IFS - Unit 2

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What is annual exempt amount?
The annual tax free allowance for capital gains tax.
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What is capital sum?
The total amount borrowed or saved/invested before the addition of interest.
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What is a corporate bond?
A product that companies use to borrow money over periods of five years or more. The company offers a number of bonds for sale; buyers can then sell the bonds on to other investors if they wish.
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What is a key difference between bonds and shares?
Bondholders do not own a share in a company.
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What is diversification?
Diversification is spreading a range of different products, funds, or types of asset so as to reduce the potenital impact of any doing particularly badly.
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What is a hedge fund?
An organisation that takes in funds from investors such as pension companies, insurance companies and wealthy individuals and invests those funds to try and get a high return. This is seen as very high risk.
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What is volatility?
Volatility is when the value of the investment varies often and widely.
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What is a standing order?
A standing order is an electronic payment of of an account. Standing orders are used to make regular payments of the same amount.
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What is negative equity?
Negative equity is the situation which the mortage loan is bigger than the value of the property.
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What is a consolidation loan?
A loan that is used to pay off a number of different debts, meaning then that there is only one payment to make each month, to the loan company.
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Who is the Financial Conduct Authority (FCA)?
The FCA is one of the two main regulators of finanical services in the UK. The other is the PRA (Prudential Regul ation Authority).
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What is the Finanical Ombudsman Service (FOS)
The FOS is an independent body set up by Parliament that settles customer complaints for customers, free of charge.
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Who is a gilt loan to?
A gilt loan is to the government.
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What is the most commonly used type of mortgage nowadays?
The most common type of mortgage is a repayment mortgage.
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What type of policy is whole-of-life cover?
Whole-of-live is an assurance policy.
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Who protects the savings in a bank account?
The FSCS (financial services compensation scheme)
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What is competitive demand?
Competitive demand means that two different products meet the same needs so the customer only needs to choose one of them.
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Other cards in this set

Card 2

Front

What is capital sum?

Back

The total amount borrowed or saved/invested before the addition of interest.

Card 3

Front

What is a corporate bond?

Back

Preview of the front of card 3

Card 4

Front

What is a key difference between bonds and shares?

Back

Preview of the front of card 4

Card 5

Front

What is diversification?

Back

Preview of the front of card 5
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