Topic One Discussion Questions

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What affects the way people behave and the choices they make including the financial ones?
Peoples values beliefs and attitudes affect the way they behave and the choices they make including the financial ones.
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Define needs?
Needs are essential must have items that everyone must have to survive.
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Give three examples of basic needs?
Food, water and shelter.
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Define wants?
Wants are optional , desirable but not essential.
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What has to be met before wants can be fulfilled?
Needs
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If a person chooses a more expensive item when cheaper items are available how is this classified?
Fashionable clothes
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What are needs and wants related to?
Related to the price of products and peoples ability to buy them.
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Define aspirations?
Hopes for the future. Items people wish to have in the medium- term or long term future for example a holiday
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Independence is an aspiration for which life cycle?
Childhood 5-12 years and teenager 13-19 years
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Material luxuries are an aspiration for which life cycle?
Middle age to late middle age (41- 60 years middle aged) (55-65 late middle age)
10 of 60
Name four factors which influence needs and wants as people move from childhood into adulthood?
Lifestyle
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Savings over a longer period would be classified as how many years?
More than three years
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How is an investment different from a long term saving?
It is more risky but can bring it a higher return.
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Why might a parent save money in an investment scheme?
While their children are young so they will have money to help them with their education when their older.
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What is the purpose of a pension?
Finance their retirement
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Give two examples of longer term borrowing?
Mortgage
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What does insurance cover?
Long term risks.
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Name the key internal factor that affects someone’s financial choices?
Own personal set of values , beliefs and attitudes.
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Why might this change over time?
May change as the person passes through the stages of the life cycles.
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What do people perceive to be a higher risk?
Many people perceive a higher risk in something they are particularly anxious about than in something they don’t worry much about.
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Define values?
Values are general feelings or beliefs about desirable behaviour and goals
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What are the two functions values fulfil?
They help people to distinguish between what they consider to be needs and what they consider to be wants, and to form their aspirations.
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Define beliefs absolute beliefs and casual beliefs
Beliefs are more specific and detailed than values. They are less about the way people think things out to be and more about the way they think they are.
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Define attitudes?
Attitudes refer to how at a given time and place people think and feel about another person, an event or an issue.
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How can attitudes be changes?
Attitudes can be changed by circumstances , events , experience or advice.
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Define risk?
Risk is the likelihood that a particular event will happen or that people might gain or lose from buying a financial product.
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Define perceptions?
Peoples perceptions represent their understanding of the world around them- not just their physical environment but their social environment also
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Define preferences?
People have certain preferences for particular products and these often depend on their personal values, beliefs and attitudes. People prefer different kinds of goods and services and different features within each product.
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Name three major external factors which a person has no control over?
Marketing and advertising
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Define marketing?
The activities associated with buying and selling a product or service. Includes advertising, selling and delivering products to people. 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
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List three aims of promotions?
Communicate with people
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Give two examples of advertising through media and advertising online?
Broadcast media
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Define PR?
Public relations are a specific part of promotion that is known as below the line expenditure.
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Define celebrity endorsement?
Businesses have an agreement with a celebrity to use their products or their marketing merchandise when they are at public events.
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Define product placement?
Involves a product appearing on a TV show or in a film- for example a character drinking a brand of drink.
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Define sponsorship?
A business paying for a sporting entertainment or venue.
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‘From our peers we form our perception of what is the norm’ Explain?
The acceptable behaviour within our particular group, want to fit in.
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Define culture?
Norms, about behaviours and attitudes across social groups. Indicates what society considers to be acceptable and unacceptable.
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Define consumerism?
There is a wide range of goods or services for people to buy, and their existence encourages people to need, want or aspire to own or use them
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How is a culture of consumerism strengthened?
By advertising and by seeing other people buying and using goods or services
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Why are financial services interested in culture?
Financial services providers are very interested in culture because it influences financial behaviour and indicates to them what financial products will be successful.
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Explain there is a strong culture of home ownership in the UK?
People like to buy the home they live in
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How have providers encouraged this trend?
Make mortgage loans available and pay back over long periods often 20-25 years
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Why are people in the UK likely to need to save for a deposit?
To be able to take out a mortgage
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Why is taking out a mortgage a risk?
Might not be able to keep up the payments and home might be reposed.
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When does a property belong to an individual?
When the mortgage is paid off.
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How has the financial crisis of 2008 affected mortgage borrowing?
Assessing potential borrowers ability to repay before they decide to lend.
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How is renting different from buying a property?
Have to pay rent all through their lives will never be paid off
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Which EU country has the lowest levels of home ownership?
Germany
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Define 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. Linked to expectations.
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Explain how expectations can be self fulfilling?
The feedback effect refers to the fact that peoples own attitudes mean that they effect the outcome of events.
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Explain three financial expectation led events?
If people expect a share price to fall, start to sell the shares, if enough people sell them the price will fall
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Define ethical investing?
Involves someone choosing to save in a way that means the money will be used for what the individual considers to be good purposes.
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Explain how attitudes to managing debt finance affect an individuals behaviour and decision making?
Many people are prepared to get into debt provided they can afford to make the repayments of the debt.
55 of 60
Explain how religious beliefs affect an individuals ability to manage finance?
Muslims are not aloud to borrow money.
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Why should a person consider affordability when borrowing money?
Must be reasonably certain they can make the agreed payments.
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Why is affordability more difficult to access when borrowing for the medium or long term?
Circumstances can change, for example unemployment
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Why should affordability be considered when taking out an insurance policy?
Too many insurance policies and having to pay a large amount in premiums each month
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Why should affordability be considered in relation to savings?
Consider the type of account to use , interest may be lost if certain amount not saved each month.
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Other cards in this set

Card 2

Front

Needs are essential must have items that everyone must have to survive.

Back

Define needs?

Card 3

Front

Food, water and shelter.

Back

Preview of the back of card 3

Card 4

Front

Wants are optional , desirable but not essential.

Back

Preview of the back of card 4

Card 5

Front

Needs

Back

Preview of the back of card 5
View more cards

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