University of Edinburgh LIBF- Unit 3 || 100% Detailed Answers.
Bank rate correct answers The interest rate that the Bank of England uses when it lends money to
other banks. Financial services providers take account of the Bank rate when they decide how to
set interest rates on their own products.
Cash flow forecast correct answers A plan of expected incomings and outgoings over several
time periods, such as the next three months or a year.
Cash flow modelling correct answers 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
plans.
Credit union correct answers A mutual organisation (that is, owned by its members) that provides
a range of financial products to members, eg savings accounts and personal loans.
Flexible financial planning correct answers 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 (eg by including saving and insurance).
Income protection insurance correct answers 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.
Individual savings account correct answers An account that pays interest tax-free on savings up
to a certain level. In 2014 the rules were changed, with a higher limit on the amount that can be
saved tax-free. Savers can choose to save the entire amount in cash, or in stocks and shares, or in
a mixture of the two.
Insolvency correct answers A situation in which a person cannot repay what they owe because
their debts are greater than their assets.
, Money purchase Pension scheme correct answers A pension scheme in which the value of the
fund available at retirement is based on the contributions made by an employee (and their
employer, in workplace schemes), which are invested. Also known as defined-contribution
schemes.
Mortgage payment protection insurance correct answers An insurance policy intended to cover
mortgage payments in the event of illness or unemployment.
Personal debt correct answers The debt owed by individual consumers (as opposed to the debts
of companies or governments).
Recession correct answers A period of at least six months in which the amount of goods and
services the country is producing is shrinking.
Savings bond correct answers 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.
Shares correct answers Also known as 'equities', investments that represent part-ownership in a
company.
Sustainable personal finance correct answers Achieving and maintaining a balance between
personal income and expenditure to satisfy needs, wants and aspirations within a budget.
Attendance allowance correct answers Payable to those aged 65+ who have a long-term illness or
disability that means they cannot perform basic daily living activities or have limited mobility.
Carer's allowance correct answers Paid to anyone over 16 who spends 35 hours per week or more
looking after someone who has substantial care needs.
Bank rate correct answers The interest rate that the Bank of England uses when it lends money to
other banks. Financial services providers take account of the Bank rate when they decide how to
set interest rates on their own products.
Cash flow forecast correct answers A plan of expected incomings and outgoings over several
time periods, such as the next three months or a year.
Cash flow modelling correct answers 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
plans.
Credit union correct answers A mutual organisation (that is, owned by its members) that provides
a range of financial products to members, eg savings accounts and personal loans.
Flexible financial planning correct answers 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 (eg by including saving and insurance).
Income protection insurance correct answers 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.
Individual savings account correct answers An account that pays interest tax-free on savings up
to a certain level. In 2014 the rules were changed, with a higher limit on the amount that can be
saved tax-free. Savers can choose to save the entire amount in cash, or in stocks and shares, or in
a mixture of the two.
Insolvency correct answers A situation in which a person cannot repay what they owe because
their debts are greater than their assets.
, Money purchase Pension scheme correct answers A pension scheme in which the value of the
fund available at retirement is based on the contributions made by an employee (and their
employer, in workplace schemes), which are invested. Also known as defined-contribution
schemes.
Mortgage payment protection insurance correct answers An insurance policy intended to cover
mortgage payments in the event of illness or unemployment.
Personal debt correct answers The debt owed by individual consumers (as opposed to the debts
of companies or governments).
Recession correct answers A period of at least six months in which the amount of goods and
services the country is producing is shrinking.
Savings bond correct answers 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.
Shares correct answers Also known as 'equities', investments that represent part-ownership in a
company.
Sustainable personal finance correct answers Achieving and maintaining a balance between
personal income and expenditure to satisfy needs, wants and aspirations within a budget.
Attendance allowance correct answers Payable to those aged 65+ who have a long-term illness or
disability that means they cannot perform basic daily living activities or have limited mobility.
Carer's allowance correct answers Paid to anyone over 16 who spends 35 hours per week or more
looking after someone who has substantial care needs.
