LIBF-Unit 4 UPDATED Exam Questions
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1. effective competition - ANSWER ✔ When the providers on
the market compete to provide the best product, rather than
taking advantage of lack of customer awareness or poor
regulation.
2. nominal interest rate - ANSWER ✔ The actual rate of interest
received by a saver.
3. public sector - ANSWER ✔ The collective name for
organisations that are funded through general taxation, eg
schools, healthcare, some welfare services.
4. pure risk - ANSWER ✔ Where risk can only have a
downside, eg loss of or damage to possessions.
,5. real interest rate - ANSWER ✔ The difference between the
nominal interest rate received by the saver and the rate of
inflation.
6. real terms - ANSWER ✔ A value adjusted to account for
changes in prices, eg real income or real interest rate. For
example, although someone may receive a nominal pay
increase of 5%, if inflation (ie rise in general prices) is 3%
then in real terms the pay increase is approximately 5% - 3%
= 2%.
7. sharia law - ANSWER ✔ Rules that devout Muslims follow,
which, in relation to personal finance, prohibit the paying and
receiving of interest, which virtually excludes a strict Muslim
from doing any borrowing
8. What is Gharar - ANSWER ✔ Uncertainty in business
transactions.
9. What is riba - ANSWER ✔ Prohibition of interest
, 10. speculative risk - ANSWER ✔ Where risk can have either a
good or a bad outcome, eg a financial loss or a financial gain.
11. volatility - ANSWER ✔ Changeability, as when the value
of an investment moves up and down significantly in a short
period.
12. advertising standards authority - ANSWER ✔ The UK's
independent regulator of advertising across all media.
13. economic climate - ANSWER ✔ The state of the economy
at a given time - in a good economic climate people are more
inclined to spend money and invest; in a poor climate they are
less likely to do so.
14. gross domestic product - ANSWER ✔ The total value of
goods produced and services provided in a country during one
year.
15. market segments - ANSWER ✔ Groups of customers
sharing distinct features in terms of, for example, age, income
or lifestyle.
With Complete Exam Answers | already
graded A+ |Latest Update 2025 | Sure To
Pass!!
1. effective competition - ANSWER ✔ When the providers on
the market compete to provide the best product, rather than
taking advantage of lack of customer awareness or poor
regulation.
2. nominal interest rate - ANSWER ✔ The actual rate of interest
received by a saver.
3. public sector - ANSWER ✔ The collective name for
organisations that are funded through general taxation, eg
schools, healthcare, some welfare services.
4. pure risk - ANSWER ✔ Where risk can only have a
downside, eg loss of or damage to possessions.
,5. real interest rate - ANSWER ✔ The difference between the
nominal interest rate received by the saver and the rate of
inflation.
6. real terms - ANSWER ✔ A value adjusted to account for
changes in prices, eg real income or real interest rate. For
example, although someone may receive a nominal pay
increase of 5%, if inflation (ie rise in general prices) is 3%
then in real terms the pay increase is approximately 5% - 3%
= 2%.
7. sharia law - ANSWER ✔ Rules that devout Muslims follow,
which, in relation to personal finance, prohibit the paying and
receiving of interest, which virtually excludes a strict Muslim
from doing any borrowing
8. What is Gharar - ANSWER ✔ Uncertainty in business
transactions.
9. What is riba - ANSWER ✔ Prohibition of interest
, 10. speculative risk - ANSWER ✔ Where risk can have either a
good or a bad outcome, eg a financial loss or a financial gain.
11. volatility - ANSWER ✔ Changeability, as when the value
of an investment moves up and down significantly in a short
period.
12. advertising standards authority - ANSWER ✔ The UK's
independent regulator of advertising across all media.
13. economic climate - ANSWER ✔ The state of the economy
at a given time - in a good economic climate people are more
inclined to spend money and invest; in a poor climate they are
less likely to do so.
14. gross domestic product - ANSWER ✔ The total value of
goods produced and services provided in a country during one
year.
15. market segments - ANSWER ✔ Groups of customers
sharing distinct features in terms of, for example, age, income
or lifestyle.
