Business BTEC Unit 3 - Aim B
Comprehensive Questions
(Frequently Tested) with
Verified Answers Graded A+
What is the Bank of England? - Answer: It's the UK's central bank.
Advantages of the Bank of England - Answer: - responsible for UK's financial stability
- interest rate designed to achieve stable economy
Disadvantages of the Bank of England - Answer: - increase in interest leads to expensive
borrowing
- members of public cannot access it
What is a bank? - Answer: It is a financial institution licensed to receive deposits and make loans
(owned by shareholders).
Advantages of banks - Answer: - offer a range of services and account types
- provide a secure place to store money
- pay interest on credit balances (and charge high rates on borrowing, leading to increased
profits)
Disadvantages of banks - Answer: - savings only protected up to £85,000
, - may charge for certain accounts (premium account)
- profit-making organisation (makes the cost to individual higher)
What is a building society? - Answer: It is a financial institution that provides banking and
financial services to its members (account holders).
Advantages of building societies - Answer: - a secure place to store money
- costs kept down (due to being owned by members)
- pay interest on credit balances on most accounts
Disadvantages of building societies - Answer: - savings only protected up to £85,000
- lack business drive (not for maximising profits, local, for the needs of people)
- may not give quality deals compared to banks
What are credit unions? - Answer: They are financial cooperatives owned and run by their
members.
Advantages of credit unions - Answer: - secure places to store money
- not for profit organisation (cost kept down)
- offers additional services
Disadvantages of credit unions - Answer: - savings only protected up to £85,000
- lack of business drive (no profit interest)
What is the National Savings and Investment (NS&I)? - Answer: It's a state-owned savings
institution in the UK.
Comprehensive Questions
(Frequently Tested) with
Verified Answers Graded A+
What is the Bank of England? - Answer: It's the UK's central bank.
Advantages of the Bank of England - Answer: - responsible for UK's financial stability
- interest rate designed to achieve stable economy
Disadvantages of the Bank of England - Answer: - increase in interest leads to expensive
borrowing
- members of public cannot access it
What is a bank? - Answer: It is a financial institution licensed to receive deposits and make loans
(owned by shareholders).
Advantages of banks - Answer: - offer a range of services and account types
- provide a secure place to store money
- pay interest on credit balances (and charge high rates on borrowing, leading to increased
profits)
Disadvantages of banks - Answer: - savings only protected up to £85,000
, - may charge for certain accounts (premium account)
- profit-making organisation (makes the cost to individual higher)
What is a building society? - Answer: It is a financial institution that provides banking and
financial services to its members (account holders).
Advantages of building societies - Answer: - a secure place to store money
- costs kept down (due to being owned by members)
- pay interest on credit balances on most accounts
Disadvantages of building societies - Answer: - savings only protected up to £85,000
- lack business drive (not for maximising profits, local, for the needs of people)
- may not give quality deals compared to banks
What are credit unions? - Answer: They are financial cooperatives owned and run by their
members.
Advantages of credit unions - Answer: - secure places to store money
- not for profit organisation (cost kept down)
- offers additional services
Disadvantages of credit unions - Answer: - savings only protected up to £85,000
- lack of business drive (no profit interest)
What is the National Savings and Investment (NS&I)? - Answer: It's a state-owned savings
institution in the UK.
