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Financial Studies - Year 2 > Unit 3 Topic 1 > Flashcards

Unit 3 Topic 1 Flashcards

1
Q

Define ‘Assets’ - what might examples of these include?

A

Things that a person or a business owns.
Property, jewelry or financial products i.e. company shares.

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2
Q

What is the ‘bank rate’?

A

The interest rate that the bank of England uses when it lends money to other banks.

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3
Q

When do FSP’s (Financial Services Providers) take account of the Bank rate?

A

When they decide how to set interest rates on their own products.

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4
Q

What is this referring to?
A situation in which a person cannot pay their debts and is the subject of a court order that shares out their assets between their creditors.

A

Bankruptcy

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5
Q

What is a budget?

A

A plan of expected incomings and outgoings over a set time period such as a month.

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6
Q

What term is given to the government’s annual spending plan, which the Chancellor sets out in the House of Commons each year?

A

Budget

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7
Q

What is a cash-flow forecast?

A

A plan of expected incomings and outgoings over several time periods, such as the next three months or a year.

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8
Q

What is this referring to?
A software program that can predict the medium and long-term impact of different decisions and events on an individual’s income, expenditure and savings plan.

A

Cash-flow modelling

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9
Q

What is a contingency plan?

A

A plan to deal with unexpected changes in income or expenditure.

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10
Q

What kind of card is this referring to?
A card that allows the holder to make purchases face to face, online or over the phone, and to withdraw cash from an ATM. Transactions are paid by the card provider. The card holder repays the amount owed to the provider either in one payment or in instalments. Provider charges interest on cash withdrawals from the time the withdrawal is made and on purchases after a certain period.

A

A credit card

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11
Q

What is a credit union?

A

A mutual organisation that provides a range of financial products to members.

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12
Q

Give two examples of financial products that a credit union may offer its members.

A

Savings account
Personal loans
Mortgages

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13
Q

Define ‘deficit’

A

Where expenditure exceeds income.

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14
Q

What is discretionary expenditure?

A

Spending or saving that people choose to do or not.

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15
Q

What is disposable income?

A

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

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16
Q

What is essential expenditure?

A

Spending on items required to live.

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17
Q

Name 3 examples of possible essential expenditure?

A

Rent
Mortgage repayments
Food and drink
Water supplier
Gas and electricity

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18
Q

Define ‘financial capability’

A

Being able to manage personal finances effectively.

19
Q

What does it mean to pay a ‘fixed interest’ rate?

A

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

20
Q

What is flexible financial planning?

A

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.

21
Q

What is this referring to?
A type of secured consumer credit, to finance items such as cars and furniture, which involved the borrower repaying over a number of years.

A

Hire purchase

22
Q

What is ‘Income Protection Insurance’? How does it work?

A

A policy that allows people to manage the risk of loss of earnings over a long term.

It pays out a monthly income to insured people who have suffered an accidental injury or long-term illness and who are therefore unable to work.

23
Q

What is an individual savings account (ISA)?

A

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

24
Q

What changes were brought to ISA’s in 2014?

A

A higher limit on the amount that can be saved tax free was imposed.

25
Q

Define ‘inflation’

A

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

26
Q

What is ‘insolvency’?

A

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

27
Q

What is insurance?

A

Products that give financial protection against certain events.

28
Q

What are investments?

A

Money paid into financial products.

29
Q

What is the aim of an investment?

A

The aim is that the value of the product will grow over time and so the person will eventually receive back more money than they paid in.

30
Q

True or False?
Investments are a way of saving over the short-term.

A

FALSE
Investments are a way of saving over the medium or long term.

31
Q

What is mandatory expenditure?

A

Compulsory outgoings

32
Q

What is a money-purchase pension scheme?

A

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

33
Q

What is a mortgage?

A

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

34
Q

What is mortgage payment protection insurance?

A

An insurance policy intended to cover mortgage payments in the event of illness or unemployment.

35
Q

What are national insurance contributions?

A

Money deducted from the pay of people who are employed or self-employed and used by the government to fund state pensions in other benefits.

36
Q

What type of investments are items such as fine wines, art and antiques?

A

Non-financial investments

37
Q

What is a notice account?

A

An 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
the required amount of notice, they lose interest on their savings.

38
Q

What is a recession?

A

A period of at least six months in which the amount of goods and services the country is producing is shrinking.

39
Q

What is the act of repossession?

A

A legal process whereby a financial institution takes ownership of an asset, often a house, because loan repayments relating to that asset have not been met. It is the last resort in the process of recovering money owed.

40
Q

What’s a savings bond?

A

A savings product held for a fixed period, eg two years. The holder can only make a limited number of withdrawals, or none at all, during that period without incurring a penalty.

41
Q

What are ‘shares’?

A

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

42
Q

What is a ‘surplus’?

A

Income that exceeds mandatory and essential expenditure.

43
Q

Explain sustainable personal finance.

A

Achieving and maintaining a balance between personal income and expenditure to satisfy needs, wants and aspirations within a budget.

Financial Studies - Year 2 (3 decks)

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