money to other people or companies.
  • Help to buy ISA: launched in 2015 for first time-buyers to help them save to buy property
22
Q

What are the advantages of ISA’s?

A
  • No Tax on Interest Earned
  • Easy to Open and Access
  • Secured and FDIC-Insured
  • Cash ISAs are less risky than stocks and shares ISAs
23
Q

What are the disadvantages of ISA’s?

A
  • Limit to how much you can put in a ISA a year.
  • May need to give a notice if you wish to make a withdrawal
  • Saving Withdrawal Federal Limits
  • Stocks and shares ISA could result in financial losses.
  • Stocks and shares charge a management fee
24
Q

What are Deposit and Savings accounts?

A

Asavings accountis adeposit accountheld at a retailbankthat pays interest but cannot be used directly as money in the narrow sense of a medium of exchange (for example, by writing a cheque). Theseaccountslet customers set aside a portion of their liquid assets while earning a monetary return.

25
Q

What are the advantages of Deposit and Savings accounts?

A
  • Potential to Earn Interest
  • Fast and Easy to Open and Access
  • Secured and FDIC-Insured
26
Q

What are the disadvantages of Deposit and Savings accounts?

A
  • Minimum Balance Requirements
  • May ask for notice before withdrawing
  • Pays a variable amount of interest which is taxable.
  • Lower Interest Rates than Other Accounts/Investments
  • Saving Withdrawal Federal Limits
  • A fixed deposit account pays a set amount of interest over a set period of time. You cant withdraw during this time.
27
Q

What are Premium Bonds?

A

A government security that offers no interest or capital gain but is entered in regular draws for cash prizes.

28
Q

What are the advantages of Premium Bonds?

A
  • Given the chance to win a tax-free cash prize monthly
  • Savings are secure
  • You can cash in in your premium bonds when you no longer want them.
29
Q

What are the disadvantages of Premium Bonds?

A
  • Don’t pay interest

- You will receive no return on your money unless you win a prize.

30
Q

What are Bonds and Gilts?

A

Agilt-edgedbondis simply a high-grade type of debt. What blue-chip stocks are to ordinary equities,gilt-edgedbondsare to regularbondissues. As with anybond, the federal or corporate issuer is borrowing money from investors at a set rate of interest for a specific period of time

31
Q

What are the advantages of Bonds and Gilts?

A

-Pay investors regular interest over a set period of time

32
Q

What are the disadvantages of Bonds and Gilts?

A
  • Based on if the issuer can pay the interest

- The value of bonds and gilts can fall.

33
Q

What are Shares?

A

Shares can be described as the financial instrument issued by the company to raise funds from the general public. A share represents fractional ownership in a body corporate. Thus, a share is the smallest unit of the company’s overall net worth.

34
Q

What are the advantages of Shares?

A
  • Capital Gains
  • Limited Liability
  • Exercise Control
  • Rights Shares
  • Liquidity
35
Q

What are the disadvantages of Shares?

A
  • Don’t control how much you receive
  • High risk as the money is based on the faith an investor has in the company
  • Fluctuation in market price
  • Limited control
  • Residual Claim.
36
Q

What are Pensions?

A

A pension is a fund into which a sum of money is added during an employee’s employment years and from which payments are drawn to support the person’s retirement from work in the form of periodic payments. A pension may be a “defined benefit plan”, where a fixed sum is paid regularly to a person, or a “defined contribution plan”, under which a fixed sum is invested that then becomes available at retirement age.

37
Q

What are the advantages of Pensions?

A
  • No Investment Risk
  • Payments for Life
  • Tax relief
  • Employer contributions
38
Q

What are the disadvantages of Pensions?

A
  • No Investment Control
  • No Early Access
  • Risk of poor returns
  • Too complicated

Business (9 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions