Financial studies topic 1- unit 2

what are needs and wants related to?
the price of products and people's ability to buy them
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what life stage is independence an aspiration for?
childhood- school and teenager
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what life stage are material luxuries an aspiration for?
middle age to late middle age
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4 factors influencing people's needs and wants as they move from childhood into adult hood
their lifestyle, the prevailing culture of the society they live in, the size of their family and their ability to afford products
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how many years is savings over a longer period classified as?
more than 3 years
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how is an investment different from a long term saving?
an investment is riskier than a long term savings product but it can bring higher returns
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two examples of longer term borrrowing
a mortgage and hire purchase
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what does insurance cover?
it allows people to protect their loved ones in case they die, and some products also enable people to save moeny for later stages of their lives
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what is the key internal factor affecting someone's financial choices?
their own personal beliefs, values and attitudes
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why might people's attitudes, beliefs and values chnage over time?
they may change as people pass through the personal life cycle and stages of their life
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what do many people percieve to be a higher risk?
a risk to the wellbeing of people is more important than a risk to property
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what are values?
general feelings or beliefs about desirable behaviour and goals
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what are 2 functions values fulfil?
they help people distinguish between wants and needs and form their aspirations. they help people to plan their finances and decide between different alternatives
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what are beliefs?
they are more specific and detailled than values. they are the way people think things are
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what are attitudes?
attitudes refer to how, at any given time and place, people think and feel about another person, event or issue
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what is risk?
risk is the likelihood that a particular event will happen or that people might lose or gain from buying a particular financial product
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what are perceptions?
people's perceptions represent their understanding of the world around them
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what are preferences?
people have certain preferences for certain products, those often depend on personal values, beliefs and attitudes
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what are 3 external factors that people have no control over?
marketing and advertising, peer pressure and trends
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what is marketing?
marketing is everything a company does to acquire customers and maintain a relationship with them
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how is marketing subdivided?
into promotion and public relations (PR)
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what are 3 aims of promotion?
to communicate with people, to inform them of goods and services and to persuade them to buy
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what is sponsorship?
involves a business paying for a sporting or entertainment venue or event: it can advertise at the event and in the promotional materials
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what does a strong culture of home ownership mean?
it means that people like to own their own homes
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how have providers encouraged a trend of strong home ownership?
by making mortgage loans available to people so they can buy their own homes and pay back over a long period of time such as 20-25 years
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why is taking out a mortgage a risk?
they take the risk that they won't be able to make repayments and that their home may be repossessed
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how has teh financial crisis of 2008 affected mortgage borrowing?
providers are now more cautious about assessing borrowers' ability to repay before they lend
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which EU country has the lowest levels of home ownership?
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what is the "feedback effect"?
the link between thoughts, feelings and behaviour is clear and can be traced back to attitudes and so to our personal values- this is the feeback effect
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what happens if people expect share prices to fall?
they will start to sell their shares and if enough people sell their shares, the price will fall
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what happens if people expect interest rates to rise?
if people expect interest rates to rise, they will start to save more and borrow less- banks will therefore pay out more interest and gain less from lending and they may raise interest rates in order to maintain the level of their income
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how do religious beliefs affect an individual's ability to manage finance?
Islamic (Sharia) Law prohibits the payment of interest on a debt, so Muslims aren't allowed to borrow money via western-type mortgages or loans
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why is affordability harder to access when borrowing for teh medium or short term?
they cannot be certain about whether their circumstances will change e.g. they may lose their job or become ill and be unable to work
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Other cards in this set

Card 2


what life stage is independence an aspiration for?


childhood- school and teenager

Card 3


what life stage are material luxuries an aspiration for?


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Card 4


4 factors influencing people's needs and wants as they move from childhood into adult hood


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Card 5


how many years is savings over a longer period classified as?


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