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BTEC Business Level 3 - Unit 3 - Finance.Questions and answers are graded A+
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BTEC Business Level 3 - Unit 3 - Finance
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BTEC Business Level 3 - Unit 3 - Financewhat are the 6 types of personal borrowing? - answermortgages, hire purchase, payday
loans, overdraft, personal loans, credit cards
personal loan - answergives you the ability to borrow a set amount of money, normally
for a specific purpose, to be repaid in regular instalments.
payday loan - answershort term source of finance used to bridge the gaps between now
and next receiving a wage
credit card - answergoods are paid for by card and can be paid for either at the end of a
set period, normally a month, when a statement is issued
overdraft - answerallows you to withdraw money that you don't have in a current
account
mortgage - answerlong-term loan to fund the purchase of assets, normally paid back
over a long time, usually 25 years. it is secured against an item like a house.
hire purchase - answerallows you to have use of an item immediately but pay for it in
regular instalments. the item remains the property of the seller until all instalments have
been made
what are the 6 saving and investment options? - answerISA, deposits & savings
account, premium bonds, bonds & gilts, shares, pensions
when are saving and investment options available? - answerwhen you are earning or
receiving more money than you need to cover your expenditure
Individual savings account (ISA) - answera type of saving account where the holder is
not charged income tax on the interest received.
deposit and savings account - answeraccounts where interest is paid on the balance
and normally the holder needs to give notice before withdrawing funds
premium bonds - answergovernment scheme that allows individuals to save up to a set
amount by buying bonds. the bond holder doesn't receive interest on their savings but
each bond is placed into a regular draw for cash prizes
bonds & gilts - answerfixed term securities where the lender lends money to companies
and governments in return for interest payments. the money is invested for a specific
period of time
, shares - answerinvolve investment in a business in return for equity. the shareholder will
receive dividends from the company's profits and will also want the value of the shares
to increase
pensions - answerlong term saving plans where individuals make regular contributions,
called premium payments, throughout their working life. this is then repaid as either a
lump sum, regular payments or a combinations of the two upon retirement.
how is inflation a risk to your savings? - answerinflation can reduce the spending power
of any money saved.
what is the risk of saving money? - answerlow or zero risk as the money saved is
guaranteed to be available in the furture
what are the benefits of saving money? - answerprovides financial security/peace of
mind and there are interest payments
why are investments a risk? - answerthey can go wrong and all or some of the value
may be lost and there is no guarantee of a return
what are the benefits of investing your money? - answerif it's successful, there is a
potential for a high financial return and they can be exciting for some people, some
invest in shares, antiques or art.
what is insurance? - answera form of protection where specific items, as a well as
individuals and pets can be insured.
what do insurance policies cover? - answerthe cost of loss, damage or illness up to
prearranged levels in return for regular payments called premiums
what are the advantages of car insurance? - answermeets legal requirements, protects
oneself against theft or damage and protects against damage caused to a third party.
what are the advantages of home & contents insurance? - answerreplaces items that
may have been lost or damaged, covers accidents that happens, covers large damage
they you may not otherwise be able to cover, eliminates some stress from worrying
about life and low deductible compared to cost of repair
what are the advantages of life insurance? - answerprovides permanent protection,
flexible, tax benefits, low premiums for new policies
what are the advantages of travel insurance? - answergood for emergencies (can get
booking costs back if your flights are cancelled), if you contract a disease your travel
insurance will cover treatment costs that your medical insurance might not, may policies
provide coverage for lost, stolen or damaged luggage
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