BTEC Business Finance Level 3 Unit 3
Exam Questions & Answers 2024/2025
what are the 6 types of personal borrowing? - ANSWERSmortgages, hire purchase, payday loans,
overdraft, personal loans, credit cards
personal loan - ANSWERSgives you the ability to borrow a set amount of money, normally for a specific
purpose, to be repaid in regular instalments.
payday loan - ANSWERSshort term source of finance used to bridge the gaps between now and next
receiving a wage
credit card - ANSWERSgoods 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 - ANSWERSallows you to withdraw money that you don't have in a current account
mortgage - ANSWERSlong-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 - ANSWERSallows 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? - ANSWERSISA, deposits & savings account, premium
bonds, bonds & gilts, shares, pensions
when are saving and investment options available? - ANSWERSwhen you are earning or receiving more
money than you need to cover your expenditure
, Individual savings account (ISA) - ANSWERSa type of saving account where the holder is not charged
income tax on the interest received.
deposit and savings account - ANSWERSaccounts where interest is paid on the balance and normally the
holder needs to give notice before withdrawing funds
premium bonds - ANSWERSgovernment 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 - ANSWERSfixed 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 - ANSWERSinvolve 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 - ANSWERSlong 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? - ANSWERSinflation can reduce the spending power of any money
saved.
what is the risk of saving money? - ANSWERSlow or zero risk as the money saved is guaranteed to be
available in the furture
what are the benefits of saving money? - ANSWERSprovides financial security/peace of mind and there
are interest payments
why are investments a risk? - ANSWERSthey can go wrong and all or some of the value may be lost and
there is no guarantee of a return
Exam Questions & Answers 2024/2025
what are the 6 types of personal borrowing? - ANSWERSmortgages, hire purchase, payday loans,
overdraft, personal loans, credit cards
personal loan - ANSWERSgives you the ability to borrow a set amount of money, normally for a specific
purpose, to be repaid in regular instalments.
payday loan - ANSWERSshort term source of finance used to bridge the gaps between now and next
receiving a wage
credit card - ANSWERSgoods 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 - ANSWERSallows you to withdraw money that you don't have in a current account
mortgage - ANSWERSlong-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 - ANSWERSallows 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? - ANSWERSISA, deposits & savings account, premium
bonds, bonds & gilts, shares, pensions
when are saving and investment options available? - ANSWERSwhen you are earning or receiving more
money than you need to cover your expenditure
, Individual savings account (ISA) - ANSWERSa type of saving account where the holder is not charged
income tax on the interest received.
deposit and savings account - ANSWERSaccounts where interest is paid on the balance and normally the
holder needs to give notice before withdrawing funds
premium bonds - ANSWERSgovernment 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 - ANSWERSfixed 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 - ANSWERSinvolve 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 - ANSWERSlong 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? - ANSWERSinflation can reduce the spending power of any money
saved.
what is the risk of saving money? - ANSWERSlow or zero risk as the money saved is guaranteed to be
available in the furture
what are the benefits of saving money? - ANSWERSprovides financial security/peace of mind and there
are interest payments
why are investments a risk? - ANSWERSthey can go wrong and all or some of the value may be lost and
there is no guarantee of a return
