Title: Default for Certificate in Financial Studies (CeFS)
Course: Teaching with Moodle 2: Training, collaboration and reflection online

Feedback shared by this category's questions, if partly right: 1

Q: Specialisation means:
- exchanging goods for other goods instead of money. (Wrong)
- producing only certain things that you are good at producing. (Correct)
- putting something by for the future. (Wrong)
A: producing only certain things that you are good at producing.

Q: Money’s power to let us pay for things over time, instead of immediately, is an example of its function as:
- a means of exchange. (Wrong)
- a unit of account. (Wrong)
- a standard for deferred payments. (Correct)
A: a standard for deferred payments.

Q: Forms of money that are worth something in their own right have:
- fiduciary value. (Wrong)
- intrinsic value. (Correct)
- no value. (Wrong)
A: intrinsic value.

Q: Credit cards are:
- a means of payment. (Correct)
- a form of money. (Wrong)
- a form of bank balance. (Wrong)
A: a means of payment.

Q: Standing orders let you:
- vary the amount that you pay every month. (No - that's what a direct debit does)
- save money on a regular basis. (Wrong)
- pay the same amount of money regularly to someone. (Correct)
A: pay the same amount of money regularly to someone.

Q: An authorised overdraft means that:
- the bank has paid extra money into your account. (Wrong)
- you are given a special type of chequebook for your bank account. (Wrong)
- you can withdraw more money from your account than you have paid in. (Yes - to an agreed limit)
A: you can withdraw more money from your account than you have paid in.

Q: Inflation means that:
- money loses value over time. (Correct)
- banks add interest to your savings account. (Wrong)
- prices fall from one year to the next. (Wrong)
A: money loses value over time.

Q: Travellers’ cheques are used to:
- instruct your bank to pay money from your account to someone in another country. (Wrong)
- put money aside for the future. (Wrong)
- take money on holiday safely. (Correct)
A: take money on holiday safely.

Q: Tom wants a bank account that will enable him to make payments. Which type of account does he require?
- Mortgage account (Wrong)
- Current account (Correct)
- High-interest account (Wrong)
A: Current account

Q: Direct debits let you:
- vary the amount that you pay every month. (Correct)
- borrow money from other people. (Wrong)
- pay for small-value goods in shops. (Wrong)
A: vary the amount that you pay every month.

Q: Paper money has what type of value?
- Fiduciary. (Correct. Fiduciary means that you trust in the value of the note/ accept what it is worth.)
- Fundamental. (Incorrect - Fundamental means that something is of central importance; this has no bearing on the value of notes.)
- Integral. (Incorrect - Integral means something that is essential to make a whole complete, paper money needs a value but more importantly people need to accept that the value given is what it is worth.)
- Intrinsic. (Incorrect - Intrinsic means something is essential to something or someone, this has no bearing on the value of notes.)
A: Fiduciary.

Q: The introduction of money allowed sellers and buyers to enter into credit agreements. Which function of money provides this opportunity?
- Means of exchange. (Incorrect - This is a function of money but not one, which allows sellers and buyers to enter into credit agreements.)
- Standard of deferred payment. (Correct - This function of money does allow sellers and buyers to enter into credit agreements; as it says in the text, 'money lets us pay for things some time after we bought them'.)
- Store of value. (Incorrect - This is a function of money but not one, which allows sellers and buyers to enter into credit agreements.)
- Unit of account. (Incorrect - This is a function of money but not one, which allows sellers and buyers to enter into credit agreements.)
A: Standard of deferred payment.

Q: Which of the following features of money do notes and coins in the UK not possess?
- Divisibility. (Incorrect - Notes and coins in the UK do possess the feature of divisibility, ie they can be divided into small units that can be combined to make up any amount.)
- Fiduciary value. (Incorrect - Notes and coins in the UK do possess the feature of fiduciary value, ie their acceptability relies on you trusting in their value.)
- Intrinsic value. (Correct. Notes and coins in the UK do not possess the feature of intrinsic value, ie they do not have a value in their own right.)
- Recognisability. (Incorrect - Notes and coins in the UK do possess the feature of recognisability, ie they are immediately recognised and accepted by the people who receive them)
A: Intrinsic value.

Q: The common format of euro notes across the Eurozone reinforces which of the currency’s features?
- Divisibility. (Incorrect - They need to be divisible but this would not require them to have a common format across the Eurozone.)
- Durability. (Incorrect - They need to be durable but this would not require them to have a common format across the Eurozone.)
- Recognisability. (Correct. They need to be recognisable, ie they must be immediately recognised and accepted by the people who receive them; this would require them to have a common format across the Eurozone)
- Scarcity. (Incorrect - They need to be relatively scarce but this would not require them to have a common format across the Eurozone.)
A: Recognisability.

Q: Which of the following best describes the state of dependency of a person during the young adult stage (20s to 30s) of their personal life cycle?
- Highly dependent. (Incorrect - This would apply to a much earlier stage in the personal life cycle, such as childhood.)
- Independent. (Incorrect - This would apply to a later stage in the personal life cycle, such as middle age.)
- Physically dependent. (Incorrect - This would apply to a much later stage in the personal life cycle, such as old age.)
- Shared dependency. (Correct. This would apply to the young adult stage of the personal life cycle. There would be a shared dependency involving some degree of dependency on parents or others eg renting with friends.)
A: Shared dependency.

Q: Which of the following personal life cycle stages is most likely to involve significant responsibilities for budgeting and ensuring that income covers expenditure?
- Birth and childhood. (Incorrect - This stage of the personal life cycle is unlikely to involve such significant financial responsibilities because such people are still very young.)
- Teenager. (Incorrect - This stage of the personal life cycle is less likely to involve such significant financial responsibilities because although the people will be older, they are very likely to be still living at home.)
- Young adult. (Incorrect - This stage of the personal life cycle is less likely to involve such significant financial responsibilities because although the people will be even older, they are likely to have less financial responsibilities than people in the maturity stage of the life cycle.)
- Mature adult. (Correct. This stage of the personal life cycle is most likely to involve such significant financial responsibilities because these people are more likely to have family and property responsibilities.)
A: Mature adult.

Q: In which of the personal life cycle stages does expenditure often rise when income falls?
- Young adult. (Incorrect - In this stage of the personal life cycle, expenditure and income are both likely to be rising.)
- Mature adult. (Incorrect - In this stage of the personal life cycle, expenditure and income are both likely to be rising.)
- Middle age. (Incorrect - In this stage of the personal life cycle, expenditure and income are both likely to be rising.)
- Old age. (Correct. In this stage of the personal life cycle, expenditure may still be rising but it is likely that there will be a fall in income as people retire)
A: Old age.

Q: Which of the following personal life cycle stages can potentially take place out of the normal chronological order?
- Teenager. (Incorrect - The stage of adolescence in the personal life cycle will be in chronological order, ie after childhood and before young adult.)
- Mature adult. (Incorrect - The stage of adolescence in the personal life cycle will be in chronological order, ie after childhood and before young adult.)
- Old age. (Incorrect - The stage of old age in the personal life cycle will be in chronological order, ie after middle age.)
- Death. (Correct. The state of death in the personal life cycle is placed after old age but it can, of course, occur at any time in a person's life.)
A: Death.

Q: Greater opportunity to take advantage of which of the following public services has provided more career options for individuals and allowed them to become more 'socially and upwardly mobile'?
- Education. (Correct. Education has provided more career options for individuals and has allowed them to become more 'socially and upwardly mobile'. As it says in the text, 'education means that nowadays people have options they didn't have in the past'.)
- Health. (Incorrect - Health services are likely to enable people to live longer but they will not necessarily provide for more career options.)
- Social. (Incorrect - Social services will benefit people in various ways but they will not necessarily provide for more career options)
- Welfare. (Incorrect - Welfare services will benefit people in various ways but they will not necessarily provide for more career options.)
A: Education.

Q: The age structure in the UK is changing. The population is best described as:
- ageing. (Correct.)
- reducing. (Incorrect - The UK has an ageing population)
- retiring. (Incorrect - The UK has an ageing population)
- socialising. (Incorrect - The UK has an ageing population)
A: ageing.

Q: Which of the following influences on an individual’s personal values is implicit?
- Advice from parents or guardians. (Incorrect - Advice from parents or guardians is likely to be explicit, ie stated clearly.)
- Behaviour of characters in a television advert. (Correct. The behaviour of characters in a television advert is likely to be implicit, ie it is likely to be more subtle and therefore more difficult to detect or identify.)
- Teaching in classroom lessons. (Incorrect - Teaching in classroom lessons is likely to be explicit, ie stated clearly.)
- The writings in a religious text such as the Bible or Koran. (Incorrect - The writings in a religious text, such as the Bible or the Koran, are likely to be explicit, ie stated clearly.)
A: Behaviour of characters in a television advert.

Q: Someone's opinion about 'what is good' and 'what is bad' will be influenced the most by which of the following?
Their:
- finances. (Incorrect - They will be influenced the most by their values.)
- gender. (Incorrect - They will be influenced the most by their values.)
- size. (Incorrect - They will be influenced the most by their values.)
- values. (Correct)
A: values.

Q: What is the term for exchanging goods or services instead of using money?
- Bartering. (Correct. Bartering is the correct term for exchanging goods and services instead of using money.)
- Dealing. (Dealing is a much more general term for a commercial relationship and would usually involve the use of money)
- Swapping. (Swapping is also a much more general term.)
- Trading. (Trading would suggest that money was being used.)
A: Bartering.

Q: Which of the following is

not one of the four key functions of money?
- Standard for fulfilled payments. (Correct. This is not a key function of money.)
- Store of value. (This is a key function of money)
- Means of exchange. (This is a key function of money.)
- Unit of account. (This is a key function of money.)
A: Standard for fulfilled payments.

Q: When exchanging goods using barter, which of the following can be a

problem?
- Deciding on the rate of exchange. (Correct.)
- Finding gold to be used for the exchange. (Gold does not have to be used in the exchange.)
- Recognising the items being used. (Recognising the item is not usually a problem with barter; it is an attribute of money.)
- Understanding what bartering means. (Understanding what bartering means is not usually a problem.)
A: Deciding on the rate of exchange.

Q: Which of the following is

not an attribute of money?
- Acceptability. (Acceptability is an attribute of money)
- Affordability. (Correct.)
- Homogeneity. (Homogeneity is an attribute of money.)
- Recognisability. (Recognisability is an attribute of money.)
A: Affordability.

Q: At what personal life cycle stage do aspirations tend to become more realistic?
- Young adult. (Aspirations can be rather unrealistic at the young adult stage of the personal life cycle.)
- Mature adult. (Correct. Aspirations tend to become somewhat more realistic at the mature adult stage of the personal life cycle.)
- Middle age (Aspirations tend to become less realistic at the middle age stage of the personal life cycle.)
- Old age. (Aspirations also tend to become less realistic at the old age stage of the personal life cycle.)
A: Mature adult.

Q: John is in education. When he finishes his qualification it will lead to a better job and higher social mobility for him. What is John's most likely age?
- 12. (He is most likely to be in higher education)
- 16 (He is most likely to be in higher education)
- 21. (Correct.)
- 30. (He is most likely to be in higher education)
A: 21.

Q: Which of the following is most likely to be associated with the middle age stage of the personal life cycle?
- A new home. (A new home is most likely to be associated with the young adult or mature adult stages of the personal life cycle.)
- Nights out. (Nights out are most likely to be associated with the teenager or young adult stages of the personal life cycle.)
- Promotion. (Promotion is most likely to be associated with the maturity stage of the personal lifecycle.)
- To travel. (Correct. Travel is most likely to be associated with the middle age stage of the personal life cycle as people will be taking retirement or becoming semi-retired and so have more time for travel.)
A: To travel.

Q: During which stage of the personal life cycle are parents most likely to experience their children gaining their independence?
- Young adult. (Parents are likely to have relatively young children when they are in the young adult stage of the personal life cycle.)
- Mature adult. (Parents are likely to find that their children are still dependent on them when they are in the mature adult stage of the personal life cycle.)
- Middle age. (Correct. Parents are most likely to experience their children gaining their independence when they are in the middle age stage of the personal life cycle.)
- Old age. (Parents will already have experienced their children gaining their independence in the earlier stage of the personal life cycle.)
A: Middle age.

Q: Wealth is passed from one generation to another, via:
- attainment. (This does not refer to the passing of wealth from one generation to another.)
- endowment. (This does not refer to the passing of wealth from one generation to another.)
- inheritance. (Correct. This does refer to the passing of wealth from one generation to another.)
- succession. (This does not refer to the passing of wealth from one generation to another.)
A: inheritance.

Q: The length of each stage of the personal life cycle, and what happens during them, is affected

most by:
- communo-social policies. (This does not refer to the passing of wealth from one generation to another)
- politico-economic factors. (This does not refer to the passing of wealth from one generation to another.)
- socio-economic trends. (Correct. This does refer to the passing of wealth from one generation to another.)
- socio-gender behaviours. (This does not refer to the passing of wealth from one generation to another.)
A: socio-economic trends.

Q: Paul is dedicated to animal welfare issues, and will not invest his money in companies that have

a poor animal rights record. This type of ethical investing is based on Paul’s:
- attitude. (The length of the various stages in the life cycle, and what happens during them, is affected by socio-economic trends.)
- beliefs. (The length of the various stages in the life cycle, and what happens during them, is affected by socio-economic trends.)
- values. (Correct.)
- wants. (The length of the various stages in the life cycle, and what happens during them, is affected by socio-economic trends.)
A: values.

Q: The provision of food and clothing is an example of:
- a need and a want. (Food and clothing are two examples of needs.)
- a want and an aspiration. (Food and clothing are two examples of needs.)
- two needs. (Correct.)
- two wants. (Food and clothing are two examples of needs.)
A: two needs.

Q: A financial services investment product is based specifically on shares in companies which care

for the environment and support children's charities.

This type of investment is known as:
- behavioural. (This is a form of ethical investment.)
- economic. (This is a form of ethical investment.)
- ethical. (Correct.)
- financial. (This is a form of ethical investment.)
A: ethical.

Q: Mr and Mrs Khan would like to leave their substantial wealth as a legacy to their children, and have decided that they should prepare wills now. This is an example of:
- a want and a need. (Correct.)
- an aspiration and a want. (The legacy is an example of a want and the desire to prepare a will is an example of a need.)
- two wants. (The legacy is an example of a want and the desire to prepare a will is an example of a need.)
- two needs. (The legacy is an example of a want and the desire to prepare a will is an example of a need.)
A: a want and a need.

Q: Which of the following is not a factor that influences needs, wants and aspirations?
- Attitudes. (Correct. Our attitudes to things are simply how we are disposed towards them and so they are not a factor that influences needs, wants and aspirations.)
- Beliefs. (Beliefs are more specific and detailed than attitudes and so they are a factor that influences needs, wants and aspirations.)
- Thoughts. (While attitudes are usually buried quite deep, our thoughts are usually quite clear to us and so they are a factor that influences needs, wants and aspirations.)
- Values. (Values are generalised feelings or beliefs about desirable behaviour or goals and so they are a factor that influences needs, wants and aspirations.)
A: Attitudes.

Q: An individual, who is not a role model, appears in an advertisement promoting a particular brand of clothing. This is designed to appeal to the reader’s or viewer’s:
- aspirations. (When an individual, who is not a role model, appears in an advertisement promoting a particular brand of clothing, this is designed to appeal to the reader's/viewer's wants and so aspirations is an incorrect answer.)
- desires. (When an individual, who is not a role model, appears in an advertisement promoting a particular brand of clothing, this is designed to appeal to the reader's/viewer's wants and so desires is an incorrect answer.)
- needs. (When an individual, who is not a role model, appears in an advertisement promoting a particular brand of clothing, this is designed to appeal to the reader's/viewer's wants and so needs is an incorrect answer.)
- wants. (Correct. The advertisement is designed to appeal to a person's wants.)
A: wants.

Q: Which of these ‘wants’ is really an ‘aspiration’?
- be a dentist. (Correct. An aspiration is something that people hope for in the future, ie they have an ambition to achieve something in the long-term; wanting to be a dentist, therefore, is an example of an aspiration rather than a want.)
- be able to pay the monthly rent. (This is a relatively short-term desire and is, therefore, a want.)
- go on a beach holiday. (This is a relatively short-term desire and is,therefore, a want.)
- wear fashionable clothes. (This is a relatively short-term desire and is, therefore, a want.)
A: be a dentist.

Q: Which of these following ‘wants’ is really a ‘need’?
The want to:
- be a teacher. (A need is something that people must have to survive; the desire to be a teacher is actually an aspiration.)
- buy a flashy sports car. (The desire to buy a flashy sports car is a want.)
- buy the weekly food shopping from the supermarket. (Correct. Food is an example of something that people must have to survive and is therefore a need.)
- visit nightclubs every weekend. (The desire to visit nightclubs every weekend is a want.)
A: buy the weekly food shopping from the supermarket.

Q: Which statement is most accurate about our needs, wants and aspirations?
- Although peoples’ obligations change their needs, wants and aspirations will remain the same. (Peoples' needs may be relatively constant but their wants and aspirations may well change over time.)
- An individual’s needs and wants never change throughout their life cycle. (It is most unlikely that peoples' needs, wants and aspirations will never change throughout their life cycle.)
- As people get older, their lives change, and so do their needs and wants (Correct. This statement is the most accurate because it is very likely that as people get older, their lives change, and so do their needs and wants.)
- As people get older, their needs will change but their wants and aspirations will remain the same. (It is likely that as people get older, their needs will remain relatively constant but that their wants and aspirations will change.)
A: As people get older, their lives change, and so do their needs and wants

Q: Which group of people provide a person with ‘the norm’ of behaviour that they may need, want or aspire to?
- Advertisers (Advertisers try to persuade people to do certain things, such as buy a particular product, and so they are unlikely to provide a person with 'norms' of behaviour)
- Media (The media give out a number of messages, which can sometimes be distorted in some way and so it is unlikely to provide a person with 'norms' of behaviour.)
- Peers (Correct. Peers refers to other people who are broadly similar to us and so they can provide a person with ideas about the 'norms' of behaviour in terms of what is seen to be acceptable behaviour.)
- Role models (Role models refer to people we look up to, and try to be like; you can be influenced by a role model but they tend to be better than others and so they are less likely to provide a person with ideas about the 'norms' of behaviour)
A: Peers

Q: Whilst still at school a girl starts a part-time job and is beginning to receive regular ‘wages’ which she is keen to keep safe but also wants to be able to access and use easily and quickly.
Which financial services solution would help her?
- Borrowing (She wants to be able to access and use her own money easily and quickly; she does not wish to borrow any money.)
- Investment (She wants to be able to access and use her own money easily and quickly; she does not wish to have it tied up in an investment product)
- Protection (She wants to be able to access and use her own money easily and quickly; she does not desire a protection solution)
- Transaction (Correct. She wants to be able to access and use her own money easily and quickly; she, therefore, wants a transaction solution, which will provide a way to handle financial transactions easily and to make payments safely and securely)
A: Transaction

Q: A couple with children want to enjoy a family holiday. During each winter month they have a small excess of income over expenditure, which they wish to use to help them pay for the holiday in the summer.
- Borrowing (The couple wish to use the excess of income over expenditure; a borrowing solution, therefore, is not required)
- Investment (The couple wish to use the excess of income over expenditure to help them pay for a summer holiday; an investment solution, therefore, would not be required as that is more of a long-term solution.)
- Savings (Correct. The couple wish to use the excess of income over expenditure to help them pay for a summer holiday; a savings solution, therefore, would be most appropriate to deposit the money and earn interest)
- Transaction (The couple wish to use the excess of income over expenditure to help them pay for a summer holiday; this is a medium-term aim and so a transaction solution, therefore, would be less appropriate.)
A: Savings

Q: Anna has received £10,000 from an aunt, but she does not need the money for at least ten years. Over this period she wishes to maximise growth potential. What type of financial services product should she consider?
- Investing in the stockmarket. (Correct. She should consider investing the £10,000 in the stock market; investing is regarded as a long-term solution and she will not need the money for at least 10 years.)
- Purchasing general insurance. (The purchase of general insurance would not require an expenditure of anything like £10,000.)
- Putting money into a building society account. (Over a ten-year period, it is very likely that the return on money invested in the stock market will be greater than the interest received from money deposited in a building society account.)
- Taking out a loan. (It would be unlikely that she would consider borrowing money by taking out a loan if she has just received a sum of £10,000.)
A: Investing in the stockmarket.

Q: What is the benefit of a personal pension plan over other forms of investment?
It:
- allows the purchase of an annuity. (A personal pension plan does allow the purchase of an annuity but this would not be regarded as a major benefit, especially given the fall in the value of annuities in recent years)
- includes some insurance cover. (It may include some insurance cover but not necessarily; it is up to the individual to choose whether to buy extra benefits, such as insurance cover)
- is not a long-term commitment. (It is a long-term commitment.)
- is tax efficient. (Correct. This is the correct answer because it is tax efficient; for example, for a basic rate taxpayer, for every £80 they contribute, the government will add a further £20.)
A: is tax efficient.

Q: When budgeting, priority has to be given to:
- all needs. (Correct. When budgeting, priority has to be given to the most important things and these are the needs; answer A is, therefore, the correct answer.)
- aspirations. (Aspirations are much more long-term and so less priority is given to them in budgeting)
- wants that involve large sums (When budgeting, priority has to be given to needs rather than wants.)
- wants that involve small sums. (Again, priority must be given to needs whether the wants involve large or small sums of money.)
A: all needs.

Q: When a person is taking out a new financial services product, which of the following should be the most important consideration?
- Affordability. (Correct.)
- Marketing. (Affordability is more important than marketing.)
- The bank's location. (Affordability is more important than the bank's location)
- The brand name. (Affordability is more important than the brand name.)
A: Affordability.

Q: Financial services products are frequently bought to satisfy a customer's needs. As a result,

these products are frequently referred to as:
- fashions. (They are frequently referred to as solutions.)
- remedies. (They are frequently referred to as solutions.)
- solutions. (Correct.)
- values. (They are frequently referred to as solutions.)
A: solutions.

Q: At which stage of the personal life cycle is someone most likely to stop saving money?
- Teenager. (They are most likely to stop saving at old age.)
- Young adult. (They are most likely to stop saving at old age.)
- Mature adult. (They are most likely to stop saving at old age.)
- Old age. (Correct.)
A: Old age.

Q: It is becoming increasingly popular for bank account holders to make payment for goods and services by using:
- cheques. (Cheques are becoming less popular as a means of paying for goods and services; some retail outlets have now refused to accept them as a means of payment.)
- electronic transfer mechanisms. (Correct. Electronic transfer mechanisms are becoming more popular as a means of paying for goods and services.)
- notes and coins. (Notes and coins are becoming less popular as a means of paying for goods and services, apart from the smallest amounts; they are being replaced increasingly by plastic.)
- Travellers' cheques (Travellers' cheques are only used as a means of taking money abroad; they can be used as a means of paying for goods and services but to a far lesser extent than electronic transfer mechanisms.)
A: electronic transfer mechanisms.

Q: Which of the following plastic cards does not represent a means of borrowing money?
- Charge cards. (A charge card, such as Diners' Club, is a means of borrowing money and is similar to a credit card except that the entire balance must be paid off each month.)
- Credit cards (A credit card, such as VISA, is a means of borrowing money and allows customers to pay off only so much of the credit that has been borrowed in a month.)
- Debit cards (Correct. A debit card, such as MAESTRO, is the only one, which does not represent a means of borrowing money; it arranges a prompt transfer of money from the cardholder's account to the seller of the good or service.)
- Store cards (A store card, such as Marks & Spencer, is a means of borrowing money and is a credit or charge card issued by a department store.)
A: Debit cards

Q: The process by which a cheque transaction moves money from an account in Bank A to an account in Bank B is known as:
- clearing. (Correct. This correctly describes the process by which a cheque transaction moves money from an account in Bank A to an account in Bank B.)
- collection. (This is not the correct term for the process.)
- dispersal. (This is not the correct term for the process.)
- settlement. (This is not the correct term for the process.)
A: clearing.

Q: ‘Putting money aside for a rainy day’ is a description of:
- investment. (This is not a correct description of the phrase.)
- protection. (This is not a correct description of the phrase.)
- saving. (Correct.)
- speculation. (This is not a correct description of the phrase.)
A: saving.

Q: Which of the following is a feature of investment, but not a feature of savings?
- Interest is paid. (Interest will be paid on savings and so this answer is not correct.)
- It is only available for adults. (Savings are not only available for adults and so this answer is not correct.)
- Safety from theft. (Safety from theft is a feature of savings and so this answer is not correct.)
- The value may fall. (Correct. The value of an investment may fall but not the value of savings; this is, therefore, the correct answer.)
A: The value may fall.

Q: Which of the following does a person need to enable them to make payments by debit card, cheque, standing order and direct debit?
- A credit card. (They must have a current account.)
- A current account. (Correct.)
- A savings account. (They must have a current account.)
- A store card. (They must have a current account.)
A: A current account.

Q: What is meant by the term ‘time value of money’?
- Money does not depreciate in value in the short-term. (This does not explain the term 'time value of money'.)
- Money held today is worth more than the same sum held at any time in the future. (Correct.)
- Money that is promised at some time in the future is worth less due to the risk that it will (This does not explain the term 'time value of money'.)
- The future value of money is higher than its present value. (This does not explain the term 'time value of money'.)
A: Money held today is worth more than the same sum held at any time in the future.

Q: In the UK, lenders' interest rates are influenced by which of the following?
- Bank of England APR. (There is no such rate as Bank of England APR.)
- Bank rate. (Correct.)
- Lending rate. (Interest rates are influenced by Bank rate.)
- Monetary Policy APR. (There is no such rate as Monetary Policy APR.)
A: Bank rate.

Q: Which of the following statements regarding interest rates is

true?
- Fixed rates provide certainty with regard to cost. (Correct. It is true that fixed rates provide certainty with regard to cost.)
- Headline rates are the best basis for comparison between providers. (Headline rates are not the best basis for comparison between providers; APR or AER would be better.)
- The higher the interest rate, the lower the credit risk. (This answer is incorrect because an interest rate and a credit risk are determined by different factors.)
- Variable rates only apply to borrowers. (This answer is incorrect because variable rates can apply to both savers and borrowers.)
A: Fixed rates provide certainty with regard to cost.

Q: Beta Building Society is quoting an interest rate of 5%, APR 6.5%. Why is there a difference

between the two rates?
- 5% is the rate charged if the loan is repaid early. (This does not explain why the two interest rates are different.)
- 6.5% is the gross rate, and 5% is the net rate. (This does not explain why the two interest rates are different.)
- The APR includes any lending fees, and reflects the way that interest is charged. (Correct. This does explain why the two interest rates are different; the APR includes any lending fees and reflects the way that interest is charged. This is why it is a legal requirement to refer to the APR so that genuine comparisons can be made.)
- The APR is an annual rate, whereas 5% is charged half-yearly. (This does not explain why the two rates are different; interest rates are generally shown as annual rates.)
A: The APR includes any lending fees, and reflects the way that interest is charged.

Q: The £/$ exchange rate has moved from 1.7 to 1.65. The dollar is said to have:
- consolidated. (This is not a correct term for an appreciation of the dollar)
- strengthened. (Correct. This is a correct term for an appreciation of the dollar; it has strengthened as a result of the fall in the £/$ exchange rate, ie the pound can buy fewer dollars.)
- tempered. (This is not a correct term for an appreciation of the dollar)
- weakened. (This is not a correct term for an appreciation of the dollar; it would, in fact, indicate that there had been a depreciation of the dollar.)
A: strengthened.

Q: Ali is going to Paris. He changes £300 into euros at his bank. Because of work, he is unable to travel and so, later that day, he takes his euros back to the same bank and changes them into pounds again, commission-free.

How much is he likely to receive?
- £300 exactly. (Because of the difference between the bank's buying and selling rates, Ali would receive less than the £300 he originally spent.)
- £300 plus commissions (Because of the difference between the bank's buying and selling rates, Ali would receive less than the £300 he originally spent.)
- Less than £300. (Correct.)
- More than £300. (Because of the difference between the bank's buying and selling rates, Ali would receive less than the £300 he originally spent.)
A: Less than £300.

Q: What is the Retail Price Index based upon?
- Average price of a mix of products and services. (This is incorrect because the term is related to price rises.)
- Average price rise for a mix of products and services. (Correct. This is correct; as the text makes clear, the RPI 'measures the average price rise for a mix of products and services that the UK government thinks the average UK household buys over a year'.)
- Average price rise for all products and services. (This is incorrect because it doesn't measure the price rise for all products and services, only some.)
- Inflation target set by the government. (This is something entirely different.)
A: Average price rise for a mix of products and services.

Q: At times when consumers have more money to spend the demand for goods will increase. If the level of supply remains the same prices will increase.

This is known as which of the following types of inflation?
- Consumer-led. (This is known as demand-pull inflation.)
- Cost-push. (This is known as demand-pull inflation.)
- Demand-pull. (Correct)
- Supply-based. (This is known as demand-pull inflation.)
A: Demand-pull.

Q: Which of the following is not available from a company that only provides general insurance

products?
- Critical illness cover. (Correct. Critical illness cover is not available from a company that only provides general insurance products because it is not an example of general insurance.)
- Home and contents. (Home and contents policies are available from a company that only provides general insurance products.)
- Motor. (Motor insurance policies are available from a company that only provides general insurance products.)
- Personal accident. (Personal accident policies are available from a company that only provides general insurance products.)
A: Critical illness cover.

Q: National Savings and Investments products have traditionally been purchased:
- at the Post Office. (Correct. National Savings products have traditionally been purchased at the post office; as the text states, 'the National Savings products have branch-based delivery because they are offered through branches of the Post Office'.)
- from independent financial advisers. (They would not be purchased from independent financial advisers.)
- in bank branches. (They would not be purchased in bank branches.)
- over the telephone. (They would not have been traditionally purchased over the telephone.)
A: at the Post Office.

Q: A deposit account which requires the account holder to leave their money for a fixed period of time is known as a:
- agreed period deposit. (This is known as a term deposit.)
- fixed rate deposit. (This is known as a term deposit.)
- lump sum deposit. (This is known as a term deposit.)
- term deposit. (Correct)
A: term deposit.

Q: Compared with banks, building societies:
- offer different types of products. (Banks and building societies offer similar types of products.)
- offer similar types of products. (Correct)
- only offer mortgages and loans. (Banks and building societies both offer mortgages and loans.)
- only offer savings and investment products. (Banks and building societies both offer savings and investment products.)
A: offer similar types of products.

Q: What is the major

disadvantage of delivering financial services solutions via a branch network?
- It is a poor way of cross-selling other products and services. (This is incorrect; it is a good way of crossselling other products and services.)
- It is unpopular with customers. (This is incorrect because branches are usually popular with customers.)
- It is very costly and therefore the pricing of the products is less attractive. (Correct. This is correct because a branch network is very costly and could, therefore, make the pricing of products less attractive and competitive.)
- Service is seen as impersonal. (This is incorrect because the service is seen as personal, not impersonal.)
A: It is very costly and therefore the pricing of the products is less attractive.

Q: For very complex and high value financial transactions, which of the following would be the

best customer delivery method?
- Face-to-face. (Correct.)
- Internet. (The Internet is too impersonal. Face-toface would be the best.)
- Postal. (Postal is too impersonal. Face-to-face would be the best.)
- Telephone. (The telephone is too impersonal. Face-toface would be the best.)
A: Face-to-face.

Q: What is the difference between a financial adviser who is tied and one who is multi-tied?

A multi-toed advisor:
- Cannot provide advice (Both types of adviser can provide advice.)
- has a wider range of products to choose from. (Correct.)
- must not charge a fee. (Both types of advisor can charge a fee.)
- will always have more clients. (A multi-tied adviser will not necessarily have more clients.)
A: has a wider range of products to choose from.

Q: If someone acted as a financial adviser without authorisation from the Financial Services

Authority they would be guilty of which of the following?
- A breach of financial security. (Acting as a financial adviser without FSA authorisation is a criminal offence.)
- A criminal offence (Correct.)
- Caveat emptor. (Acting as a financial adviser without FSA authorisation is a criminal offence.)
- Consumer protection. (Acting as a financial adviser without FSA authorisation is a criminal offence.)
A: A criminal offence

Q: Which of the following is a reason why consumer protection has become so important in the UK financial services marketplace?

Because of the:
- importance of creating large bank brands. (This is not a reason why consumer protection has become so important in the UK.)
- large number of consumers. (This is not a reason why consumer protection has become so important in the UK.)
- need to help banks make bigger profits. (This is not a reason why consumer protection has become so important in the UK.)
- range and complexity of products. (Correct)
A: range and complexity of products.

Q: What is the name of the regulator that oversees the financial services industry in the UK?

The:
- Financial Services Authority. (Correct)
- Investment Management Regulatory Organisation. (The Financial Services Authority is the name of the regulator that oversees the financial services industry in the UK.)
- Personal Investment Authority. (The Financial Services Authority is the name of the regulator that oversees the financial services industry in the UK.)
- Securities and Investment Board. (The Financial Services Authority is the name of the regulator that oversees the financial services industry in the UK.)
A: Financial Services Authority.

Q: When must an adviser inform their client that they are either free to recommend from the entire range available in the marketplace or tied to one product provider?
- Before giving advice. (Correct. An adviser must inform the client that he/she is either free to recommend from the entire range available in the marketplace or is tied to one product provider before giving advice and so this is the correct answer.)
- When giving advice. (The information must be given before giving advice and so this is clearly wrong.)
- After giving advice. (The information must be given before giving advice and so this is clearly wrong.)
- Within seven days of giving advice. (The information must be given before giving advice and so this is clearly wrong.)
A: Before giving advice.

Q: How can a client check to ensure that a financial adviser is properly authorised?
- Ask the financial adviser directly. (A client would need to check the FSA's register of approved businesses to ensure that a financial adviser is properly authorised; this is, therefore, an incorrect answer.)
- Check the financial press. (A client would need to check the FSA's register of approved businesses to ensure that a financial adviser is properly authorised; this is, therefore, an incorrect answer.)
- Check the FSA’s register of approved businesses. (Correct)
- Check the Citizens Advice register of approved businesses. (A client would need to check the FSA's register of approved businesses to ensure that a financial adviser is properly authorised; this is, therefore, an incorrect answer.)
A: Check the FSA’s register of approved businesses.

Q: Why might some consumers need help if things go wrong with a financial services product they have purchased?

Because:
- all banks are dishonest and unscrupulous when dealing with complaints. (Most banks and their staff are honest and trustworthy.)
- consumers must have legal representation when complaining. (It is not necessary to have legal representation when making a complaint.)
- of the complexity involved with some financial services products. (Correct)
- there is no consumer protection in financial services. (There is considerable consumer protection in financial services)
A: of the complexity involved with some financial services products.

Q: Which of the following is the greatest risk to the consumer in dealing with financial services

providers?
- Bank rate may change. (Bank rate can change at any time.)
- Exchange rates may fluctuate. (Exchange rates fluctuate continually.)
- The consumer may go bankrupt. (This is a risk for the provider.)
- The provider may go bust. (Correct)
A: The provider may go bust.

Q: Dave has a mortgage agreed, and pays a fee of £250. He then discovers that he could have

negotiated a similar mortgage with another lender, and he would have paid a fee of £100.

What is Dave’s position?

He:
- has no rights to a refund, and should have conducted more thorough research. (Correct. He should have conducted his research more thoroughly before signing an agreement and has no rights to a refund.)
- is entitled to a refund of £150 from his current lender. (He is not entitled to a refund of £150 from his current lender.)
- is only entitled to a refund if his lender subscribes to the FSA Codes of practice. (He is not entitled to a refund; the situation has got nothing to do with the FSA Codes of Practice.)
- should make an immediate formal complaint to the Financial Ombudsman Service. (He would have no grounds for making a complaint to the Financial Ombudsman Service.)
A: has no rights to a refund, and should have conducted more thorough research.

Q: If someone applies for credit, they leave a ‘financial footprint’ because details of their application will be forwarded to:
- a credit reference agency. (Correct. For example, Experian, Equifax.)
- the Financial Services Authority. (The FSA (the regulator) is not advised on individual credit applications.)
- the Lending Standards Board. (The Lending Standards Board monitor the Lending Code.)
- their employer. (An individual’s employer will usually not know they have applied for credit.)
A: a credit reference agency.

Q: Which of the following methods is most appropriate, safe and convenient for a regular payment such as a mobile phone bill but which may be for a different amount from month-to-month?
- Cash payment. (This may not be a convenient method for a regular payment; it may also be regarded as less safe than other possible methods.)
- Cheque (This may also not be a convenient method for a regular payment, as the person has to remember to write and send the cheque each month.)
- Direct debit (Correct. This will be a much safer and more convenient method for a regular payment; the direct debit, once set up, can then pay different amounts each month.)
- Standing order (This is a safe and convenient method for making a regular payment but it can only be used when the amount is the same each month; it would, therefore, not be appropriate where the payment is for a different amount each month.)
A: Direct debit

Q: Which of the following features of investments make them different from savings?
- Regular statements of accounts are issued to update the investor (Regular statements of accounts would be issued in terms of both investments and savings.)
- The source of funds is money not required for everyday living. (Investments and savings would both be sourced by funds, which were not required for everyday living.)
- There may be some risk of losing as well as gaining (Correct. The risk of losing as well as gaining is a feature of investment but not of a savings account.)
- They are a physically safe place for money rather than ‘under the mattress.’ (Both are a physically safe place for money rather than 'under the mattress' where money can be mislaid, lost or stolen.)
A: There may be some risk of losing as well as gaining

Q: Which of the following statements is true?
- Borrowing can mean that an individual has opportunities and can make purchases of goods and services that they could not otherwise afford. (Correct. This is a true statement.)
- Borrowing is relatively cheap and will always be economically advantageous for the borrower. (This is untrue because borrowing may not be relatively cheap and it may not always be economically advantageous for the borrower, especially when there are high rates of interest involved.)
- Taking protection against future eventualities is designed to make an individual better off than they were originally (This is untrue; protection solutions are designed to restore an individual to a previous position, not make him or her better off as a result.)
- The cost of protection will always exceed the benefits (This is untrue; the cost of protection may exceed the benefits)
A: Borrowing can mean that an individual has opportunities and can make purchases of goods and services that they could not otherwise afford.

Q: Maggie is on a trip from London to Edinburgh, but her car breaks down before reaching Scotland. She decides to stay in a hotel for the night and to sort out the car in the morning.
What is the most likely way that she will pay the hotel bill?
- Credit card. (Correct.)
- Direct debit. (As this is unplanned and one-off expenditure a direct debit would not be appropriate.)
- Online. (She is most likely to pay by credit card.)
- Standing order. (As this is unplanned and one-off expenditure a standing order would not be appropriate)
A: Credit card.

Q: Bonds which are issued by the UK Government are known as which of the following?
- Gilts. (Correct.)
- Investment Bonds. (They are known as Gilts.)
- NS&I. (They are known as Gilts.)
- Premium Bonds. (They are known as Gilts.)
A: Gilts.

Q: Which form of borrowing would someone typically pay back over the longest period?
- Credit card. (A mortgage is used to buy a property and, typically, can be repaid over 25-30 years. A credit card is a short-term method of borrowing.)
- Mortgage. (Correct.)
- Overdraft. (A mortgage is used to buy a property and, typically, can be repaid over 25-30 years. An overdraft is a short-term method of borrowing)
- Personal loan. (A mortgage is used to buy a property and, typically, can be repaid over 25-30 years. A personal loan is a shorter-term method of borrowing.)
A: Mortgage.

Q: For the price of a pair of trainers in the UK you could buy more than five pairs in Vietnam. What is the main reason for this?
- Inflation. (This is concerned with the purchasing power of money in different countries, not with the inflation rates in the two countries.)
- Interest rates. (This is concerned with the purchasing power of money in different countries, not with the interest rates on saving and borrowing in the two countries.)
- Opportunity cost. (This is concerned with the purchasing power of money in different countries, not with the concept of opportunity cost which is the next best alternative that is foregone as a result of taking a decision.)
- Purchasing power. (Correct. This is the correct answer as purchasing power explains what money will be able to buy in different countries.)
A: Purchasing power.

Q: £100 will generally buy less goods in ten years’ time. Why is this?
- Credit risk. (This is concerned with the fall in the value of a given sum of money, not with any possible credit risk.)
- Exchange rates. (This is concerned with the fall in the value of a given sum of money, not with the exchange rate, which shows the value of one currency in terms of another.)
- Inflation. (Correct. This is concerned with the fall in the value of a given sum of money and this is the correct answer as this fall is the result of inflation in the country.)
- Interest rates. (This is concerned with the fall in the value of a given sum of money, not with the interest rates, which happen to apply to savers and/or borrowers)
A: Inflation.

Q: Who is directly responsible for stipulating the method of calculating the Annual Percentage Rate on loans?
- Citizens Advice. (The Citizens Advice is not responsible for stipulating the method of calculating the Annual Percentage Rate on loans.)
- Department for Business, Innovation & Skills. (The Department of Trade and Industry is not responsible for stipulating the method of calculating the Annual Percentage Rate on loans.)
- Financial Services Authority. (The Financial Services Authority is not responsible for stipulating the method of calculating the Annual Percentage Rate on loans.)
- Office of Fair Trading. (Correct. The Office of Fair Trading is responsible for stipulating the method of calculating the Annual Percentage Rate on loans. This is made very clear in the text: 'The Office of fair Trading (OFT) regulates how APRs are calculated and requires lenders to publish these rates)
A: Office of Fair Trading.

Q: Which of the following is least relevant when considering the costs of taking out a loan?
- Administration fees. (The administration fees would be a very relevant factor to take into account when considering the costs of taking out a loan.)
- Rate of inflation. (Correct. The rate of inflation would be the least relevant factor to take into account when considering the costs of taking out a loan as it is not relevant to the costs.)
- The arrangement fee (The arrangement fee would be a very relevant factor to take into account when considering the costs of taking out a loan.)
- The method of charging interest. (The method of charging interest would be a very relevant factor to take into account when considering the costs of taking out a loan.)
A: Rate of inflation.

Q: Ignoring charges, how many euros can you purchase with £100 if the exchange rate is, 1 pound = 1.25 euros?
- 12 euros. (This is incorrect; it is the correct answer of 125 euros with the last digit omitted.)
- 80 euros. (This is incorrect; it is the result of dividing 100 by 125.)
- 100 euros (This is incorrect; it is the amount in £’s)
- 125 euros. (Correct. It is the result of multiplying 100 by 1.25.)
A: 125 euros.

Q: The difference between the buying and selling exchange rate is referred to as which of the following?
- Arrangement fee. (This does not refer to the difference between the buying and selling exchange rate.)
- Commission. (This does not refer to the difference between the buying and selling exchange rate.)
- Interest rate. (This does not refer to the difference between the buying and selling exchange rate.)
- Spread. (Correct. This does refer to the difference between the buying and selling exchange rate.)
A: Spread.

Q: What is the Consumer Prices Index (CPI)?
- A measure of inflation. (Correct. The Consumer Price Index (CPI), as the text states, is one of 'two standard measures of price inflation in the UK'.)
- A method of calculating the current value of money. (It is not the method of calculating the current value of money; it is the method used to measure the average price rise for a mix of products and services that the UK government thinks the average UK household buys over a year.)
- A method of comparing buying power across countries. (It is not the method of comparing buying power across countries; it only relates to the prices of a selection of goods and services in the UK.)
- A way of expressing interest rates. (It is not the way of expressing interest rates; this would be APR or AER.)
A: A measure of inflation.

Q: In which of the following ways can attempts be made to control inflation?
The:
- Bank of England setting interest rates. (Correct. The Bank of England will be influenced by the rate of inflation when it is setting interest rates; if the rate of inflation is higher than the target figure stipulated by the government, the Bank of England is likely to raise interest rates by increasing the bank rate.)
- Financial Services Authority regulating banking transactions. (This will not be a method employed to try and control inflation.)
- Office for National Statistics setting the Consumer Prices Index. (This will not be a method employed to try and control inflation; the Consumer Price Index is simply a measure of price inflation in the UK.)
- UK Government buying large amounts of sterling. (This will not be a method employed to try and control inflation)
A: Bank of England setting interest rates.

Q: Why would a building society want to convert to a bank?
To:
- offer transaction services (Transaction services can be provided by both a bank and a building society)
- raise cash for capital investment. (Correct. A building society may want to convert to a bank to raise cash for capital investment by becoming a plc and raising income through the issuing of shares.)
- reduce conflict between shareholders and customers. (This would not be a reason for a building society to want to convert to a bank; it does not have shareholders and so there could not be any conflict between shareholders and customers.)
- release profits to members. (This would not be a reason for a building society to want to convert to a bank; it can already release profits to members, such as the scheme operated by the Britannia Building Society)
A: raise cash for capital investment.

Q: Which of the following are the two main categories of insurance offered by an insurance company?
- Annual and Regular. (These are not the two main categories of insurance offered by an insurance company)
- General and Long-term. (Correct. These are the two main categories of insurance offered by an insurance company, as the text makes clear.)
- Household and Life. (These are not the two main categories of insurance offered by an insurance company)
- Motor and Pensions. (These are not the two main categories of insurance offered by an insurance company)
A: General and Long-term.

Q: Which of the following led to high street banks being able to offer a wide range of services, including insurance, mortgages, credit cards and investments?
- Competition. (Deregulation in the financial services marketplace enabled banks to increase their product ranges.)
- Demutualisation. (Deregulation in the financial services marketplace enabled banks to increase their product ranges.)
- Deregulation. (Correct)
- Financial exclusion. (Deregulation in the financial services marketplace enabled banks to increase their product ranges)
A: Deregulation.

Q: Retail organisations, such as Tesco, Asda and Sainsbury's, have been able to enter the financial services market mostly because of which of the following?
- Customers trust their brands. (Correct.)
- Customers visit them every day. (This may be true, but it is mostly because their customers trust their brand.)
- They are nationwide chains (This may be true, but it is mostly because their customers trust their brand.)
- They have vast car parking spaces. (This may be true, but it is mostly because their customers trust their brand.)
A: Customers trust their brands.

Q: Which type of financial services provider normally uses a branch based distribution system?
- Building societies. (Correct. Building societies normally use a branch based distribution system; as the text says, 'branch-based delivery is the route traditionally used by providers such as the highstreet banks and building societies'.)
- Insurance companies. (Insurance companies would be much less likely to use a branch based distribution system.)
- Investment companies. (Investment companies would also be much less likely to use a branch based distribution system.)
- Tied financial advisers. (Tied financial advisers would be much more likely to give face-to-face service without maintaining a network of branches.)
A: Building societies.

Q: Which of the following is not a major benefit to a bank of promoting its products on its website?
To:
- reach a wide audience. (This is a major benefit of promoting products through a website.)
- reduce printing costs. (This is a major benefit of promoting products through a website.)
- save on postages. (This is a major benefit of promoting products through a website.)
- sell complex products. (Correct)
A: sell complex products.

Q: Coins are manufactured using hard-wearing metal alloys. This satisfies which essential attribute of money?
- Divisibility. (A – Divisibility means having notes and coins of various units that combine to make up any amount and so this is an incorrect answer.)
- Durability. (B – Correct. Durability means the manufacture of coins using hard-wearing metal alloys so that they are non-perishable.)
- Homogeneity. (C – Homogeneity means that every unit of money representing a specific value must be exactly the same and so this is an incorrect answer)
- Stability. (D – Stability means that each unit of money must be able to hold its value, to a large extent, over a period of time; this is, therefore, a wrong answer.)
A: Durability.

Q: Metal strips in banknotes, watermarks and complicated designs are designed to combat:
- forgery. (A – Correct. Metal strips in banknotes, watermarks and complicated designs are designed to combat forgery and so this is the correct answer; as it states in the text, such features 'can make it hard or expensive to print and produce good fakes'.)
- money laundering. (B – These features are not designed to combat money laundering.)
- scarcity. (C – These features are not related to the scarcity of money.)
- theft. (D – These features are not related to the theft of money.)
A: forgery.

Q: How are travellers' cheques used abroad?
- As a means of buying goods and services on credit. (Travellers' cheques are not a source of credit.)
- Only as a means of obtaining local currency. (They can be used to obtain local currency but they are not the only means of doing so.)
- Only to pay for goods and services (They can be used to obtain local currency as well as to pay for goods and services.)
- To pay for goods and services, and to obtain local currency. (Correct. They can be used to both pay for goods and services and to obtain local currency.)
A: To pay for goods and services, and to obtain local currency.

Q: A cheque is an instruction from the:
- buyer to the buyer’s bank. (Correct. A cheque is an instruction from the buyer to the buyer's bank; this is, therefore, the correct answer.)
- buyer to the seller. (A cheque is an instruction from the buyer but not to the seller.)
- seller to the buyer. (The buyer is in position 2 rather than position 1 and the seller is wrong.)
- seller to the seller’s bank. (Both of these are incorrect.)
A: buyer to the buyer’s bank.

Q: Which of the following is not a need for an individual in the childhood stage of the personal life cycle?
- Clothing. (Clothing is a need for an individual in the childhood stage of the personal life cycle and so this answer is incorrect.)
- Food. (Food is a need for an individual in the childhood stage of the personal life cycle and so this answer is incorrect)
- Shelter. (Shelter is a need for an individual in the childhood stage of the personal life cycle and so this answer is incorrect.)
- Transport. (Correct. Transport is not a need for an individual in the childhood stage of the personal life cycle and so this is the correct answer; this is a want rather than an essential need.)
A: Transport.

Q: Sam has just left home and is worried about taking responsibility for paying her own bills for the first time.

Sam is most likely to be at which personal life cycle stage?
- Childhood. (Typically people are at the young adult stage when they take the step of leaving home.)
- Teenager. (Typically people are at the young adult stage when they take the step of leaving home.)
- Young adult. (Correct)
- Middle age. (Typically people are at the young adult stage when they take the step of leaving home.)
A: Young adult.

Q: The needs and wants of some people in the old age stage of the personal life cycle are similar, in many ways, to the needs and wants of those in which other personal life cycle stage?
- Infanthood and childhood. (Correct)
- Young adult. (The needs and wants of some people in the old age stage of the personal life cycle are similar, in many ways, to the needs and wants of those in infanthood and childhood; the text states that 'most old people need some sort of help'.)
- Mature adult. (The needs and wants of some people in the old age stage of the personal life cycle are similar, in many ways, to the needs and wants of those in infanthood and childhood; the text states that 'most old people need some sort of help'.)
- Middle age. (The needs and wants of some people in the old age stage of the personal life cycle are similar, in many ways, to the needs and wants of those in infanthood and childhood; the text states that 'most old people need some sort of help'.)
A: Infanthood and childhood.

Q: Bob wishes to ensure that his grandchildren receive cash from his estate when he dies. This is achieved by:
- appointing a solicitor. (This is not enough by itself to ensure that the grandchildren receive cash from the estate when he dies.)
- appointing an administrator. (Incorrect. Making a will is necessary to ensure that the grandchildren receive cash from the estate when he dies.)
- making a will. (Correct. Making a will is necessary to ensure that the grandchildren receive cash from the estate when he dies.)
- taking out a mortgage. (This is incorrect; taking out a mortgage has nothing to do with the settlement of an estate.)
A: making a will.

Q: Life expectancy trends indicate that the length of time when an individual will be drawing a pension is:
- likely to increase for men and reduce for women, over the next 50 years. (Life expectancy trends indicate that the length of time when an individual will be drawing a pension is likely to increase for both men and women over the next 50 years.)
- likely to increase over the next 50 years. (Correct. It is likely to increase for both men and women over the next 50 years.)
- likely to reduce over the next 50 years. (It is likely to increase, not reduce, over the next 50 years.)
- unlikely to change over the next 50 years. (It is likely to change, ie increase, over the next 50 years and so this answer is incorrect.)
A: likely to increase over the next 50 years.

Q: Which of the following is an example of a demographic trend which might affect the personal life cycle?
- Education. (Education is a social factor rather than demographic.)
- Migration. (Correct)
- Taxes. (Taxes are an economic factor rather than demographic.)
- The environment. (The environment is not a demographic trend.)
A: Migration.

Q: Which of the following is

not a 'social' value?
- Avoiding conflict. (This is a social value.)
- Being trustworthy. (This is a social value.)
- Building relationships (This is a social value.)
- Having a faith. (Correct. This is a religious value.)
A: Having a faith.

Q: A person's attitude towards something will be influenced the

most by which of the following?
- behaviour. (A person's belief system informs their attitudes.)
- belief system (Correct.)
- decision making (A person's belief system informs their attitudes.)
- expectations. (A person's belief system informs their attitudes.)
A: belief system

Q: Tom and Mary have just repaid their mortgage, so have decided to invest in a home cinema and also to save for a ‘rainy day’.

This is an example of:
- a want and a need. (Both of these are a want and so although the first want is correctly identified, the second one is incorrectly identified as a need.)
- a want and an aspiration. (Both of these are a want and so although the first want is correctly identified, the second one is incorrectly identified as an aspiration.)
- two aspirations. (Both of these are wants and not aspirations.)
- two wants. (Correct. Both of these are examples of wants.)
A: two wants.

Q: Steve and Tracy, both aged 30, would like to buy a holiday home when they retire, and also help their children, who are aged three and five, to become home owners at the appropriate time.

This is an example of:
- a want and an aspiration. (Both of these are examples of aspirations and so although the second aspiration is correctly identified, the first one is incorrectly identified as a want.)
- an aspiration and a need. (Both of these are examples of aspirations and so although the first aspiration is correctly identified, the second one is incorrectly identified as a need.)
- two aspirations. (Correct. Both of these are examples of aspirations for the future.)
- two wants. (Both of these are aspirations and not wants.)
A: two aspirations.

Q: At school, Rakhee is asked to talk about her wants, needs and aspirations. Which of the

following will have had the least influence on Rakhee's choices?

Her:
- attitudes. (Rakhee's attitudes will have a significant impact on her wants, needs and aspirations.)
- beliefs. (Rakhee's beliefs will have a significant impact on her wants, needs and aspirations.)
- knowledge. (Correct)
- values. (Rakhee's values will have a significant impact on her wants, needs and aspirations.)
A: knowledge.

Q: Which of the following is an external factor which can influence a person's needs, wants and aspirations?
- Age. (Age is not an external factor.)
- Gender (Gender is not an external factor.)
- Marketing (Correct)
- Values (Values are not an external factor.)
A: Marketing

Q: The process of planning future income and expenditure is known as:
- balancing. (The process is budgeting.)
- borrowing. (The process is budgeting.)
- budgeting. (Correct)
- management. (The process is budgeting.)
A: budgeting.

Q: As people move through the different stages of the personal life cycle their financial requirements will vary. This is

mainly due to changes in their:
- height, weight and age. (It is due to changes in their wants, needs and aspirations.)
- location, car and peers. (It is due to changes in their wants, needs and aspirations.)
- preferences, allergies and fears. (It is due to changes in their wants, needs and aspirations.)
- wants, needs and aspirations. (Correct)
A: wants, needs and aspirations.

Q: Which of the following is a

key skill in financial planning?
- Anticipating things that may happen in the future. (Correct)
- Knowing about previous years' income tax rates. (For most people, this is not likely to be of use when planning.)
- Predicting precisely when interest rates will change. (Predicting precisely when interest rates will change is not necessary when planning (and probably is not possible))
- Understanding how exchange rates are calculated. (It is not necessary to understand how exchange rates are calculated when planning.)
A: Anticipating things that may happen in the future.

Q: The pension generated for an employee by a money purchase scheme is determined by:
- their eligibility for a State pension. (There is no link to the state pension, it is a personal arrangement not linked to the state.)
- their final salary upon retirement. (Not a final salary arrangement, it is a personal arrangement not linked to an employer.)
- how old they were at retirement. (Age at retirement is not directly relevant to money purchase schemes.)
- how successfully the money was invested. (Correct. Contributions are invested and the pension depends on the investment return.)
A: how successfully the money was invested.

Q: At which stage of the personal life cycle is someone likely to have the least amount of financial needs?
- Childhood. (Correct)
- Teenager. (The least amount of financial needs are likely to arise in childhood.)
- Young adult. (The least amount of financial needs are likely to arise in childhood.)
- Old age. (The least amount of financial needs are likely to arise in childhood.)
A: Childhood.

Q: Someone who has regular bills will

most commonly use which of the following to pay them?
- Cash. (Direct debits are commonly used to pay regular bills.)
- Cheques (Direct debits are commonly used to pay regular bills.)
- Debit cards. (Direct debits are commonly used to pay regular bills.)
- Direct debits. (Correct.)
A: Direct debits.

Q: Maggie wants to send her nephew £100 for his 21st birthday next week. They both live in

England but are 250 miles apart, so she will send it by first class post with his birthday card.

What will be the most secure method of payment?
- Cash. (There is no guarantee that the card will be delivered so cash would be risky. She would be better using a cheque.)
- Cheque (Correct. Cheque will be more secure than enclosing cash.)
- Debit Card (A cheque would be the best way.)
- Standing order (A cheque would be the best way.)
A: Cheque

Q: Which of the following is true in relation to credit cards?

The holder:
- has to pay a higher rate of interest if they only pay the minimum balance. (Interest is fixed for the months repayments regardless of amount paid.)
- has to pay the full balance at the end of each month to avoid fees. (Fees are payable on cash withdrawals even if balance has been repaid in full.)
- will be given a credit limit based on their fixed monthly payments. (This relates to some store cards but not credit cards.)
- will pay no interest on purchases if the monthly balance is paid in full. (Correct. The amount must be paid in full including all interest, with no additional purchases made (doesn’t apply to cash withdrawals) for no interest to be added)
A: will pay no interest on purchases if the monthly balance is paid in full.

Q: Which of the following is a feature of permanent health insurance (PHI)?

It will:
- only cover people who have no sick pay conditions in their employment contract. (Any ‘employed’ person can take out PHI.)
- only cover the cost of medical bills related to specified illnesses. (PHI covers accident and inability to work through a wide range of injuries.)
- pay out a lump sum if the insured is diagnosed with a specific illness. (This is critical illness cover not PHI.)
- pay out a regular amount if the insured is unable to work because of illness. (Correct.)
A: pay out a regular amount if the insured is unable to work because of illness.

Q: Which of the following is

not a requirement for a standing order payment?
- Beneficiary bank details. (Both are made via computer systems.)
- Regular amount. (The regular amount of the standing order is a requirement.)
- Regular frequency. (The frequency of the payment is a requirement.)
- Trust in the payee’s collection procedure. (Correct. Trust in the payee's collection procedure is not a requirement for a standing order payment.)
A: Trust in the payee’s collection procedure.

Q: Protection products are designed to provide funds in the event of:
- a fall in the value of investments. (Protection products are not designed to provide funds in the event of a fall in the value of investments; these can rise or fall at any time)
- death, loss of income or loss or damage to property. (Correct. Protection products are designed to provide funds in the event of death, loss of income or loss or damage to property; this is, therefore, the correct answer.)
- death or loss of income only. (Protection products are not designed to provide funds in the event of death or loss of income only; they can also provide funds in the event of loss or damage to property)
- death only. (Protection products are not designed to provide funds in the event of death or loss of income only; they can also provide funds in the event of loss or damage to property)
A: death, loss of income or loss or damage to property.

Q: What type of product is designed to provide an income in old age?
- Insurance. (Insurance would not be expected to provide an income.)
- Investment. (Investment would be expected to provide an income but it is rather risky and so would be less appropriate in the old age stage of the personal life cycle.)
- Pension. (Correct. A pension would be expected to provide an income in old age.)
- Protection (Protection would not be expected to provide an income.)
A: Pension.

Q: What type of product is designed to provide an income or lump sum in the event of accident, illness or death?
- Insurance. (Correct. Insurance is designed to provide an income or lump sum in the event of accident, illness or death.)
- Investment. (Investment is not related to protection in the event of accident, illness or death.)
- Mortgage. (A mortgage is not related to protection in the event of accident, illness or death.)
- Pension. (A pension is not related to protection in the event of accident, illness or death.)
A: Insurance.

Q: The term used to describe the cost of protection products is:
- contribution. (This is not the correct term.)
- interest. (This is not the correct term.)
- premium. (Correct. Premium is the correct term to describe the cost of protection products; as the text states, 'the principle with protection products is that the customer pays a price - called the 'premium' - for his protection'.)
- repayment. (This is not the correct term.)
A: premium.

Q: When investing, which of the following is required to protect the real value of the investment?

The:
- interest rate must always be fixed. (This will not guarantee that value of the investment is protected.)
- interest rate must always be variable. (This will not guarantee that value of the investment is protected.)
- investment must be in property. (This will not guarantee that value of the investment is protected.)
- return must be higher than the rate of inflation. (Correct)
A: return must be higher than the rate of inflation.

Q: The difference between the ‘buy’ and ‘sell’ prices of a currency is known as the:
- margin. (It is known as the spread.)
- range. (It is known as the spread.)
- rate. (It is known as the spread.)
- spread. (Correct)
A: spread.

Q: Typically, periods of deflation are usually accompanied by which of the following?
- High inflation. (Deflation usually has an adverse impact of employment, so unemployment levels would be high.)
- Low consumer spending. (Deflation usually has an adverse impact of employment, so unemployment levels would be high.)
- Low interest rates. (Deflation usually has an adverse impact of employment, so unemployment levels would be high.)
- Very high unemployment. (Correct)
A: Very high unemployment.

Q: Argus Bank could earn 3% by investing deposits instead of lending it to customers.

3% represents the:
- annual percentage rate. (APR is the interest/ fees charged on loans.)
- appropriate interest rate. (3% is the current market rate, usually through inter-bank lending (LIBOR rate).)
- current market rate. (Correct)
- prevailing savings rate. (3% is the current market rate, usually through inter-bank lending (LIBOR rate).)
A: current market rate.

Q: Gamma Bank is quoting an interest rate of 4%, APR 4.9%.

The 4% rate is known as the:
- banner rate. (This is an incorrect answer.)
- compound rate. (The compound rate refers to a way of calculating interest as it is compounded over a period of time but this does apply to these figures.)
- headline rate. (Correct. The 4% interest rate is known as the 'headline' rate, ie unlike APR, it does not take into account other considerations, such as an arrangement fee.)
- net rate. (The net rate is the rate after tax has been deducted; there is no reference here to either gross or net so it can be assumed that both are gross figures.)
A: headline rate.

Q: Which of the following is a key function of money?

It is a store of:
- inflation. (Inflation is the general increase in prices and fall in the purchasing value of money; it is not a key function of money.)
- lending rates. (Lending rates are not a key function of money.)
- saving rates. (Saving rates are not a key function of money.)
- value. (Correct. Money is such that you can store it without it losing value.)
A: value.

Q: If people expect a currency to weaken, they are likely to sell it. Overall what impact will this have on that currency’s exchange rates, if any?
- It will have no impact. (If people expect a currency to weaken, they are likely to sell it and this will increase the supply of the currency on the foreign exchange market; this will have an impact on its value.)
- The buying rate will fall, but the selling rate will rise. (An increase in the supply of a currency will be expected to affect both the buying and selling rate in the same way.)
- The exchange rates will fall. (Correct. An increase in the supply of a currency on the foreign exchange market will depreciate its value, ie the exchange rate will fall.)
- The exchange rates will rise. (An increase in the supply of a currency on the foreign exchange market will cause the exchange rate to fall, not rise.)
A: The exchange rates will fall.

Q: Josh went on holiday to Spain six years ago when the exchange rate was £1 = €1.70. He is

returning to Spain for his holiday again this year. The rate is now £1 = €1.16.

This means that, in terms of his spending money, his holiday will be:
- a little cheaper. (It will be more expensive. For every £100 he takes he will receive 54 Euros less now than he did six years ago.)
- exactly the same. (It will be more expensive. For every £100 he takes he will receive 54 Euros less now than he did six years ago.)
- less expensive. (It will be more expensive. For every £100 he takes he will receive 54 Euros less now than he did six years ago.)
- more expensive. (Correct)
A: more expensive.

Q: Which of the following key attributes of money means that it retains its value?

Money is:
- divisible. (The quality of divisibility does not refer to its role as a store of value. Its role as a store of value depends on it retaining its value.)
- durable. (Correct. Its role as a store of value depends on it retaining its value. In order to do this all forms of money should ideally be something that is durable so that it can be carried around, if not it would result in it losing its value.)
- not transferable. (Money must be transferable in order to be accepted as payments for goods and services.)
- standardised. (Money has to be standardised in order to be accepted but, in order to fulfil its role as a store of value, it should ideally be something that is not perishable as this would result in it losing its value.)
A: durable.

Q: Which of the following is a sign of a healthy economy?
- Low deflation. (Any form of deflation is not a sign of a healthy economy; there will be a period of reduced economic activity, often accompanied by falling prices.)
- Low inflation. (Correct. A low rate of inflation is a sign of a healthy economy; it is debatable what is actually meant by a low rate of inflation but many governments aim to try and keep it down to about 2%.)
- High deflation. (As said in A, any form of deflation is not a sign of a healthy economy, although a high rate of deflation is obviously worse than a low rate.)
- High inflation. (A high rate of inflation is not a sign of a healthy economy; it can cause a number of problems, such as a significant decline in the real value of a given sum of money.)
A: Low inflation.

Q: Which of the following would have the

greatest impact on the real value of money over time?
- Inflation. (Correct)
- State benefits. (Inflation will have the greatest impact.)
- Statistics. (Inflation will have the greatest impact.)
- The population (Inflation will have the greatest impact.)
A: Inflation.

Q: Which of the following payment methods is not used for transferring money directly from a bank account?
- Cheque. (A cheque is a payment mechanism/a way to transfer money.)
- Credit card. (Correct. Credit cards are a way of borrowing money and are not used to transfer money and value directly from a bank account.)
- Debit card. (A debit card is a payment mechanism/a way to transfer money.)
- Standing order. (A standing order is a payment mechanism/a way to transfer money.)
A: Credit card.

Q: Delta plc advertises annuities as one of its core products. Which of the following is

most likely to describe the nature of Delta’s business?
- Bank. (An annuity is the name of what can be bought from a life insurance company to provide a pension income; this answer is, therefore, incorrect.)
- Building society. (An annuity is also unlikely to be purchased from a building society.)
- Life insurance company. (Correct. It is much more likely that an annuity will be purchased from a life insurance company.)
- Open-ended investment company. (It is much more likely that an annuity will be purchased from a life insurance company. This answer is, therefore, also incorrect.)
A: Life insurance company.

Q: Which of the following gives you access to the money in your bank account?
- Charge card. (A charge card is similar to a credit card but you have to pay the balance off each month.)
- Credit card. (A credit card is a form of borrowing.)
- Debit card. (Correct. A debit card allows you to take money out of a current account.)
- Store card. (A store card allows you to buy goods within a particular store.)
A: Debit card.

Q: How does the UK Government, as a financial services provider, differ from a high street bank?

The UK Government:
- is more accessible. (The UK Government is less accessible than a high street bank.)
- is not seeking to make a profit. (Correct)
- will always lend money more cheaply. (The UK Government will not always be the cheapest for finance.)
- will always pay higher interest. (The UK Government will not always pay the highest rates.)
A: is not seeking to make a profit.

Q: Access to the UK Government's range of NS&I products is through which of the following?
- Banks. (NS&I products are accessible through Post Office branches.)
- Building societies. (NS&I products are accessible through Post Office branches.)
- Post Offices. (Correct)
- Supermarkets. (NS&I products are accessible through Post Office branches.)
A: Post Offices.

Q: Financial planning for old age should most commonly begin at which stage of the personal life cycle?
- Teenager. (You should start planning for old age when you are in young adult so you have enough money when you reach retirement.)
- Young adult. (Correct. You should start planning for old age when you are in young adult so you have enough money when you reach retirement.)
- Mature adult (You should start planning for old age when you are in young adult so you have enough money when you reach retirement.)
- Middle age. (You should start planning for old age when you are in young adult so you have enough money when you reach retirement.)
A: Young adult.

Q: What is the cost of an insurance policy to a policyholder known as?

The:
- administration fee. (Policyholders are charged a premium.)
- interest. (Policyholders are charged a premium.)
- policy fee. (Policyholders are charged a premium.)
- premium. (Correct)
A: premium.

Q: Who is

most likely to be 'risk averse'?  Someone who:
- has debts. (Someone who has dependants is most likely to be risk averse.)
- has dependants (Correct)
- is unemployed. (Someone who has dependants is most likely to be risk averse.)
- is wealthy. (Someone who has dependants is most likely to be risk averse.)
A: has dependants

Q: What is the

advantage of telephone banking to the consumer?
- Increased convenience. (Correct. Increased convenience is a likely advantage of telephone banking to the consumer, saving the time and effort of going to a bank branch.)
- Increased security. (Increased security is not likely to be an advantage of telephone banking; in fact, security issues could be regarded as a potential disadvantage of telephone banking)
- Reduced banking charges. (Telephone banking is not necessarily going to reduce banking charges to the consumer.)
- Reduced delay in cheque clearance. (Telephone banking is not necessarily going to reduce the delay in clearing cheques.)
A: Increased convenience.

Q: Which of the following is a

disadvantage of Internet banking to the consumer?
- Accounts are more vulnerable to fraud. (Correct. A greater vulnerability to fraud is a potential disadvantage of Internet banking to the consumer.)
- Banking charges are greater than on the high street. (Banking charges are likely to be lower than on the high street.)
- Cheques take longer to clear. (Cheques will not necessarily take any longer to clear.)
- New accounts cannot be opened online. (New accounts can be opened online.)
A: Accounts are more vulnerable to fraud.

Q: In which personal life cycle stage is an individual

most likely to be dependent on their children?
- Young adult. (Children of individuals in young adulthood would not be old enough to support them.)
- Mature adult. (Most individuals would still be working and, therefore, not be dependant on their children.)
- Middle age. (Most individuals would still be working and, therefore, not be dependant on their children.)
- Old age. (Correct. During this period of time individuals are most likely to become physically and financially dependent on their children.)
A: Old age.

Q: If there was no consumer protection in financial services, what would most likely happen?

The:
- level of competence of financial advisers would reduce. (Correct)
- number of consumers would increase. (This would be unlikely to happen as a result.)
- number of financial services companies would reduce. (This would be unlikely to happen as a result.)
- sale of pensions and investments would reduce. (This would be unlikely to happen as a result.)
A: level of competence of financial advisers would reduce.

Q: By making which of the following throughout their earlier years will give people greater choice when they reach the old age stage of the personal life cycle?
- A will. (Making financial provision gives people greater choice when they reach old age.)
- Financial provision. (Correct)
- Friends. (Making financial provision gives people greater choice when they reach old age.)
- Plans. (Making financial provision gives people greater choice when they reach old age.)
A: Financial provision.

Q: Which of the following has had the

least impact on consumer protection in financial services?
- Demutualisation. (Correct)
- Legislation. (Legislation has had a major impact on consumer protection.)
- Regulatory bodies. (Regulatory bodies have had a major impact on consumer protection.)
- Government Intervention. (Government intervention has had a major impact on consumer protection.)
A: Demutualisation.

Q: Who enforces the Data Protection Act?

The:
- Bank of England. (The Information Commissioner enforces the Data Protection Act.)
- Data Protection Officer. (The Information Commissioner enforces the Data Protection Act.)
- Financial Ombudsman Service. (The Information Commissioner enforces the Data Protection Act.)
- Information Commissioner. (Correct)
A: Information Commissioner.

Q: Improvements in which of the following have enabled the general population to become more socially mobile?
- Education (Correct. Improvements in education have enabled the general population to attain qualifications, which allows them to become more socially mobile, through acquiring jobs that increase income.)
- Health care (Improvements in health care have enabled the general population to live longer, but this does not affect social mobility.)
- Housing policy (Improvements in housing policy may enable the general population to afford a place to live, but this will not directly affect social mobility.)
- Social security. (Improvements in social security may ensure that the general population enjoy a basic standard of living, but this will not directly affect their social mobility.)
A: Education

Q: What is professional indemnity cover designed to provide?
- Compensation for clients who have been given bad or negligent advice. (Correct)
- Income for the adviser in times of low activity. (Professional indemnity cover protects consumers who have been given bad or negligent advice.)
- Insurance against loss of profits if the adviser is unable to work due to accident or illness. (Professional indemnity cover protects consumers who have been given bad or negligent advice.)
- Reimbursement for the adviser in the event of fraud by the customer. (Professional indemnity cover protects consumers who have been given bad or negligent advice.)
A: Compensation for clients who have been given bad or negligent advice.

Q: Which of the following is a demographic change?

The increase in the:
- life expectancy of individuals. (Correct. An increase in the life expectancy of individuals would be regarded as a demographic change because demography means the analysis of human populations.)
- membership of ‘keep fit’ clubs. (This would not be regarded as a demographic change.)
- number of cars owned by households. (This would not be regarded as a demographic change.)
- number of hours people work. (The number of hours that people work is not an example of demographic change.)
A: life expectancy of individuals.

Q: Which of the following does

not form part of a ‘fit and proper’ check?
- Competence. (There are three areas which the Financial Services Authority will look into in a 'fit and proper' check before authorising anyone; one of these is competence.)
- Experience. (Correct. Experience is not one of the three areas, which it will look into, and so this is, therefore, the correct answer.)
- Integrity. (Integrity is another one of the three areas, which the FSA will look into.)
- Solvency. (Solvency is the third area, which the FSA will look into.)
A: Experience.

Q: To assume that certain groups of people automatically share the same characteristics is known as which of the following?
- Ethics. (This is stereotyping.)
- Perception. (This is stereotyping.)
- Stereotyping. (Correct.)
- Values. (This is stereotyping.)
A: Stereotyping.

Q: Where the regulator looks into a potential adviser’s honesty, resources, skills and knowledge, this is known as what type of check?
- Competency. (Competence is one of the three areas that the FSA looks into but it is not the name of the process of checking.)
- Fit and proper. (Correct)
- Professionalism. (This is not the correct name for this type of check.)
- Reliability. (This is not the correct name for this type of check.)
A: Fit and proper.

Q: Which of the following statements about consumer protection in financial services is true?

Consumer protection:
- is only available to the elderly. (Consumer protection is available to all consumers.)
- is provided to everyone for a fee. (Consumer protection is available for free.)
- only applies to pensions. (Consumer protection applies to a wide range of financial services products.)
- would not prevent a bank from going bust. (Correct)
A: would not prevent a bank from going bust.

Q: Individual values begin to form in early childhood. Which of the following would have the

least impact on a child's values as they begin to form?
- Culture. (Culture has a significant impact on forming a child's values.)
- Family. (Family has a significant impact on forming a child's values.)
- The media. (Correct. The media is likely to have little impact on forming the values of a young child.)
- Their friends. (Friends have a significant impact on forming a child's values.)
A: The media.

Q: Which of the following statements about consumer protection is true?

Consumer protection:
- does not guarantee that processing mistakes will not happen. (Correct)
- has eliminated fraud and money laundering in the UK. (Fraud and money laundering have not been eliminated in the UK.)
- has reduced the number of financial services providers in the UK. (Consumer protection has not reduced the number of providers.)
- means that it is impossible for mistakes of any kind to happen. (Mistakes still do happen.)
A: does not guarantee that processing mistakes will not happen.

Q: Which of the following best describes the term ‘aspirations’?   The things people:
- hope for in the future. (Correct. An aspiration is something you hope will happen/ be the case in the future.)
- must have to survive. (Something you must have to survive is a need.)
- will buy next week. (Something you tend to worry about is not an aspiration, it is a concern.)
- wish they had right now. (Something you wish you had now is a want.)
A: hope for in the future.

Q: For which of the following situations is consumer protection in place?
- Hannah invested her money on the recommendation of her financial adviser, and this was bad advice. (Correct. Consumer protection is in place if a person took out a policy on the recommendation of an adviser and this turned out to be bad advice (this refers to the requirement of the Financial Services Authority that all authorised advisers hold a kind of insurance called professional indemnity cover).)
- Jeff gave his partner the PIN number for his bank account and they have withdrawn all the money without his consent. (Consumer protection is not in place in this situation; the person should not have given the PIN number.)
- Julie decided to invest in high risk shares, without seeking advice beforehand, and lost 50% of her capital when share values fell. (Consumer protection is not in place in this situation; the value of shares can go up or down.)
- Mike has miscalculated his finances, went overdrawn, and one of his cheques bounced. (Consumer protection is not in place in this situation; the person should not have gone overdrawn or should have negotiated a larger overdraft limit.)
A: Hannah invested her money on the recommendation of her financial adviser, and this was bad advice.

Q: Where a business holds information about a client, perhaps taken from a product application form, the client has legal rights as a result of which Act of Parliament?

The:
- Consumer Credit Act. (The Data Protection Act is the correct Act; 'the Data Protection Act 1998 is a law that aims to protect your privacy if businesses hold information about you'.)
- Data Protection Act. (Correct)
- Financial Services and Markets Act. (The Data Protection Act is the correct Act; 'the Data Protection Act 1998 is a law that aims to protect your privacy if businesses hold information about you'.)
- Law of Property Act. (The Data Protection Act is the correct Act; 'the Data Protection Act 1998 is a law that aims to protect your privacy if businesses hold information about you'.)
A: Data Protection Act.

Q: Rasik is keen to make sure that he has enough money to feed his family and hopes one day to buy a sports car. These are examples of:
- a need and a want. (The first is an example of a need but the second is not an example of a want.)
- a need and an aspiration. (Correct. The first is an example of a need and the second is an example of an aspiration.)
- a want and an aspiration. (The second is an example of an aspiration but the first is not an example of a want.)
- two needs. (The first is an example of a need but not the second.)
A: a need and an aspiration.

Q: An individual’s needs, wants and aspirations are influenced both by their values and external factors. Which of the following is an

external factor?
- Beliefs. (Beliefs are an internal value set.)
- Lifestyle. (Lifestyle is an internal value set.)
- Morals. (Morals are an internal value set.)
- Peers. (Correct.)
A: Peers.

Q: Which of the following would a teenager

most typically regard as an important need?
- Acceptance by peers. (Correct. Acceptance by peers is something that an adolescent would be likely to regard as an important need.)
- Career progression (This is less likely to be the case for an adolescent.)
- Explicit aspirations (Again, this is less likely to be regarded as an important need by an adolescent.)
- Positive role models. (This could be a need but is likely to be seen as less important than acceptance by peers.)
A: Acceptance by peers.

Q: David has won £1,000. He has decided to spend it on the purchase of some shares in a company he has read about in the financial pages of a newspaper.  This is an example of:
- a protection solution. (He has chosen an investment solution.)
- a retirement solution. (Investing in shares is not a retirement solution as you could loose more than you invested depending on the performance of the shares.)
- a savings solution. (He has chosen an investment solution.)
- an investment solution. (Correct.)
A: an investment solution.

Q: Sydney wants to buy a car. She already has £500 and plans to save a regular amount each month so that she can purchase a car in six months' time.  Which of the following financial services products is

most suitable for Sydney?
- A deposit account. (Correct. This would provide Sydney with the transactional needs and maximise her money through the payment of interest on her savings.)
- A mortgage account. (A mortgage account would be used to borrow money to buy a property over a long period of time.)
- An overdraft facility (This would not be suitable as she is not purchasing a car in the next six months and may save enough in that time to buy a car.)
- An unsecured loan. (This would not be suitable as she is not purchasing a car in the next six months and may save enough in that time to buy a car.)
A: A deposit account.

Q: During which of the following personal life cycle stages is an individual most likely to have surplus funds available for investment?
- Teenager. (This is unlikely to be a time when a person has surplus funds available for investment.)
- Young adult. (This is also unlikely to be a time when a person has surplus funds available for investment.)
- Middle age. (Correct. Middle age is the stage in the personal life cycle when a person is most likely to have surplus funds available for investment)
- Old age. (This is unlikely to be a time when a person has surplus funds available for investment.)
A: Middle age.

Q: Ruud needs a bank account to receive his monthly salary and to pay his various bills. Which of the following types of account would be the

most appropriate for him?
- Current account. (Correct.)
- Deposit account. (A deposit account is for savings and he might not be able to get instant / regular access to his money.)
- Loan account. (A loan account, would be to make repayments on the amount borrowed not for putting you salary into.)
- Savings account (A mortgage account, would be to make repayments on the amount borrowed not for putting you salary into.)
A: Current account.

Q: What is the

essential difference between a standing order and a direct debit?
- Direct debits are paper-based transfers whereas standing orders are made via computer (Both are made via computer systems.)
- Direct debits are transferred on the same day whereas a standing order payment takes two days. (For both money is transferred on the same day.)
- Standing orders are for a set amount but a direct debit can be for different amounts each payment. (Correct.)
- Standing orders can only be paid annually whereas direct debits can be paid as often as weekly. (Both are usually paid monthly, but could be paid weekly.)
A: Standing orders are for a set amount but a direct debit can be for different amounts each payment.

Q: A mortgage is an example of what type of product?
- Borrowing. (Correct. A mortgage is a form of borrowing.)
- Investment. (A mortgage is a form of borrowing, although buying a property could be considered an investment.)
- Protection. (A mortgage is a form of borrowing)
- Saving. (A mortgage is a form of borrowing.)
A: Borrowing.

Q: Which of the following describes a customer's instruction to a bank for it to pay a varying amount at regular intervals?
- A direct debit. (Correct. This is correct; a direct debit is where the instruction refers to varying amounts of money.)
- A legal tender arrangement. (This is incorrect; legal tender refers to particular forms of money that have to be legally accepted.)
- A revolving arrangement. (This is incorrect; revolving arrangement applies to overdrafts and some loans.)
- A standing order (This is incorrect; a standing order is a customer's instruction to a bank to pay a set amount, rather than varying at regular intervals.)
A: A direct debit.

Q: Which of the following is the most appropriate payment method where a regular monthly payment of the same amount is required?
- Charge card. (This would not be an appropriate method where regular payments are needed; it is a means of paying for purchases at a particular moment in time.)
- Cheque. (A cheque would not be the most appropriate method because the person would need to remember to write the cheque every month.)
- Standing order. (Correct. A standing order would be the most appropriate method if the monthly payments were to always be of the same amount.)
- Store card. (A store card would not be the most appropriate method; it is a means of paying for particular purchases at one time.)
A: Standing order.

Q: Which of the following is

most likely to be used for the purchase of a property?
- Buildings insurance. (Insurance will be necessary in relation to a property but it is not a means of purchasing it.)
- Mortgage. (Correct. A mortgage is most likely to be used for the purchase of a property, typically over a 25 year period.)
- Overdraft. (An overdraft allows a person to take out more money than they have in their current account. Up to a specified maximum; this figure will be well below what would be needed to purchase a property.)
- Personal loan. (A personal loan is usually for purchases of smaller items ie a car, well below the amount of money needed to buy a property.)
A: Mortgage.

Q: Which of the following relates to investments rather than savings?
- A fixed rate of interest over a given period of time. (An investment, such as in the form of shares or unit trusts, would not bring about a particular rate of interest.)
- A guarantee that the value will keep up with inflation. (There would not be a guarantee that the value will keep up with inflation.)
- A guarantee that there will be a rise in value. (There is no guarantee that the value of an investment would go up)
- There will be a risk of a fall in value. (Correct. Investments can go up or down in value; there would, therefore, be a risk of a fall in value. This would not be the case with savings.)
A: There will be a risk of a fall in value.

Q: The idea that £50 today will buy you more than in 12 months' time, is known as which of the following?
- Deferred value of money. (The time value of money is the idea that £50 today will buy you more than £50 in 12 months time.)
- Extrinsic value of money. (Extrinsic value is value not belonging to something.)
- Intrinsic value of money. (The intrinsic value of money is the value placed on it ie £1 = £1.)
- Time value of money. (Correct. The time value of money is the idea that £50 today will buy you more than £50 in 12 months time.)
A: Time value of money.

Q: A 'recession' is defined as:
- continually increasing inflation. (A recession occurs when there has been two consecutive quarters of negative growth in the economy.)
- high levels of unemployment. (A recession occurs when there has been two consecutive quarters of negative growth in the economy.)
- six months of increasing interest rates. (A recession occurs when there has been two consecutive quarters of negative growth in the economy)
- two consecutive quarters of negative growth. (Correct.)
A: two consecutive quarters of negative growth.

Q: The APR may be different from the headline interest rate because it:
- excludes mortgages. (This is incorrect.)
- includes arrangement fees. (Correct. This is correct; the APR does include such costs as arrangement fees.)
- is calculated over a six month period. (This is incorrect; APR refers to a period of twelve, not six, months.)
- takes into account the exchange rate. (This is incorrect; it does not take into account the exchange rate.)
A: includes arrangement fees.

Q: In the UK, the bank rate is set by the:
- Bank of England. (Correct. The bank rate is set by the Bank of England; its Monetary Policy Committee meets every month to determine the rate.)
- Financial Services Authority (The bank rate in the UK is not set by the Financial Services Authority.)
- Office for National Statistics. (The bank rate in the UK is not set by the Office for National Statistics.)
- Office of Fair Trading. (The bank rate in the UK is not set by the Office of Fair Trading.)
A: Bank of England.

Q: Sam repays Emma the £500 that she borrowed last year. While waiting for Sam to repay the money, which of the following risks was Emma

least likely to experience?
- Credit. (Emma was most likely to experience a credit risk as Sam might not have been able to pay back the money.)
- Exchange rate. (Correct. There would only be an exchange risk if Sam lived in another country.)
- Inflation (There could be an inflation risk.)
- Interest rate. (Interest could have been earned if Emma kept it in a savings account.)
A: Exchange rate.

Q: If interest rates are higher in the United States than they are in the United Kingdom, what is likely to happen to the US dollar?
- It will strengthen. (Correct. If the dollar strengthens you will receive less dollars for the pound)
- It will weaken. (The US dollar would strengthen.)
- The difference between the buying and selling rates will increase. (The US dollar would strengthen.)
- The difference between the buying and selling rates will reduce. (The US dollar would strengthen.)
A: It will strengthen.

Q: A method of measuring the rate of inflation in the UK is through changes in:
- Bacs. (This is a method of transferring money from one bank account to another, not a way of measuring inflation.)
- CPI. (Correct. The CPI refers to the Consumer Price Index (there is also a Retail Price Index) and this is used to measure the changes in prices of a number of goods and services in order to calculate the rate of inflation in a country.)
- exchange rate. (This shows the value of a currency against another, not the rate of inflation.)
- interest rate. (This is the cost of borrowing money or the gain from lending money, not the rate of inflation.)
A: CPI.

Q: Which of the following is

not an effect of a relatively high rate of inflation?
- People on fixed incomes will be particularly worse off. (This is an effect of a relatively high rate of inflation)
- Percentage wage increases are likely to be reduced. (Correct. Percentage wage increases are likely to be increased rather than reduced at a time of relatively high inflation.)
- The cost of goods will increase. (This is what will be happening.)
- The purchasing power of money will fall. (The purchasing power of a given sum of money will be falling at a time of inflation.)
A: Percentage wage increases are likely to be reduced.

Q: What feature makes a security ‘gilt edged’?
- Repayment at maturity is guaranteed by the government. (Correct. Gilts are bonds issued by the government, so if a security is gilt edged it is guaranteed by the government.)
- They are companies that are in the FTSE 100. (Companies are said to be listed on FTSE 100.)
- They are investments in private sector companies. (Gilts are bonds issued by the government, so if a security is gilt edged it is guaranteed by the government.)
- They are investments in public companies that have excellent profit records (Gilts are bonds issued by the government, so if a security is gilt edged it is guaranteed by the government.)
A: Repayment at maturity is guaranteed by the government.

Q: Which of the following is the main difference between a building society and a bank?

A building society:
- does not offer transaction services. (Building societies are mutual, and therefore owned by their customers.)
- is owned by its customers. (Correct. Building societies are mutual, and therefore owned by their customers.)
- is owned by its shareholders. (Building societies are mutual, and therefore owned by their customers.)
- offers various types of mortgage. (Building societies are mutual, and therefore owned by their customers.)
A: is owned by its customers.

Q: Which of the following is owned on a ‘mutual’ basis?
- Britannia Building Society. (Correct. Building societies are mutual ie owned by their members.)
- NatWest Bank. (NatWest is a bank and therefore owned by its shareholders.)
- The Bank of England. (Building societies are mutual ie owned by their members.)
- The Post Office. (Building societies are mutual ie owned by their members.)
A: Britannia Building Society.

Q: Which of the following is a

key feature of a National Savings Certificate?  It:
- can be cashed in before the maturity date with no loss of interest. (They can be cashed in before the maturity date but there would be a loss of interest involved.)
- can be easily bought and sold through a stockbroker. (It would not be bought and sold through a stockbroker.)
- guarantees a very high rate of growth for your investment. (They do not guarantee a very high rate of growth for your investment; their aim is to ensure that the increase in value beats the rate of inflation.)
- is a safe form of investment as it is backed by the government. (Correct. National Savings Certificate are a safe form of investment as they are backed by the UK Government)
A: is a safe form of investment as it is backed by the government.

Q: During the last ten years, which of the following delivery channels has had the greatest increase

in use?
- Branch-based banking. (Branch-based banking has been declining in use and a number of bank branches have closed.)
- Internet banking. (Correct. Internet banking has had the greatest increase in use during the last ten years; some accounts can only be operated through the Internet.)
- Postal banking. (Postal banking has increased but it has not had the greatest increase.)
- Telephone banking. (Telephone banking has also been increasing in use but it has not had the greatest increase.)
A: Internet banking.

Q: Why might a financial services provider contact someone, who is not an existing customer, through the post?  To:
- get their view on its service. (Non-customers will not have a view on its service.)
- inform them of price increases. (Non-customers will not normally be informed of price increases.)
- offer them products (Correct.)
- thank them for their custom. (This is not relevant for non-customers.)
A: offer them products

Q: Who administers a set of advertising regulations which aim to ensure that consumers understand the full costs and implications of any loans, and also sets out a formula for showing the APR?  The:
- Advertising Standards Authority. (This is administered by the Office of Fair Trading.)
- Financial Services Authority. (This is administered by the Office of Fair Trading.)
- Monetary Policy Committee. (This is administered by the Office of Fair Trading.)
- Office of Fair Trading. (Correct.)
A: Office of Fair Trading.

Q: When a consumer deals with a regulated financial adviser they know that the FSA has checked the adviser's credentials and is satisfied that they are 'fit and proper' to do business.  This means that the FSA is satisfied as to the adviser's:
- age, experience and knowledge. (The FSA checks their integrity, solvency and competence.)
- integrity, solvency and competence. (Correct.)
- training, skills and awareness. (The FSA checks their integrity, solvency and competence.)
- wealth, origins and background. (The FSA checks their integrity, solvency and competence.)
A: integrity, solvency and competence.

Q: Doug has too many debts and cannot afford to make his repayments as he has just lost his job.  Which of the following would be the

best for him to visit to discuss his financial problems?
- A financial services industry body. (Doug should visit his nearest Citizens Advice.)
- Citizens Advice. (Correct.)
- Financial Ombudsman Service. (Doug should visit his nearest Citizens Advice.)
- Financial Services Authority. (Doug should visit his nearest Citizens Advice.)
A: Citizens Advice.

Q: Which of the following is responsible for monitoring firms’ compliance with the Lending Code?The:
- Bank of England. (The Bank of England is the central bank of the UK and does not monitor codes of practice.)
- Financial Services Authority. (The FSA is a regulator and does not monitor voluntary codes of practice.)
- Lending Standards Board. (Correct.)
- Office of Fair Trading. (The OFT authorises and regulates credit providers but is not responsible for the Lending Code.)
A: Lending Standards Board.

Q: Which of the following is intended to protect your privacy if businesses hold information about you?  The:
- Consumer Credit Act. (The Consumer Credit Act is related to credit, not information.)
- Data Protection Act. (Correct. The Data Protection Act is intended to protect your privacy if businesses hold information about you.)
- Financial Ombudsman Service. (The Financial Ombudsman Service is not related to the protection of privacy.)
- Financial Services Authority. (The Financial Services Authority has a number of different functions but they are not related to the protection of privacy.)
A: Data Protection Act.

Q: Voluntary ‘codes of practice’ to protect consumers are usually formulated by:
- industry bodies. (Correct.)
- the Bank of England. (The Bank of England is the central bank and does not introduce codes of practice.)
- the Financial Services Authority. (The FSA is the regulator and does not introduce codes of practice.)
- the government. (The government does not usually introduce codes of practice.)
A: industry bodies.

Q: Which of the following measures is

not available to the Financial Services Authority?
- Imprisonment of persistent offenders. (Correct. This is not a sanction which is available to the Financial Services Authority.)
- Private warnings to firms to mend their ways. (This is one sanction which the Financial Services Authority can use.)
- Public reprimands which could discourage people from using a firm. (This is also a possible sanction to be employed.)
- Withdrawal of a firm’s authorisation to conduct business. (The Financial Services Authority does have the power to do this.)
A: Imprisonment of persistent offenders.

Q: The Financial Ombudsman Service can make awards up to which

maximum amount?
- £100,000. (Correct.)
- £250,000. (The maximum amount which can be awarded by FOS is £100,000.)
- £500,000. (The maximum amount which can be awarded by FOS is £100,000.)
- £1 million. (The maximum amount which can be awarded by FOS is £100,000.)
A: £100,000.

Q: Richard ignores advice and invests in a highly speculative venture and as a result he loses £10,000. Which of the following is the

most likely outcome?  He:
- can claim under the Financial Services Compensation Scheme. (Richard ignored advice therefore he knowingly took a risk, so he is unable to claim under FSCS)
- can take out enforcement action against the firm that handled his investment. (Richard ignored advice therefore he knowingly took a risk, he cannot take action against the firm as they advised him it would be risky.)
- is not protected. (Correct. He ignored advice therefore he knowingly took a risk.)
- is protected under the terms of the Consumer Credit Act. (Richard ignored advice therefore he knowingly took a risk, and therefore he wouldn't be protected against his loss.)
A: is not protected.

Q: When would it be most likely that a customer would seek specialist financial advice? When they are:
- considering a mortgage. (Correct.)
- making a deposit. (This is not a complicated transaction and so they should not require specialist advice.)
- opening a current account. (This is not a complicated transaction and so they should not require specialist advice.)
- setting up a standing order. (This is not a complicated transaction and so they should not require specialist advice.)
A: considering a mortgage.

Q: Prioritising, as part of financial planning, is all about:
- achieving your easy goals first, irrespective of importance. (Prioritising is about making reasoned decisions for long-term financial planning.)
- buying what you desire. (Prioritising is about making reasoned decisions for long-term financial planning.)
- changing goals each month depending on surplus income. (Prioritising is about making reasoned decisions for long-term financial planning.)
- deciding what goals you consider most important and ranking them to reflect this. (Correct. Prioritising is about making reasoned decisions for long-term financial planning.)
A: deciding what goals you consider most important and ranking them to reflect this.

Q: Planning to achieve realistic financial goals should always involve an element of which

of the following?
- Flexibility. (Correct. Although goals are long-term they should be flexible when circumstances change.)
- Luck. (Good financial goals and planning take away the element of luck; if luck is needed then the goal is not realistic.)
- Randomness. (Good financial goals and planning take away the element of randomness; if a goal is based on randomness then it is not realistic.)
- Risk. (Good financial goals and planning take away the element of risk; if risk is needed then the goal may not be realistic.)
A: Flexibility.

Q: Which of the following is true in relation to company shares?
- Companies pay their shareholders a fixed rate of interest. (Dividends paid to shareholders vary.)
- Profits are distributed to shareholders through dividends. (Correct.)
- Shareholders receive a guaranteed income annually. (There is no guarantee that shareholders will receive any payments.)
- Share prices will not affect the shareholder’s initial capital. (The share price does affect the shareholder's capital, as if the price falls they could loose some or all of their capital.)
A: Profits are distributed to shareholders through dividends.

Q: Which of the following is a key feature of a personal loan?
- Fixed term repayment. (Correct.)
- Payment of an arrangement fee. (Arrangement fees are not usually charged for personal loans.)
- Secured on the borrower’s house. (Personal loans are usually unsecured)
- Variable rate of interest. (Interest on a personal loan is usually fixed over the loan term.)
A: Fixed term repayment.

Q: Which of the following is a legal requirement of the cover provided to the insured by a

motor insurance policy?
- Claims by third party. (Correct. This is a RTA requirement.)
- Damage to their vehicle. (This is not legally required.)
- Injury to owner. (This is not legally required.)
- Theft of their vehicle. (This is not legally required.)
A: Claims by third party.

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How much can Helen afford and must save per month to build up the required amount for the car by her 18th birthday?
- £70. (Helen earns £240 per month; her outgoings are £110 plus half of the cost of 4 driving lessons, which comes to £40. So she has £90 left to put into her savings account.)
- £80. (Helen earns £240 per month; her outgoings are £110 plus half of the cost of 4 driving lessons, which comes to £40. So she has £90 left to put into her savings account.)
- £90. (Correct. Helen earns £240 per month; her outgoings are £110 plus half of the cost of 4 driving lessons, which comes to £40. So she has £90 left to put into her savings account.)
- £100. (Helen earns £240 per month; her outgoings are £110 plus half of the cost of 4 driving lessons, which comes to £40. So she has £90 left to put into her savings account.)
A: £90.

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Should Helen find difficulties in building up her savings, which of the elements of her

income and expenditure is flexible and could be changed allowing Helen still to achieve

her objective?
- Compact discs. (Correct. These are optional.)
- Driving lessons. (Driving lessons are required to pass her test.)
- Part-time work. (Part-time work is her only source of income.)
- Travel. (She has to pay her travel expenses so that she can get to work.)
A: Compact discs.

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Which of the following services would be the best for Helen to use to build up her reserves for the deposit of the car?
- Fixed interest savings bond. (Fixed interest savings bonds only have limited access.)
- Investment trust. (Investment trusts only have limited access.)
- Savings account. (Correct. Savings account can be used for short-term savings.)
- Unit trust. (Unit trusts are for long-term savings.)
A: Savings account.

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When choosing between services to help her build up her money, which would be the

most suitable for her? A service paying:
- 1% on the first £100 deposited, with the percentage rate rising by 1% on each of the subsequent £100 deposited. (This sort of tiered approach is not relevant to Helen as she will not be saving for long enough for this type of account to be beneficial to her.)
- a bonus of £5 when the balance reaches £500 and an overall rate of 2% pa. (Once the balance of the account reaches £500 she will withdraw the money to buy the car.)
- a rate of 4% pa on her balance. (Correct.)
- interest at a percentage point above the standard rate of 4% and requiring an opening deposit of £200. (She does not have the opening deposit, therefore she could not open this type of account.)
A: a rate of 4% pa on her balance.

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Which of the following risks would have the biggest impact on Helen’s ability to achieve her ambitions?
- A doubling in the inflation rate relating to car prices of 2% to 4%. (This will mean an additional (2% of £2,000) £40, onto the cost of the car, which is not as much of an impact as having her hours reduced.)
- A slowing of the economy resulting in her employer reducing all part-time workers hours by half. (Correct. Loss of income of 24hrs at £5 per hour = £120 per month, and will take her twice as long to save.)
- An increase in travel fares of 5%. (This will only mean an additional (5% of £10) 50p per month on her travel expenses.)
- The introduction of a monthly standing charge on her mobile phone, which would add £5 to her bill. (This will only mean an additional £5 per month to her expenses.)
A: A slowing of the economy resulting in her employer reducing all part-time workers hours by half.

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Which of Jo’s following expenses is she required to pay by law?
- Deposit on field trip. (No contract exists so the deposit for the field trip is optional.)
- Motor insurance. (Correct. Road Traffic Act requirement for third party cover.)
- Petrol. (Petrol is considered an optional cost.)
- Rent. (She is paying her rent in advance and there is no evidence of a contract for a set period.)
A: Motor insurance.

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As Jo receives a lump sum support payment from her grandparents in September, at the beginning of the academic year, she must be careful to put aside any surplus money she has at the end of that month so that it is available for the remainder of the year.

Taking into account all her planned income and expenses how much money will Jo have left over as surplus at the end of the month?
- £600. (Jo would have £3,200 left at the end of September.)
- £1,600. (£1,600 is the amount of her student loan.)
- £2,800. (£2,800 is the amount of her total outgoings in September.)
- £3,200 (Correct. Jo's income £4,000 (from grandparents) + £1,600 (loan) + £400 (pay cheque) = £6,000. Outgoings £1,000 (tuition) + £1,000 (rent/ deposit) + £100 (field trip) + £700 (expenditures) = £2,800. Surplus £3,200.)
A: £3,200

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Which of the following services would be best for her to use?

Jo will want to ensure that the money left over at the end of September is safe, secure and available for use later in the year and also earning her some return. Jo will want to ensure that the money left over at the end of September is safe, secure and available for use later in the year and also earning her some return.
- Premium Bonds. (They are safe, have the possibility of earning interest, although they are not easy to access.)
- Savings account. (Correct. They are safe, interest bearing and easy to access.)
- Shares. (Shares are a high risk and long-term investment option.)
- Unit trusts. (Unit trusts are for long-term investments and have limited access.)
A: Savings account.

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Jo realises that she will often be travelling when the rent on her flat becomes due.  Which of the following payment methods could she use to ensure that the payment is made on time?
- Cheque. (A cheque would have to be post dated and is not secure.)
- Debit card. (It is unlikely that an individual landlord would have this facility.)
- Direct debit. (A direct debit is not available to Jo.)
- Standing order. (Correct. Standing orders ensure payments are made regularly and on time.)
A: Standing order.

Q: In making and paying for her travel arrangements, which of the following payment methods would provide her with additional benefits in the form of travel insurance?
- Charge card. (Some credit cards offer limited travel insurance cover.)
- Cheque. (Some credit cards offer limited travel insurance cover.)
- Credit card. (Correct. Some credit cards offer limited travel insurance cover.)
- Debit card. (Some credit cards offer limited travel insurance cover.)
A: Credit card.

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What is the largest amount they are likely to be able to borrow bearing in mind their income?
- £105,000. (Correct. 3 times salary.)
- £140,000. (4 times salary.)
- £210,000. (6 times salary.)
- £245,000. (7 times salary.)
A: £105,000.

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Which of the following protection products would be unnecessary in Brian and Mary’s situation?
- Building insurance. (There is no mention of existing household cover in the case study.)
- Critical illness cover. (Brian’s sick pay cover stops after 12 months.)
- Life assurance. (There is no mention of existing life cover in the case study.)
- Medical insurance. (Correct. They have full BUPA cover.)
A: Medical insurance.

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Which of the following mortgage arrangements would be most appropriate for Brian and Mary?
- Base rate tracker. (This is not a vital benefit.)
- Capped. (This is not a vital benefit.)
- Fixed rate. (Only limited interest rate rises, fixing rate does not seem vital here.)
- Flexible. (Correct. With increasing salary and desire to repay amounts flexibility is key for them.)
A: Flexible.

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Brian and Mary face a number of risks but Brian’s contract of employment is very favourable providing him with a lot of protection. However, which of the statements best describes their situation?
- Although well covered they do need to consider additional cover for both illness and death. (Correct.)
- The employment contract provides them with all the life cover the family need. (They do have gaps in their life cover.)
- The sickness cover provided will protect them fully in all situations of bad health. (They do not have critical illness cover.)
- They are fully protected by the employment contract in respect of illness but require more cover in respect of death. (They are not covered for long-term sickness (maximum of 12 months only).)
A: Although well covered they do need to consider additional cover for both illness and death.

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Given the type of financial products that Brian and Mary will be purchasing, which type

of adviser would provide them with the most choice and appropriate protection?

An:
- authorised independent adviser. (Correct. An independent adviser would have the widest possible product range.)
- authorised tied adviser. (They have a wide range of financial needs and a tied agent's product coverage is limited.)
- unauthorised independent adviser. (Advisers cannot be unauthorised.)
- unauthorised tied adviser. (Advisers cannot be unauthorised.)
A: authorised independent adviser.

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Which of the following risks is likely to have the least harmful affect upon the Greens’ financial situation?

An increase:
- in rate of commission charged by estate agents on property sales. (This would increase the cost of selling their house.)
- in the Bank of England bank rate. (Correct. This would increase the interest rate and the value of their savings.)
- in the rate of stamp duty on property transactions. (Stamp duty may have a negative effect on selling their property.)
- on the rate of income tax charged on interest from savings. (This would have a negative effect on their savings.)
A: in the Bank of England bank rate.

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If they wished to provide themselves with cover against the most serious types of medical problems, which of the following would give them the highest value financial protection?
- Critical illness cover. (Correct. Lump sums if specified illnesses are diagnosed.)
- Payment protection plan. (This is only linked to purchases made on credit terms.)
- Permanent health insurance. (PHI will cover lost income if unable to work for long periods.)
- Medical insurance. (Medical insurance will cover incurred bills.)
A: Critical illness cover.

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Which would best describe the source of advice they have chosen for the potential

investment of their £100,000?  An adviser:
- able to give guidance about investments up to a limited value. (Banks are tied agents and therefore only offer a limited range of product choice.)
- providing a full choice of products from different providers. (Banks are tied agents and therefore only offer a limited range of product choice.)
- providing information about a limited range of products and alternatives. (Correct. Banks are tied agents and therefore only offer a limited range of product choice.)
- who could potentially be influenced by commission paid by different financial institutions. (Banks are tied agents and therefore only offer a limited range of product choice.)
A: providing information about a limited range of products and alternatives.

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Which of the following savings and investment products would best suit the Green’s

situation and attitude?
- Investment trust. (Investment trusts are high risk and the Greens are cautious investors.)
- National Savings and Investments (Correct. NS&I products are low risk and the Greens are cautious investors.)
- Open-ended investment company (OEIC). (OEICs are high risk and the Greens are cautious investors.)
- Shares (Shares are medium to high risk and the Greens are cautious investors.)
A: National Savings and Investments

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Which of the following investment and savings products may provide them with the opportunity for a saving in tax payments?
- Building society savings account. (Building society savings accounts are taxable.)
- Gilt edged securities. (Gilt-edged savings accounts are taxable.)
- Individual savings account (ISA). (Correct. ISAs are tax free within specific limits.)
- Unit trusts. (Unit trusts are taxable.)
A: Individual savings account (ISA).

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Which of the following is the most important for Harry to consider before investing?
- As a shareholder he will have a vote at the company AGM and thus a say in how the company is run. (This is true but not the most important consideration.)
- He may not receive any dividends if the companies he invests in make a loss. (This is true but not the most important consideration.)
- The dividends from the shares are likely to go up and down with the level of profits made by the companies. (This is true but not the most important consideration.)
- The value of the shares can go up and down. (Correct. This is the key consideration)
A: The value of the shares can go up and down.

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Harry is keen to leave something to his children when he dies and is worried about the loss in value of his savings. Which of the following risks is the most likely to have an effect upon their value?
- Capital gains tax payable by his benefactors. (CGT not payable in these situations.)
- Possible rises in inflation and the retail price index. (Correct. This could erode the value of his savings.)
- The amount of income tax payable on his interest. (He will be below the tax threshold.)
- The inheritance tax payable on his estate. (IHT is only payable on estates much larger than Harry's.)
A: Possible rises in inflation and the retail price index.

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Which of the following is likely to offer the highest rate of interest for Harry’s savings?
- Bank savings account. (Bonds generally have a longer term and will yield better interest rates.)
- Building society fixed interest bond. (Correct. Bonds generally have a longer term and will yield better interest rates.)
- Building society share account. (Bonds generally have a longer term and will yield better interest rates.)
- National savings fixed interest account. (Bonds generally have a longer term and will yield better interest rates.)
A: Building society fixed interest bond.

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Which of the following is likely to provide the best interest rate for the money that Harry wishes to be readily available?
- Bank savings account. (With lower cost bases telephone accounts generally offer better instant access rates.)
- Building society savings account (With lower cost bases telephone accounts generally offer better instant access rates.)
- Current account. (With lower cost bases telephone accounts generally offer better instant access rates.)
- Telephone bank savings account (Correct. With lower cost bases telephone accounts generally offer better instant access rates.)
A: Telephone bank savings account

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Which of the following should Harry approach for the widest range of advice?
- Authorised building society mortgage adviser. (Building societies are tied agents and can only offer limited advice.)
- Chartered accountant (Chartered accountants are tied agents and can only offer limited advice.)
- FSA authorised bank employee (FSA authorised bank employees are tied agents.)
- Independent financial adviser. (Correct. IFAs offer the widest range of advice.)
A: Independent financial adviser.

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The interest rate that the garage and bank both would have quoted Ali is the:
- AER. (The interest rate quoted on loans is APR.)
- APR. (Correct.)
- Bank rate. (The interest rate quoted on loans is APR.)
- Loan rate. (The interest rate quoted on loans is APR.)
A: APR.

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Before the bank agreed Ali's loan they would have completed which of the following on Ali?
- Credit scoring. (Correct.)
- Guarantee insurance (The bank would have completed credit scoring on Ali.)
- Payment protection. (The bank would have completed credit scoring on Ali.)
- Risk reduction. (The bank would have completed credit scoring on Ali.)
A: Credit scoring.

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Which of the following would be the best way for Ali to pay for his car running costs and fuel?
- Credit card. (Correct.)
- Mortgage. (A credit card would be the best way.)
- Personal loan. (A credit card would be the best way.)
- Store card. (A credit card would be the best way.)
A: Credit card.

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Which of the following would be an unplanned expense for Ali in respect of his car?
- Fuel. (Fuel would be a planned expense)
- Insurance. (Insurance would be a planned expense, especially as he is paying by monthly direct debit.)
- Repairs (Correct.)
- Road tax. (Road tax would be a planned expense.)
A: Repairs

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Which of the following would be covered by Ali's car insurance?
- His car. (He is only insured third party, fire and theft so his car would not be covered.)
- His injury. (He is only insured third party, fire and theft so his injury would not be covered.)
- His laptop. (He is only insured third party, fire and theft so his laptop would not be covered.)
- The other car. (Correct.)
A: The other car.

Q: Which of the following is the least important factor when considering personal financial aspirations?
- Fashion. (A – Correct. Aspirations are long-term and fashion is not relevant.)
- Resources. (B – Resources are relevant, as they will affect the aspiration/ timescale.)
- Risk appetite. (C – Risk appetite is relevant, as it will affect the aspiration/ timescale.)
- Timescales. (D – Timescales are relevant as they affect the aspiration/ when it can be achieved.)
A: Fashion.

Q: Which of the following would have the most positive impact on a person's financial plans?
- A budget. (A – A budget would have no impact.)
- A debt. (B – A debt would have a negative impact.)
- A deficit. (C – A deficit would have a negative impact.)
- A windfall. (D – Correct.)
A: A windfall.

Q: Last year Paul invested some money in five year NS&I fixed-interest savings certificates. Which of the following does not apply to this investment?
- All of the money that Paul has invested is safe. (A – This does apply - all of his money is safe. NS&I investments are backed by the UK Government.)
- If interest rates go up, Paul can still benefit from the increase. (B – Correct. Paul cannot benefit because his interest was fixed for the full five years when he made the original investment.)
- The interest Paul will receive is known at the outset. (C – This does apply - because the interest rate is fixed Paul will know exactly how much he will earn on his investment over the five years.)
- The interest that Paul earns is tax-free. (D – This does apply - interest earned on NS&I savings certificates is paid to investors free of Income Tax.)
A: If interest rates go up, Paul can still benefit from the increase.

Q: Which of the following is an advantage to an account holder of having an agreed overdraft?
- It enables the bank to significantly reduce its administration costs. (A – This is an advantage for the bank not the account holder.)
- It gives the account holder the flexibility to cope with irregular cash flow. (B – Correct.)
- The account holder may incur charges if they exceed their set limits. (C – This is a disadvantage for the account holder.)
- The bank will charge a fixed rate of interest on the overdraft amount. (D – Interest rates on overdrafts vary over time.)
A: It gives the account holder the flexibility to cope with irregular cash flow.

Q: Shona is worried about falling ill. She is concerned about being faced with the ongoing

costs of private treatment, because she is worried about waiting lists for treatment on

the NHS.

Which of the following should she consider?
- Critical illness insurance. (This will pay a lump sum on diagnosis of a specified critical illness, but does not pay ongoing medical costs.)
- Life assurance. (This pays out a lump sum on the death of the assured.)
- Medical insurance. (Correct.)
- Permanent health insurance. (This pays out a proportion of the insured's income if they are too ill to work.)
A: Medical insurance.

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How much of a monthly increase in his allowance will Derek need to cover all of his expenses, excluding his tour costs?
- £5. (Derek gets a monthly allowance of £175, his monthly expenses are £200 (£2,400 divided by 12). Which leaves him with a £25 deficit.)
- £25. (Correct. Derek gets a monthly allowance of £175, his monthly expenses are £200 (£2,400 divided by 12). Which leaves him with a £25 deficit.)
- £50. (Derek gets a monthly allowance of £175, his monthly expenses are £200 (£2,400 divided by 12). Which leaves him with a £25 deficit.)
- £75. (Derek gets a monthly allowance of £175, his monthly expenses are £200 (£2,400 divided by 12). Which leaves him with a £25 deficit.)
A: £25.

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If he starts part-time work whilst studying how much will Derek be able to save towards his cricket tour each month?
- £45. (£45 is the amount of house keeping Derek will need to pay his parents when he starts working.)
- £130. (Correct. Derek gets a monthly allowance of £175; if he works in the kitchen he will earn £200 (£4 x 50 hours), which gives him a monthly income of £375. His monthly expenses are £200 (£2,400 divided by 12), and £45 housekeeping. £375 minus £245 leaves him £130 to save.)
- £155. (£155 is the monthly earning Derek will receive from working in the kitchen minus the £45 housekeeping he needs to pay his parents; it doesn't take into account his allowance or his other expenses.)
- £200. (£200 is Derek’s monthly earnings from working in the kitchen, it doesn't take into account his allowance, expenses or housekeeping.)
A: £130.

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Which of the following products is suitable in Derek’s situation?
- Life insurance. (Derek will be earning and is likely to need a bank account to receive his wages and to make payments to other people. He will not need life assurance at this stage.)
- Occupational pension. (Derek will be earning and is likely to need a bank account to receive his wages and to make payments to other people. He will not need to start a pension at this stage.)
- Transactional bank account. (Correct. Derek will be earning and is likely to need a bank account to receive his wages and to make payments to other people.)
- With-profits bond. (Derek will be earning and is likely to need a bank account to receive his wages and to make payments to other people.)
A: Transactional bank account.

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If he starts part-time work, which of the following products would also be suitable for Derek?
- A bond. (Bonds are generally long-term savings products.)
- A cash ISA. (Cash ISAs are long-term savings products.)
- A savings account. (Correct. Savings accounts allow for regular savings, withdrawals and pay interest.)
- A unit trust. (Unit trusts are usually long-term savings products.)
A: A savings account.

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What would be the most effective way of Derek’s parents paying him his allowance?
- Bacs. (Bacs would not be available to them.)
- Cash. (Cash is an insecure way of giving Derek £175 every month.)
- Cheque. (A cheque could be lost and needs paying in, so it isn't as convenient as a standing order.)
- Standing order. (Correct. Standing orders are a method of automatic transfer, which allow people to make regular payments on set dates.)
A: Standing order.

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Based on the details above how much of Olivia’s monthly income should be left at the

end of each month?
- £100. (Olivia has £150 left at the end of each month.)
- £125. (Olivia has £150 left at the end of each month.)
- £150. (Correct. Olivia's monthly income is £1,200; her outgoings £75 (credit card bill) + £100 (student loan) + £325 (rent) + £50 (utility bills) + £500 (other expenses) = £1,050. Balance = £150.)
- £175. (Olivia has £150 left at the end of each month.)
A: £150.

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Which of the following would be the best way of Olivia repaying some of her credit card debt immediately and reducing the amount of interest she pays?
- Stop paying her council tax. (Council tax is not an optional cost.)
- Stop repaying the student loan. (Olivia cannot stop making student loan repayments as they are taken directly from her salary, as she earns over £14,000.)
- Take out a personal loan. (Olivia's overdraft facility is interest-free, whereas credit cards/ personal loans are not.)
- Use her overdraft facility. (Correct. Olivia's overdraft facility is interestfree therefore it is cheaper to borrow on her overdraft than on her credit card.)
A: Use her overdraft facility.

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Which of the following would be the best advice for Olivia at the moment?
- Do not pay National Insurance and utility bills and use this to increase credit card (National Insurance and utility bills are not optional costs.)
- Keep to a monthly budget and stop using her credit card. (Correct. Good budgeting and reduction of credit card debt is the best approach.)
- Start a savings account and use this to repay credit card bill in 12 months. (The interest rates for credit cards are usually higher than the return on a savings account.)
- Use monthly budget excess to increase repayments of student loan. (Student loans usually have very low interest rates, as such it would be better to reduce the credit card debt than the student loan.)
A: Keep to a monthly budget and stop using her credit card.

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Which of the following payment methods would be the  best way of ensuring Olivia

allocates her unspent monthly income to a specific purpose?
- Bacs. (Bacs would not be available to her.)
- Cash. (If paying by cash she could forget to save.)
- Cheque. (If paying by cheque she could forget to save/ forget to pay the cheque in.)
- Standing order. (Correct. A standing order ensures that savings are taken on the same date every month.)
A: Standing order.

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Which of the following financial priorities should Olivia arrange first once she has

resolved her debt repayment problems?
- Inheritance tax (IHT is only payable on large estates at time of death.)
- Life assurance. (Olivia has no dependants so life assurance is not a priority.)
- Pension arrangements. (Pension arrangements, although important, are not a priority for Olivia at this stage.)
- Saving towards property deposit. (Correct. Olivia wants to purchase her own property and a deposit will be needed.)
A: Saving towards property deposit.

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What should Tom and Janice's immediate financial priority be?

To:
- increase the mortgage because it is much lower than the value of their house. (Their priority should be to make better arrangements for their monthly surplus cash.)
- make better arrangements for their surplus cash each month. (Correct)
- move to a larger property because they do not have a spare bedroom. (Their priority should be to make better arrangements for their monthly surplus cash.)
- sell the property and invest the profit they has made (Their priority should be to make better arrangements for their monthly surplus cash.)
A: make better arrangements for their surplus cash each month.

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What will help them to identify and plan more precisely how much they can afford to save each month?
- A budget. (Correct.)
- A savings account. (A budget will help them.)
- A surplus. (A budget will help them.)
- An online bank account (An online bank account would make it easier for them to manage their account but it would not help them to plan more precisely.)
A: A budget.

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What is Tom and Janice's main risk regarding their pension planning?

That:
- interest rates may fall. (This would not affect their plans.)
- Janice may decide not to return to work. (This should not affect their plans.)
- Janice may decide to return to work. (This should not affect their plans.)
- property prices could fall (Correct)
A: property prices could fall

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Based on their financial situation, what is most likely to be the minimum amount of life cover that Tom and Janice currently hold?
- £55,000. (They should hold enough to repay their mortgage, ie £150,000. £55K = £330K minus £275K.)
- £150,000. (Correct)
- £275,000. (They should hold enough to repay their mortgage, ie £150,000. £275K = the original purchase price of their property.)
- £330,000. (They should hold enough to repay their mortgage, ie £150,000. £330K = the current value of the property.)
A: £150,000.

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Who would be the best person for them to speak to?

Tom and Janice decide that they should visit someone who can help them to get their finances better organised and to advise them on pensions and investments.
- An independent financial adviser. (Correct)
- Someone at the Office of Fair Trading. (They would be best speaking to an IFA.)
- Someone at their local Citizens Advice bureau. (They would be best speaking to an IFA.)
- Tom's father. (They would be best speaking to an IFA.)
A: An independent financial adviser.

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Which of the following risks is associated with George and Elizabeths house plans?
- House prices may fall (If house prices fall after they have sold their house and before they purchase a new one (in 2 years) they will be better off.)
- House prices may rise. (Correct. If this happens they may not be able to afford a house in two years.)
- Mortgage rates may fall. (If mortgage rates fall and George and Elizabeth still need a mortgage then this would have a positive impact on their finances.)
- The value of the stock market may rise (If this happens the value of their investment will rise.)
A: House prices may rise.

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Which of the following financial products could George and Elizabeth have tried to invest in earlier to help their current situation?
- Bonds. (Bonds require a capital sum, which they probably wouldn't have had, as they needed money to set up their own company.)
- Derivatives. (Derivatives are high risk and require a capital sum, which they probably wouldn't have had, as they needed money to set up their own company.)
- Investment trusts. (Investment trusts are high risk and require a capital sum, which they probably wouldn't have had, as they needed money to set up their own company.)
- Regular savings product. (Correct. Regular savings products would have allowed them to make small contributions.)
A: Regular savings product.

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What type of risk profile matches George and Elizabeths plans?
- Very low. (They have chosen a very high-risk investment method as it depends on house prices and the stock market both moving in the right direction.)
- Low. (They have chosen a very high-risk investment method as it depends on house prices and the stock market both moving in the right direction.)
- High. (They have chosen a very high-risk investment method as it depends on house prices and the stock market both moving in the right direction.)
- Very high. (Correct. They have chosen a very high-risk investment method as it depends on house prices and the stock market both moving in the right direction.)
A: Very high.

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Which of the following long-term products should George and Elizabeth be advised to purchase?
- Endowment policy. (If they do not have a mortgage they will not need an endowment.)
- Pension. (Correct. They are still young enough for a pension policy to be of benefit.)
- Reinsurance. (Reinsurance is only purchased by insurers.)
- Whole-of-life assurance. (George and Elizabeth already have adequate protection cover.)
A: Pension.

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Which of George and Elizabeth’s plans is the longest term?
- House sale. (The house sale is an immediate plan.)
- Retirement (Correct. George and Elizabeth are approximately 20 years away from retirement age.)
- Twins’ education. (The twins are 6 years away from being of university age.)
- World cruise. (They would like to go on the world cruise in 10 years time when the twins would have completed university.)
A: Retirement

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In order to start the process of becoming more mobile Sarah is considering

economising. In Sarah’s current situation, which of the following expenditures are

compulsory?
- Bus fare. (Correct. Sarah has to use the bus to get to college.)
- Clothes. (Currently optional, Sarah doesn’t have to buy clothes.)
- Going out. (Currently optional, Sarah doesn’t have to go out socialising.)
- Mobile phone card. (Currently optional, Sarah doesn’t have to get a mobile phone top up card.)
A: Bus fare.

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Rather than economising or borrowing money Sarah could do more babysitting and/or

more hours at the village shop. Which of the following options would pay exactly for the

cost of one driving lesson?
- 1 hour babysitting and 3 hours at the shop. (Correct. Driving lessons = £18.50, 1 hours babysitting is £3.50 and 3 hours work at the shop is £15 (£5 per hour).)
- 3 hours babysitting and 1 hour at the shop. (Driving lessons = £18.50, 3 hours babysitting is £10.50 (£3.50 per hour) and 1 hour at the shop is £5, so this is £3 short.)
- 4 hours at the shop. (Driving lessons = £18.50, 4 hours at the shop is £20 (£5 per hour), so this is £1.50 too much.)
- 4 hours babysitting. (Driving lessons = £18.50, 4 hours babysitting is £14 (£3.50 per hour), so this is £4.50 short)
A: 1 hour babysitting and 3 hours at the shop.

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Which of the following would help Sarah pay for her driving lessons?
- Go out with friends more often. (Going out with friends more often would increase Sarah’s outgoings and therefore have a negative impact on her ability to afford driving lessons.)
- Reduce her hours of babysitting. (Reducing her hours of babysitting would mean she has less income and therefore has a negative impact on her ability to afford driving lessons.)
- Reduce her spending on clothes. (Correct. Reducing her spending on clothes will mean she has more of her income available to spend on driving lessons.)
- Spend more time on her mobile phone. (Spending more time on her mobile will mean she requires more credit and lead to an increase in Sarah’s outgoings and therefore have a negative impact on her ability to afford driving lessons.)
A: Reduce her spending on clothes.

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Which of the following products would be the

most useful to Sarah in her current situation?
- Investment trust. (This is a long-term product so wouldn't be appropriate for Sarah.)
- Fixed interest bond. (Sarah does not have the capital she would need capital to take out a fixed rate bond.)
- Savings account. (Correct. This allows for regular saving and pays interest.)
- Unit trust. (This is a long-term product so wouldn't be appropriate for Sarah.)
A: Savings account.

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Currently how much money is Sarah able to save a year?
- £150. (Sarah has a total income of £110, her total outgoings are £95 Therefore she can save £15 a month, £180 a year.)
- £180. (Correct. Sarah has a total income of £110 (15 hours at the shop and 10 hours babysitting), her total outgoings are £95. Therefore, she can save £15 a month, £180 a year)
- £210. (Sarah has a total income of £110, her total outgoings are £95 Therefore she can save £15 a month, £180 a year.)
- £360. (Sarah has a total income of £110, her total outgoings are £95 Therefore she can save £15 a month, £180 a year.)
A: £180.

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Which of the following will have been deducted from Austin’s salary before it is paid into his bank account?
- Income tax only. (NI is also deducted.)
- Income tax and National Insurance contributions. (Correct.)
- Income tax and pension contributions. (Austin's pension is non-contributory.)
- Pension and National Insurance contributions. (Austin's pension is non-contributory.)
A: Income tax and National Insurance contributions.

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What type of pension scheme did Pear Tree Products change from?
- Final salary scheme. (Correct. The pension on these schemes was linked to salary.)
- Guaranteed annuity. (Guaranteed annuity is how pension payments are arranged.)
- Money purchase. (The pension on these schemes is linked to contributions and investment return.)
- Personal pension. (Personal pensions are taken out by individuals.)
A: Final salary scheme.

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Why might Constantine’s company pension be less than she was expecting?
- Annuity rates were better than predicted. (This would have increased the pension.)
- State pensions have increased. (There is no link between the two pensions.)
- The company have not maintained their level of pension contributions. (The company did maintain the contribution levels.)
- The value of the pension fund was linked to the value of the stockmarket. (Correct. There may have been a significant reduction in the value of the stock market.)
A: The value of the pension fund was linked to the value of the stockmarket.

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Instead of investing in shares, which of the following products could Constantine purchase to help her out of her predicament?
- An immediate annuity (Correct. Would turn a capital amount into regular income.)
- Funeral policy. (A funeral policy has no savings return.)
- Growth bond. (A growth bond would only increase the capital.)
- Income protection policy. (This is income replacement for the 'employed'.)
A: An immediate annuity

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When selecting her portfolio of shares, which characteristics should they possess to meet her needs?

Those:
- in emerging industries. (Constantine is looking to increase her income and therefore should look for stocks with a good dividend to capital ratio, emerging industries are risky.)
- with a good capital growth potential. (Constantine is looking to increase her income and therefore should look for stocks with a good dividend to capital ratio.)
- with a good dividend ratio. (Correct. Constantine is looking to increase her income and therefore should look for stocks with a good dividend to capital ratio.)
- with a high risk/reward. (Constantine is looking to increase her income and therefore should look for stocks with a good dividend to capital ratio, high risk investments would not meet her needs)
A: with a good dividend ratio.

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What state benefit is Constantine entitled to?
- Attendance Allowance. (Constantine does not need assistance/ care and is therefore not entitled to an attendance allowance.)
- Incapacity Benefit. (Constantine is not disabled and is therefore not entitled to disability benefit.)
- Jobseekers Allowance. (Constantine is not unemployed and therefore is not entitled to job seekers allowance.)
- State pension (Correct.)
A: State pension

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The money, which Jean used to finance her property move, is most likely to have come from which of the following types of protection cover on her husband?
- Death insurance. (It is most likely to have come from life assurance cover.)
- Life assurance (Correct)
- Medical insurance. (It is most likely to have come from life assurance cover.)
- Permanent health insurance. (It is most likely to have come from life assurance cover.)
A: Life assurance

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Which of the following did Jean most likely use to finance the new car?
- Credit card. (A car purchase is most commonly financed by personal loans.)
- Mortgage. (A car purchase is most commonly financed by personal loans.)
- Overdraft. (A car purchase is most commonly financed by personal loans.)
- Personal loan. (Correct)
A: Personal loan.

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What will Jean's main financial priority be over the next five years?
- Borrowing. (Her main priority will be income as she has no job and will not be drawing her pension before she is 60.)
- Capital growth. (Her main priority will be income as she has no job and will not be drawing her pension before she is 60.)
- Income. (Correct)
- Repayments. (Her main priority will be income as she has no job and will not be drawing her pension before she is 60.)
A: Income.

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If Jean needs to borrow money over the next five years, why might a lender be concerned?

Because she:
- has no regular income. (Correct)
- has significant outgoings. (This would not usually concern a lender, provided she has income.)
- is over 55. (This would not usually concern a lender, provided she has income.)
- lives on her own. (This would not usually concern a lender, provided she has income.)
A: has no regular income.

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This is:

Jean has the maximum insurance cover available on her car.
- all inclusive. (The maximum car insurance cover is fully comprehensive.)
- executive cover. (The maximum car insurance cover is fully comprehensive.)
- fully comprehensive. (Correct)
- third, party, fire and theft (The maximum car insurance cover is fully comprehensive.)
A: fully comprehensive.

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Whilst undergoing training what is Austin’s monthly budget deficit?
- £50. (Correct. Austin’s monthly costs are £800 and his monthly income is only £750.)
- £100. (Austin’s monthly deficit is £50.)
- £450. (Austin’s monthly deficit is £50.)
- £750. (Austin’s monthly deficit is £50.)
A: £50.

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Which of the following is a

disadvantage of how Austin has decided to borrow money?
- He may be refused the credit. (He already has the credit card, so credit has been agreed.)
- It is not convenient. (Paying by credit card is very convenient.)
- The interest rate is higher than others available. (Correct. Lower interest rates are available but they are not as convenient as a way to borrow as a credit card/ not as easy to pay bills.)
- There will be a redemption penalty. (No redemption penalty exists for credit cards.)
A: The interest rate is higher than others available.

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When Austin starts to receive his new salary, which of the following should he do as a

priority?
- Buy a new car. (Buying a new car is an unnecessary expense.)
- Move flats. (Moving flats is an unnecessary expense.)
- Repay his debt. (Correct. This debt has a high interest rate, and repayment should be his priority.)
- Start saving. (The saving rate is lower than the credit interest rate, so he should pay back the debt before he starts saving.)
A: Repay his debt.

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Whilst in training what alternative to using his credit card is most appropriate for Austin?
- Mortgage. (A mortgage is only relevant for house purchase.)
- Overdraft. (Correct. The overdraft is more appropriate because it is for relatively small amounts and not a specific item such as a car.)
- Personal loan. (The overdraft is more appropriate because it is for relatively small amounts and not a specific item such as a car.)
- Unsecured loan. (Unsecured loans are expensive to repay.)
A: Overdraft.

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Which of the following financial products will be of most help to the Josephs when planning for Emily’s attendance at university?
- Endowment mortgage. (This is linked to house purchase, not saving for the future.)
- Investment bond. (Correct. This is a long-term savings option and the Joseph’s have 18 years until their baby attends university.)
- Savings account. (This is a short-term savings option, which is not suitable for the timescale.)
- Transactional account. (Very low or no interest on this account, it is designed to provide banking services, not a long-term investment opportunity.)
A: Investment bond.

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As a direct result of Emily’s birth, which of the following has changed for the Josephs?
- Ensuring continuity of income. (Correct. They now have a dependant and they require a regular income source)
- General insurance requirements (No change will be made to their general insurance requirements as a result of their daughter’s birth.)
- Making mortgage repayments. (No change will be made to their mortgage repayments as a result of their daughter’s birth.)
- Provision of banking services. (No change will be made to the banking services provided to them as a result of their daughter’s birth.)
A: Ensuring continuity of income.

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Who will be able to provide the Josephs with the widest range of advice on planning for Emily’s future?
- Accountant. (An accountant can only offer limited advice, as they are not a financial adviser.)
- Bank manager. (A bank manager can offer tied advice, which is fairly narrow/ restricted to the organisation for which they work.)
- Independent financial adviser. (Correct. An IFA is independent and looks at products from across the whole marketplace.)
- Solicitor. (A solicitor is not generally qualified to give financial advice; if they do then it will be limited.)
A: Independent financial adviser.

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Which of the following insurance products should the Josephs be advised to purchase?
- Annuity. (Annuities are used for pension payments.)
- Endowment policy. (These are linked to a mortgage.)
- Reinsurance. (Insurance companies purchase this.)
- Whole-of-life assurance. (Correct. This is necessary when a person has dependants.)
A: Whole-of-life assurance.

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What problem is associated with Emily’s grandparents’ choice of investment?
- It is not a suitable long-term investment. (A unit trust is a long-term investment.)
- The investment can only be held for 10 years. (Can be held for an unlimited period.)
- The returns are subject to value added tax. (VAT is not payable on investments.)
- The value can go down as well as up. (Correct)
A: The value can go down as well as up.

Q: Financial services regulation protects the consumer from:
- administration errors occurring. (This does not correctly complete the sentence.)
- being misled by advertisements. (Correct. This does correctly complete the sentence.)
- fluctuations in the price of shares. (This does not correctly complete the sentence.)
- insolvency of insurers. (This does not correctly complete the sentence.)
A: being misled by advertisements.

Q: When someone buys something, the basic rule is:
- caveat emptor. (Correct - Caveat emptor means 'let the buyer beware'.)
- post script. (No the correct answer is "Caveat emptor" which means 'let the buyer beware'.)
- pro rata. (No the correct answer is "Caveat emptor" which means 'let the buyer beware'.)
- ultra vires. (No the correct answer is "Caveat emptor" which means 'let the buyer beware'.)
A: caveat emptor.

Q: What must a financial adviser declare to the consumer when providing advice?
- How long they have been qualified. (They do not have to declare this.)
- How much commission they will be earning. (Correct.)
- How much experience they have. (They do not have to declare this.)
- What their previous role was. (They do not have to declare this.)
A: How much commission they will be earning.

Q: Which organisation has been set up to deal specifically with customer complaints?
- Financial Ombudsman Service. (Correct. The Financial Ombudsman Service has been set up to deal specifically with customer complaints.)
- Financial Services Authority. (The Financial Services Authority is an independent body that regulates the financial services industry in the UK)
- Financial Services Compensation Scheme. (The Financial Services Compensation Scheme is an industry body that protects consumers from losing money if a financial services organisation goes bust.)
- Office of Fair Trading. (The Office of Fair Trading is responsible for enforcing the Consumer Credit Act.)
A: Financial Ombudsman Service.

Q: Who pays for the services provided by the Financial Ombudsman Service?
The:
- consumer. (The services provided by the Financial Ombudsman Service are paid for by the financial services industry and so consumer is the wrong answer)
- financial services industry (Correct)
- financial services provider under investigation. (The services provided by the Financial Ombudsman Service are paid for by the financial services industry and so financial services provider under protection is the wrong answer.)
- government. (The services provided by the Financial Ombudsman Service are paid for by the financial services industry and so government is the wrong answer.)
A: financial services industry

Q: Which organisation is responsible for financial services consumer education?
- Citizens Advice. (The Citizens Advice is not responsible for financial services consumer education.)
- Financial Ombudsman Service (The Financial Ombudsman Service is not responsible for financial services consumer education.)
- Financial Services Authority. (Correct. The Financial Services Authority is responsible for financial services consumer education and so is the correct answer.)
- Office of Fair Trading. (The Office of Fair Trading is not responsible for financial services consumer education.)
A: Financial Services Authority.

Q: Jake is in financial difficulties. Which of the following is the most suitable organisation that may be able to assist him?
The:
- Citizens Advice. (Correct. The Citizens Advice would be the most suitable organisation that may be able to assist him as it is able to give advice on such matters.)
- Financial Ombudsman service. (The Financial Ombudsman Service can only help if a formal complaint by a customer cannot be resolved and so would not be appropriate.)
- Financial Services Authority. (The Financial Services Authority is the body, which regulates the financial services industry and so would not be appropriate.)
- Office of Fair Trading. (The Office of Fair Trading regulates such things as the calculation of the APR and the Consumer Credit Act and so would not be appropriate.)
A: Citizens Advice.

Q: In the UK financial services marketplace, consumers have no protection against which of the following?
- Incompetent providers. (Consumers are protected against this.)
- Interest rates moving unfavourably against them. (Correct.)
- Products which have been mis-sold to them. (Consumers are protected against this.)
- Providers who go bust. (Consumers are protected against this.)
A: Interest rates moving unfavourably against them.

Q: When entering into a personal loan agreement it is important to:
- calculate the APR. (It would not be necessary to calculate the APR as that is required to be shown by law.)
- know the provider’s solvency margin. (It would not be necessary to know the provider's solvency margin when entering into a personal loan agreement)
- understand the terms for early repayment. (Correct. It would be important to know the terms for early repayment when entering into a personal loan agreement.)
- understand your risk profile. (It would not be necessary to understand your risk profile when entering into a personal loan agreement.)
A: understand the terms for early repayment.

Q: Andrew, a depositor with Reliable Bank plc, receives formal notification that the bank has gone out of business. He does, however, have a ‘safety net’, namely the:
- Banking Sector Protection Scheme (This is a fictitious organisation.)
- Financial Ombudsman Service (The Financial Ombudsman Service deals with customer complaints; it would not be appropriate if a bank had gone out of business)
- Financial Services Compensation Scheme (Correct. The Financial Services Compensation Scheme was set up specifically to deal with such a situation and so is the correct answer.)
- Office of Fair Trading. (The Office of Fair Trading is not concerned with the consequences of a financial institution going out of business)
A: Financial Services Compensation Scheme

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Georgie and Max are thinking of investing £10,000 of their savings in shares. Which of the following will they be guaranteed to receive?
- Capital growth.
- Distribution of the company's profits.
- Nothing.
- Regular dividends.
A: Nothing.

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Which of the following is not an external factor, which would have affected their financial plan?
- Inflation. (Inflation is an external factor and could have an adverse impact on their financial plans.)
- Interest rates. (Interest rate movements are an external factor and could have an adverse impact on their financial plans.)
- Property prices. (Movement in property prices is an external factor and could have an adverse impact on their financial plans.)
- Retirement. (Correct)
A: Retirement.

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Which of the following would enable them to have treatment at a private health clinic, rather than at their local NHS hospital, if they fall ill?
- Critical illness insurance. (This pays a lump sum but only in the event of the insured being diagnosed with a critical illness.)
- Life assurance. (This pays a lump sum on the death of the insured.)
- Medical insurance. (Correct)
- Permanent health insurance. (This pays out a proportion of the insured's income if they are too ill to work.)
A: Medical insurance.

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Georgie and Max like the idea of trying to win some money, although they do not want to lose anything either.

Which of the following would suit them?
- Gambling on a horse. (Whilst they may win, they could also lose their stake money on a horse.)
- Premium Bonds. (Correct)
- The Lotto. (Whilst they may win, they could win nothing and would also not be able to get back the cost of buying the Lotto tickets.)
- Visiting the casino (Whilst they may win at the casino, they could also lose their money.)
A: Premium Bonds.

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What would have the greatest negative impact on their finances?

If:
- corporation tax went up. (They would be unaffected by changes in corporation tax.)
- income tax reduced. (This would reduce the amount of tax they paid, so it would have a positive impact.)
- interest rates went down. (Correct)
- the cost of borrowing increased. (They do not borrow any money so this would have no impact on them.)
A: interest rates went down.

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What is the advantage of leaving the money from the house sale where it is?
- It is not subject to tax. (It is subject to tax at the highest rate they pay.)
- The amount will increase in value with interest. (Correct. It is safe and bears some interest.)
- The dividend payment will match the level of inflation. (It is not a dividend and will not always match inflation although usually does.)
- The interest rate is higher than base lending rate. (It is relatively low interest rate.)
A: The amount will increase in value with interest.

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What is the advantage of following the financial adviser’s advice and moving the house sale money?
- It is a long-term investment. (Correct)
- It is not subject to tax. (Tax is payable.)
- The money will be more easily accessible. (Their will only be limited access.)
- The returns are guaranteed. (Returns are not guaranteed as based on stock market.)
A: It is a long-term investment.

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As well as the with-profits bond what other product should the financial adviser also have recommended?
- Income protection. (As they are already receiving a pension that is guaranteed.)
- Life assurance. (They have no dependants or need for life cover.)
- Regular savings plan. (They are not looking to make regular savings.)
- Savings account. (Correct. Ralph and Jan need an easy access emergency fund)
A: Savings account.

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How much of Ralph and Jan’s £100,000 is available for long-term investment?
- £70,000. (Correct. £100,000 less £5,000 for emergency fund; £5,000 for Australia and £20,000 for half share of boat.)
- £75,000. (This answer is only taking the £20,000 for the half share of a boat and the emergency fund or amount from Australia into account.)
- £80,000. (This answer is only taking the £20,000 for the half share of a boat into account.)
- £95,000. (This answer is only taking the emergency fund or amount from Australia into account.)
A: £70,000.

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The financial adviser gave Ralph and Jan inaccurate advice. How could that have occurred?

They:
- did not establish Ralph and Jan’s attitude to risk. (The product has an appropriate risk/reward profile.)
- did not establish Ralph and Jan’s needs, wants and aspirations. (Correct. The adviser failed to understand they had immediate spending needs.)
- only sold a limited product range. (Independent’s have access to the whole market.)
- were an independent adviser. (Independent’s have access to the whole market.)
A: did not establish Ralph and Jan’s needs, wants and aspirations.

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What should Susan and Paul review and reduce since finding out that Paul is being made redundant?

The family's:
- compulsory expenditure. (They should reduce their discretionary expenditure.)
- discretionary expenditure. (Correct)
- mandatory expenditure. (They should reduce their discretionary expenditure.)
- obligatory expenditure. (They should reduce their discretionary expenditure.)
A: discretionary expenditure.

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Why is Paul's redundancy likely to have such a major impact on the family's longer-term financial plans?

Because it was:
- avoidable. (Paul's redundancy was unplanned.)
- expected. (Paul's redundancy was unplanned.)
- inevitable. (Paul's redundancy was unplanned.)
- unplanned. (Correct)
A: unplanned.

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Of the four types of borrowing that the family has, how many can be easily repaid from their savings without financial penalty?
- 1 (The credit card and overdraft can be most easily repaid.)
- 2 (Correct)
- 3 (The credit card and overdraft can be most easily repaid.)
- 4 (The credit card and overdraft can be most easily repaid.)
A: 2

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Which of the following should Paul contact first when he finds out that he is going to be made redundant?
- A Citizens Advice bureau. (He should inform his bank first.)
- An independent financial adviser. (He should inform his bank first.)
- His bank. (Correct)
- The Financial Services Authority. (He should inform his bank first.)
A: His bank.

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A month after being made redundant, Paul's account goes £1,200 overdrawn. £200 of this is called:
- a free overdraft. (Because his authorised limit is only £1,000 the additional overdraft is unauthorised.)
- a temporary overdraft. (Because his authorised limit is only £1,000 the additional overdraft is unauthorised.)
- an authorised overdraft. (Because his authorised limit is only £1,000 the additional overdraft is unauthorised.)
- an unauthorised overdraft. (Correct)
A: an unauthorised overdraft.

Q: A person’s financial budgeting and planning is most likely to change:
- at the end of each tax year. (Changing plans on a yearly basis is too regular.)
- during the different stages in their life cycle. (Correct. Life cycle changes will initiate a change in financial budgeting and planning.)
- once every couple of years. (This is too vague a timescale.)
- only when they get married or have children. (You could have to review plans for other reason so not only at these times.)
A: during the different stages in their life cycle.

Q: Which of the following activities is most essential to achieving realistic lifetime aspirations?
- Aiming to reach all your goals at once. (Prioritising is important; it probably is realistic to reach all goals at the same time.)
- Comparing what you have or need with others. (Life aspirations should be personal goals.)
- Deciding what you want over the next few months. (Lifetime aspirations should be long-term.)
- Planning and setting personal goals. (Correct.)
A: Planning and setting personal goals.

Q: Which of the following would be considered a low risk investment?
- Collective schemes. (Collective schemes are considered to be high risk.)
- Company shares. (Company shares are medium to high-risk investments.)
- UK Government gilts. (Correct. Gilts are low risk investments.)
- Unit trusts. (Unit trusts are medium risk investments.)
A: UK Government gilts.

Q: Which of the following is true with regard to credit scoring?

It:
- assesses the likelihood of the credit being repaid. (Correct)
- ensures that the lender will get their money back. (Credit scoring provides no guarantee that the lender will get their money back.)
- prevents the borrower defaulting on their payments. (Credit scoring provides no guarantee that the borrower will not default on their payments.)
- sets the rate of interest charged on the loan. (Credit scoring does not determine the rate set on a loan.)
A: assesses the likelihood of the credit being repaid.

Q: Which of the following is the main purpose of an accident, sickness and unemployment policy?

To:
- cover hospital and medical bills. (Medical cover would pay for hospital and medical bills not accident, sickness and unemployment.)
- cover repayments of a specific debt. (Correct. It is usually taken out as payment protection.)
- provide a regular income. (It is not a method of income replacement.)
- supplement state benefits. (There is no link to state benefits.)
A: cover repayments of a specific debt.

Q: Match the following
- Income | Money coming in
- Expenditure | Money going out
- Surplus | Income is greater than expenditure
- Deficit | Expenditure is greater than income
Also offered: Money remaining still

Q: What is being described; " A financial plan of forecasted income and expenditure"
A: Budget
Feedback ("Budget"): Well done

Q: By what name are "perquisites" better known?
A: Perks
Feedback ("Perks"): Great

Q: What does "S2P" stand for?
- State Second Pension (Correct)
- State to Pension (No it stands for State Second Pension)
- Secondary Pension (Nearly - it stands for State Second Pension)
A: State Second Pension

Q: What is being described here:

"A low cost option for retirement, aimed at people who might not save for a pension. Financial services companies provide them."  ?????????? schemes
A: Stakeholder

Q: What is being described here:

"Pensions you set up for yourself."  ?????????? pensions
A: Personal
Feedback ("Personal"): Superb

Q: What is being described here:

"Pensions that your employer has set up for you."  ?????????? pensions
A: Occupational
Feedback ("Occupational"): Superb

Q: What is being described here:

"a share in the profits of a company"
A: Dividends
Feedback ("Dividends"): Superb

Q: What is being described here:

"financial products that give a regular income to the person who owns them, who pays a lump sum ti the provider e.g. a life assurance company, which pays a regular income in return"

NB plural
A: Annuities
Feedback ("Annuities"): Get in

Q: What is being described here:

"one-off payments, such as gifts, inheritance and even wins on the lottery"
A: Windfalls
Feedback ("Windfalls"): You rock

Q: The government allows everyone to earn an amount before you start to pay basic rate income tax - what is this called? (two words)
A: Personal allowance
Feedback ("Personal allowance"): You'd man! or you'd woman! you choose

Q: Match the following
- Income Tax | Direct tax
- Value added tax | Indirect tax
Also offered: Indirect tax

Q: How much income tax will someone who earns £60,000 per year pay?

Just type your answer in the following format  xxxxx  = no need for a £ sign and  pence to be shown
A: 15225
Feedback ("15225"): You shoot, you score!

Q: National insurance contributions (NICs) are paid on investments and rental income.
- True (No, NICs are only paid on earned income)
- False (Correct NICs are only paid on earned income)
A: False

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Assuming that Ian's earnings do not change, which of the following monthly amounts can Ian afford to save and would be sufficient to pay for his adventure holiday at the end of the six months?
- £50. (Saving £50 a month is affordable but would not provide enough savings to go on holiday in six months.)
- £100. (Correct. Income £100 (working at music shop) + £160 (allowance). Outgoings £150 leaving a surplus of £110.)
- £150. (Saving £150 a month is not affordable as Ian only has a surplus of £110 a month.)
- £200 (Saving £200 a month is not affordable as Ian only has a surplus of £110 a month.)
A: £100.

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Should Ian experience any problems with building up sufficient savings for his holidays which of the following would he not normally be capable of changing?
- Mobile phone bill. (This is a discretionary cost.)
- Part-time employment income (His boss has said that there are always more hours available, so this can be changed.)
- Socialising expenditure. (This is a discretionary cost.)
- Travel costs. (Correct. This is a fixed cost, as he needs to get to college.)
A: Travel costs.

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Whilst on the adventure holiday Ian will have to pay cash using local notes and coins for some of the adventure activities. Changes in which of the following may be the biggest risk to Ian’s ability to afford the holiday and the activities?
- Foreign currency exchange rates. (Correct. This could increase or decrease the amount of currency he receives.)
- Income tax. (Income tax is not payable by Ian.)
- Interest rate on Ian’s savings account. (The money has already been removed from his savings account.)
- National Insurance. (National insurance is only payable on earnt income.)
A: Foreign currency exchange rates.

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Which of the following features of the bank account that Ian has opened does not directly help him in achieving his aim to save for his holiday?
- Cash withdrawal card. (Correct)
- Interest on the balance. (As he saves the amount of interest earned increases.)
- Regular statements. (Regular statements allow him to track how close he is getting to the required amount.)
- Secure home for spare money. (His capital will not decrease)
A: Cash withdrawal card.

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Ian is making a choice between four different savings accounts, which have different interest rate arrangements as detailed below.

Bearing in mind the amounts of money Ian will be saving, which arrangement would be best for him?
- A fixed bonus of £30 per year provided that the balance of the account reaches a minimum of £500 in that period. (Correct. He will earn £30, as he is saving £600 and is over the £500 threshold.)
- An interest rate of 2% on the first £300 saved and 3% on amounts above. (He will earn less than £30 as 2% of £300 = £6 and 3% of £300 = £9. So he would earn £15 in total.)
- An interest rate of 1% on the first £300 saved and a fixed interest rate of £20 per (He will earn less than £30 as 1% on first £300 = £3 and £20 as he has saved over £600. So he will earn £23 in interest.)
- An interest rate of 2% on the whole amount saved. (He will earn less than £30 as 2% of = £12.)
A: A fixed bonus of £30 per year provided that the balance of the account reaches a minimum of £500 in that period.

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Which of the following in terms of Michael’s expenditures may be considered voluntary and could be delayed or avoided during his first month at university?
- Books. (This is a compulsory expenditure.)
- Halls of residence rent. (This is a compulsory expenditure.)
- Train fares. (Correct.)
- Tuition fee. (This is a compulsory expenditure.)
A: Train fares.

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Assuming that Michael has no money of his own in his bank account at the beginning of September, he has to wait until the beginning of October for his student loan, and that he takes advantage of all the help available, what is the maximum level of borrowing he will need to finance all his planned expenditure during the month?
- £400. (£400 is Michael's regular monthly expenditure, not the deficit he faces for September.)
- £700. (Correct. Income £1,200 (from parents) + £500 (hardship loan) = £1,700. Expenditure £700 (halls) + £1,100 (tuition fee) +£200 (books) + £400 (regular monthly expenditure) = £2,400. This leaves a shortfall of £700 to be covered.)
- £1,200. (£1,200 is the initial income his parents are going to give him at the start of the academic year.)
- £2,400. (£2,400 is his total expenditure for September.)
A: £700.

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Which of the following borrowing facilities would be an incorrect choice to help him with his first term payments?
- Credit card. (Correct. Borrowing on a credit card to help him with his first payments would mean that he is subject to high interest rates and cash handling charges.)
- Overdraft. (As Michael is a student it is possible that his overdraft will be interest free.)
- Personal loan. (The interest on a personal loan will be lower than on a credit card, a bank may offer a loan to a student for the long-term business opportunity.)
- Student loan. (Student loans are subject to low interest, but Michael's will not be available until 1 October, which is too late to cover his September expenses.)
A: Credit card.

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Considering Michael’s anticipated cash flow situation, which of the following payment services offered by banks, would potentially allow him to purchase his books whilst delay using the cash in his bank account until after the receipt of the student loan?
- ATM card. (ATMs remove cash directly from a current account.)
- Cheque book. (Paying by cheque could mean that the funds leave an account within 3 to 5 working days.)
- Credit card. (Correct. This is the only option to offer him the credit he needs.)
- Debit card. (Using a debit card means that the funds will leave an account within a couple of days.)
A: Credit card.

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Which of the following features of the banks’ student account services is least important to Michael during his first year of study?
- Free commission on foreign currency and travellers’ cheques. (Correct. It is unlikely that Michael will be able to afford to travel abroad.)
- Interest free overdraft. (This would be very valuable to him.)
- Railway discount card worth £50 per year. (This will be useful when travelling to university from home and back again, or visiting friends etc.)
- Vouchers for payment of mobile phone bills worth £30. (Michael does currently use a mobile phone so this would pay for 1 month’s bill.)
A: Free commission on foreign currency and travellers’ cheques.

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Bearing in mind Eric and Alison’s likely situation for the next few years, and the economic situation in the case study, which of the following types of mortgage would provide them with most confidence in their ability to afford the repayments?
- Base rate tracker. (A based rate tracker is variable so their repayments may increase to a level that they cannot afford.)
- Capped. (A capped mortgage is variable so their repayments may increase to a level that they cannot afford, although this will not go beyond a certain level.)
- Fixed. (Correct. Being on a tight budget, a fixed amount is attractive, as they will know exactly how much they need to pay each month.)
- Variable. (A variable mortgage may mean that their repayments increase to a level that they cannot afford.)
A: Fixed.

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In planning their finances and making their choice of mortgage Eric and Alison are considering whether to borrow over a short-term, of perhaps ten years, or over a longer period, of perhaps twenty five years.

In their personal circumstances, which of the following is correct and the most relevant piece of information?

The:
- longer the period of the mortgage, the lower the monthly repayment. (Correct. They cannot afford high repayments as they are on a tight budget, so making repayments over a longer period is better for them.)
- period of the mortgage makes no difference to the amount of interest paid over the life of the mortgage. (The period over which the money is borrowed does affect the amount of interest accrued, the longer the term the higher the total interest paid.)
- period of the mortgage makes no difference to the amount repaid each month. (The period over which the money is borrowed does affect the amount repaid each month, the longer the term the lower the monthly repayments.)
- shorter the period of repayment, the smaller the amount of interest paid over the life of the mortgage. (This is true, but not relevant, as they can't afford the higher repayments.)
A: longer the period of the mortgage, the lower the monthly repayment.

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If Eric and Alison could stretch their budget a little further, which of the following financial products would they be best advised to try and afford at this stage in their life?
- Additional repayments to the mortgage. (Eric and Alison have worked out what they can afford to pay toward the mortgage and should stick to this. The mortgage terms may also not allow them to change.)
- Investment policy for the children’s school fees. (Eric can afford to wait for a while before starting to save for education fees.)
- Pension. (Eric can afford to wait for a while to start paying into a pension.)
- Permanent health insurance. (Correct. Eric is self-employed so health insurance could be beneficial if Eric as the main wage earner falls ill.)
A: Permanent health insurance.

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Which of the following statements is false in respect of the risks faced by Eric and Alison and the cover that they could arrange to protect themselves?
- Alison could take out income protection cover to protect herself financially from loss of income due to ill health (This is true.)
- Eric and Alison would be advised to take out critical illness cover to protect themselves from financial difficulties arising from serious illness. (This is true.)
- Eric will be required by the mortgage provider to take out permanent health insurance to protect him from loss of income due to illness or injury. (Correct. The mortgage provider will not require Eric to take out PHI, it is an optional cover.)
- The mortgage provider will require Eric and Alison to take out buildings insurance on their home. (This is true.)
A: Eric will be required by the mortgage provider to take out permanent health insurance to protect him from loss of income due to illness or injury.

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Considering their plans, and the range of financial products that Eric and Alison are likely to require, which of the types of advice below is the most appropriate for them?
- tied/regulated. (They have a wide range of financial needs and a tied agent's product coverage is limited.)
- non-tied/unregulated. (Non-regulated advice is not available.)
- tied/unregulated. (Non-regulated advice is not available.)
- non-tied/regulated. (Correct. This is a description of an IFA and would be their best option.)
A: non-tied/regulated.

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Which of the following risks is likely to have the most beneficial effect upon the Richards’ financial situation?
- A decision by the Bank of England to control inflation by raising interest rates. (Correct. This would increase the interest rate and the value of their savings.)
- An international crisis leading to falls in the value of the stock market. (They do not currently have stock-based investments so no impact.)
- The slowing of the property market and a resulting fall in the value of private properties (The value of their house would fall, but they are not currently planning to sell the house.)
- To provide more funds to support the ageing population, the government decides to introduce a higher rate of income tax upon private pension benefits. (This would have a negative impact upon the Richards.)
A: A decision by the Bank of England to control inflation by raising interest rates.

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Which of the following risks could have the most catastrophic financial impact upon the Richards’?
- A fire at the Richards’ property that causes damage but no injury. (They are fully insured so they could make a claim to cover the cost of the damage.)
- Illness of either of the Richards. (Mr Richards is already retired and Mrs Richards would receive an early ill health pension.)
- The loss of Mrs Richards’ employment. (Correct. Mrs Richards earns £45,000 a year if she lost her job their annual income would more than halve.)
- The loss of Mr Richards’ employment. (Mr Richards’ employed income is low, as he works part-time, he would also still receive his pension.)
A: The loss of Mrs Richards’ employment.

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Which of the following benefits does Brian’s financial adviser status potentially provide?
- An unbiased choice of products from a range of providers. (Correct. IFAs can offer the widest choice across product providers and products.)
- His expertise in their specifically chosen products gained from being involved directly in their development. (IFAs can offer the widest choice across product providers and products, they are unlikely to have been involved in the product development.)
- The ability to benefit from the convenience of all the products and services being provided by one institution. (IFAs can offer the widest choice across product providers and products, if one institution provides the adviser the products and services then would be tied.)
- The financial security of a large company underpinning their chosen investments. (IFAs can offer the widest choice across product providers and products, financial security is dependent on the choices and investments made.)
A: An unbiased choice of products from a range of providers.

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Which of the following products would provide the Richards’ with the greatest potential to achieve their objectives but also the greatest risk?
- Government bonds. (Government bonds are low risk products.)
- High interest savings account. (High interest savings accounts are low risk products.)
- Premium Bonds. (Premium Bonds are low risk products.)
- Shares. (Correct. Shares are medium to high-risk investment products.)
A: Shares.

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Which of the following health insurance policies would potentially provide the highest monetary value of financial protection for the Richards, but at the same time not pay out on all occasions of sickness/illness?
- Critical illness. (Correct. Critical illness pays out large lump sums, if required.)
- Income protection. (Income protection pays a regular income if you are unable to work through illness.)
- Medical insurance. (Medical insurance pays incurred medical bills.)
- Permanent health. (Permanent health insurance pays a regular income, if you are unable to work through illness.)
A: Critical illness.

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She has considered investing her money in a range of different shares that her husband had always said ‘were worth investing in’.

Which of the following pieces of advice is inaccurate and misleading for Jane in considering this option?
- Investing money in a range of different companies’ shares spreads the risk of loss. (This is true.)
- The dividends on shares go up and down with the profits made by the company. (This is true.)
- The Financial Services Compensation Scheme will compensate her in the case of the failure of her investments. (Correct. The FSCS only pays if the company collapses.)
- The value of shares can go down as well as up. (This is true.)
A: The Financial Services Compensation Scheme will compensate her in the case of the failure of her investments.

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Should Jane take no further action, which of the following would have the biggest impact upon the value of her estate?
- Capital gains tax payable upon her death. (Capital gains tax is not payable in these situations.)
- Income tax payable on her total income including state pension and interest. (Income tax would not affect her estate, but would be payable during her lifetime.)
- Inheritance tax payable upon her death. (Correct. Inheritance tax would take a substantial part of the estate.)
- The fall in interest rates on her savings account balance. (The fall in interest rates on her savings would not affect her estate, but would affect her savings during her lifetime.)
A: Inheritance tax payable upon her death.

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Which of the following would best help Jane’s current budgetary problems?
- Guaranteed income bond. (Correct. Bonds generally have a low risk rating and will yield a regular income and better interest rates.)
- Open-ended investment company. (Bonds generally have a low risk rating and will yield a regular income and better interest rates.)
- Regular savings account. (Bonds generally have a low risk rating and will yield a regular income and better interest rates.)
- Unit-linked insurance bond. (Bonds generally have a low risk rating and will yield a regular income and better interest rates.)
A: Guaranteed income bond.

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Which of the following is likely to provide Jane with the highest interest rate on her investment?
- Bank savings account. (With lower cost bases, telephone accounts generally offer better instant access rates.)
- Building society share account. (With lower cost bases, telephone accounts generally offer better instant access rates.)
- National Savings and Investments account. (With lower cost bases, telephone accounts generally offer better instant access rates.)
- Telephone bank savings account. (Correct. With lower cost bases, telephone accounts generally offer better interest rates.)
A: Telephone bank savings account.

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If Jane takes advice from the company where her money is currently held this advice is most likely to be:
- independent. (Building societies are tied agents.)
- packaged. (Building societies are tied agents.)
- tied. (Correct. Building societies are tied agents.)
- unauthorised. (Building societies are tied agents.)
A: tied.

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What had been Sunil's aspiration when he was younger?

To:
- get a job. (His aspiration was to see the world.)
- have a credit card. (His aspiration was to see the world.)
- obtain a mortgage. (His aspiration was to see the world.)
- see the world. (Correct.)
A: see the world.

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What is a major risk to Sunil's financial plans?

That:
- he cannot rent out his flat. (Correct.)
- his credit card expires. (This is not a risk.)
- his overdraft limit is cancelled. (This is not a risk.)
- his personal loan is repaid. (This is not a risk.)
A: he cannot rent out his flat.

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What is the bank most likely to require in respect of Sunil's personal loan?

That:
- it is repaid in full immediately. (They are unlikely to require this.)
- the balance is transferred to his mortgage. (They would not require this.)
- the monthly repayments are reduced. (They are unlikely to require this.)
- the monthly repayments continue. (Correct.)
A: the monthly repayments continue.

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While he is away, what must Sunil ensure that he pays on his credit and store cards?
- His borrowing limit. (He must continue to pay the minimum monthly amount.)
- His overdraft limit. (He must continue to pay the minimum monthly amount.)
- The full balance outstanding. (He must continue to pay the minimum monthly amount.)
- The minimum monthly amount. (Correct.)
A: The minimum monthly amount.

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Which type of bank account does Sunil have?
- Current. (Correct.)
- Investment. (He has an overdraft so he must have a current account.)
- Savings. (He has an overdraft so he must have a current account.)
- Term deposit. (He has an overdraft so he must have a current account.)
A: Current.

Q: A budget is a:
- cheap way of buying what you need.
- plan of income and expenditure. (Yes)
- maximum amount that you can spend.
A: plan of income and expenditure.

Q: A budget that is ‘in deficit’ has:
- the same amount of money coming in and going out.
- more money coming in than going out.
- more money going out than coming in. (Correct)
A: more money going out than coming in.

Q: Benefits such as free tea and coffee at work, or use of the company flat, are

known as:
- salary.
- perks (Correct)
- overtime.
A: perks

Q: Products that protect you from the financial consequences of unforeseen events are usually:
- pension products.
- deposit products.
- insurance products.
A: insurance products.

Q: People become entitled to basic State Pension by paying:
- income tax.
- National Insurance contributions.
- pension credits.
A: National Insurance contributions.

Q: Which one of the following is a mandatory item of expenditure?
- Value added tax
- Insurance premiums
- Food bills
A: Value added tax

Q: Which one of the following is a discretionary item of expenditure for a car owner/driver?
- Motor insurance
- Petrol
- Vehicle tax
A: Petrol

Q: Second State Pension is abbreviated to:
- 2PS.
- PS2.
- S2P.
A: S2P.

Q: Occupational pensions are:
- arranged and paid into by your employer. (you may contribute as well)
- paid to you by the state.
- set up and paid for by each individual, separately.
A: arranged and paid into by your employer.

Q: Income tax is:
- an indirect tax.
- a direct tax.
- paid only on state benefits
A: a direct tax.

Q: Your assets are:
- the things that you own.
- the things or amounts that you owe.
- the total of your belongings less your debts.
A: the things that you own.

Q: When you have set out your financial plan:
- you should leave it alone for at least five years and just keep following the plan
- you should review it, say, once a year or if something major happens to change your circumstances
- you should review it at least once a month.
A: you should review it, say, once a year or if something major happens to change your circumstances

Q: When you are prioritising, security and protection should be:
- high on the list.
- low on the list.
- not on the list at all.
A: high on the list.

Q: Paula has chosen to invest money in a product that gives her an income. This type of product:
- uses up her money to provide the income
- leaves the original amount of money untouched
- adds significant amounts of money to her capital
A: leaves the original amount of money untouched

Q: Your ‘net worth is:
- your total assets.
- your total liabilities.
- your assets less your liabilities.
A: your assets less your liabilities.

Q: Pete wants to put his savings into a product that is safe. Which one of the following three is his best option?
- Shares in companies
- A house or flat
- National Savings and Investments (NS&I)
A: National Savings and Investments (NS&I)

Q: Which one of the following budget headings refers to money put aside for unplanned events?
- Holiday fund
- Emergency money
- Utility bills
A: Emergency money

Q: Sue’s top priority is to get a better mobile phone next year. She plans to save money every month, but she always saves is a little less than the amount that she budgeted. She should:
- not worry about it – a small amount won’t make much difference.
- change her budget to the figure that she actually saves each month.
- cut down on her spending, so that she can stick to her planned savings
A: cut down on her spending, so that she can stick to her planned savings

Q: Which one of the following is an external change that can affect budgets?
- A change in priorities
- A change in attitudes to risk
- A change in interest rates
A: A change in interest rates

Q: To maintain the purchasing power of your savings, you need to choose a savings product that:
- has an interest rate higher than inflation.
- invests in shares in high-tech companies.
- is linked to a life assurance policy.
A: has an interest rate higher than inflation.

Q: Mary wants to borrow money for a few days so she can put down one month’s rent as a deposit on a new flat. She will be able to repay the money when her salary is paid into her account. Her cheapest borrowing option is:
- an overdraft.
- a mortgage.
- a personal loan.
A: an overdraft.

Q: If you buy items on a credit card, you have to:
- repay the full amount each month.
- pay in a set amount of money every month.
- repay at least the minimum amount each month.
A: repay at least the minimum amount each month.

Q: Jen wants to borrow money to buy a car. She plans to repay the debt over three years. Her best option is to borrow using:
- an overdraft.
- a credit card.
- a personal loan.
A: a personal loan.

Q: Repossession occurs if people cannot pay their:
- credit card bills.
- mortgage repayments.
- insurance premiums.
A: mortgage repayments.

Q: If you want to know how much the repayments on your loan will be, you need to choose a:
- fixed rate.
- variable rate.
- standard rate.
A: fixed rate.

Q: As people get older, their attitude to financial risk usually:
- gets more aggressive.
- becomes more cautious.
- doesn’t change.
A: becomes more cautious.

Q: Which one of the following do we

not usually take into account when measuring risk?
- Frequency
- Severity
- Avoidability
A: Avoidability

Q: Insurance policies are a form of:
- risk transfer.
- risk avoidance.
- risk limitation.
A: risk transfer.

Q: Insurance against the risk of your belongings being damaged or stolen is called:
- third-party.
- contents.
- buildings.
A: contents.

Q: If you pay an insurance premium to your travel company to cover you against a cancelled holiday and your holiday isn’t cancelled:
- you will get your premium back.
- you will get part of your premium back.
- you won’t get any of your premium back.
A: you won’t get any of your premium back.

Q: Risk:
- should always be avoided.
- is sometimes worth taking.
- should always be taken.
A: is sometimes worth taking.

Q: Low-risk financial products usually give you:
- low rewards.
- high returns.
- a medium level of return.
A: low rewards.

Q: Someone is likely to be most financially risk-averse during:
- young adulthood.
- middle age.
- retirement.
A: retirement.

Q: Share

s pay you an income in the form of:
- rent.
- interest.
- dividends.
A: dividends.

Q: The savings in a bank account are protected (up to a maximum amount) by the:
- Financial Services Compensation Scheme.
- Financial Services Authority.
- Financial Services Ombudsman.
A: Financial Services Compensation Scheme.

Q: Jake is a single person who has a job and rents a flat. He has enough money to meet everyday expenses. His top priority financial product should be:
- emergency savings.
- pension scheme.
- contents insurance.
A: contents insurance.

Q: Kevin is risk-tolerant. He wants to maximise the potential return for his savings. The most suitable savings products are:
- National Savings and Investments (NS&I).
- shares in a number of companies.
- gilt-edged securities (gilts).
A: shares in a number of companies.

Q: Julie wants a tax-efficient savings product that gives her quick access to her money. The most suitable savings product is:
- a personal pension scheme.
- a cash individual savings account (ISA).
- a unit trust linked to a life assurance policy.
A: a cash individual savings account (ISA).

Q: Ali wants to buy a company bond. He can buy one from:
- a stockbroker.
- the local branch of his bank.
- an investment company.
A: a stockbroker.

Q: Proximity means how:
- severe the consequences of a risk are.
- close you are to the risk.
- likely a risk is to occur.
A: close you are to the risk.

Q: Monitoring and reviewing a budget should happen:
- before the planning stage.
- after implementation.
- after the planning stage, but before you begin implementing the plan.
A: after implementation.

Q: Retail investors may benefit from unit trusts and the like, because of their:
- diversification ‘risk-spreading effect’.
- focus on high-risk investments.
- focus on producing income only.
A: diversification ‘risk-spreading effect’.

Q: The process lenders use to assess the likelihood of a borrower not repaying a  loan is called:
- risk profiling.
- application limiting.
- credit scoring.
A: credit scoring.

Q: Sam has whole-of-life cover, which is:
- an insurance policy.
- an assurance policy.
- a family income policy.
A: an assurance policy.

Q: If you own shares, you:
A: own a part of the company of which they are shares.

Q: Permanent health insurance pays:
- only your medical bills.
- a one-off lump sum to spend as you choose.
- income replacement until you can work again.
A: income replacement until you can work again.

Q: If you have a personal pension, when you reach retirement, part of your pension pot may be used to buy:
- an annuity.
- an insurance policy.
- a fixed-income bond.
A: an annuity.

Q: Savings accounts often quote interest rates that are ‘net’ because:
- savers pay income tax on the interest through yearly tax returns.
- providers are required to give the rate after all fees and charges.
- banks and building societies pay basic income tax on the interest.
A: banks and building societies pay basic income tax on the interest.

Q: Endowment policies are products designed for:
- protection only.
- investment only.
- protection and investment.
A: protection and investment.

Q: Liability insurance covers:
- accidental damage to your home.
- injury or loss for which you are responsible.
- your bills if you are unable to work.
A: injury or loss for which you are responsible.

Q: If you own shares, you:
- own a part of the company of which they are shares.
- are a director of the company of which they are shares.
- have lent money to the company of which they are shares.
A: own a part of the company of which they are shares.

Q: When assessing risk and reward, a key factor is the impact of the potential risk. This means the:
- likelihood that the risk will happen.
- how badly you will be affected by the risk.
- whether the risk is something that affects you or not
A: whether the risk is something that affects you or not

Q: You can manage some risks by buying:
- investment products.
- insurance products.
- transactional products.
A: insurance products.

Q: Dale has decided the type of product that she should buy. Now that she wants to choose a specific product, she should be most influenced by the product’s:
- cost.
- incentives.
- history.
A: cost.

Q: What is the main risk for most of the investors who buy a company’s shares?
- That the value of the shares may go down as well as up
- That the dividend may be increased by 10 per cent
- That the company may expand into new markets
A: That the value of the shares may go down as well as up

Q: Sindy works nights and therefore finds it very difficult to get to her bank’s local branch during opening hours – but she likes being able to ask the cashiers questions. A more suitable option for her would be:
- Internet banking.
- telephone banking.
- a postal account.
A: telephone banking.

Q: Don is looking for a savings account in which his money can grow quickly. He is willing to take some risk and wants a tax-free return. The most suitable option for him is a:
- notice savings account at his bank.
- company bond.
- stocks and shares ISA.
A: stocks and shares ISA.

Q: A fund’s ‘portfolio’ is the:
- mix of shares that it owns.
- range of customers that invest with it.
- brochure that explains how it works.
A: mix of shares that it owns.

Q: Someone who buys shares through a stockbroker can expect to pay the stockbroker:
- a percentage of all profits on the shares.
- interest for the length of time for which the shares are held.
- a proportion of the sum invested as commission.
A: a proportion of the sum invested as commission.

Q: Harry wants to put money into an account that earns interest. He wants to use the money to buy birthday presents close for his friends. Which one of the following ideas is the most suitable option for him?
- An instant-access saving account
- A 60-day notice savings account
- A current account that pays interest
A: An instant-access saving account

Q: If you are trying to assess the best product for you, you are better to rely on:
- an objective review of the product.
- a subjective view of the product.
- advice from a friend or relative who has bought the product.
A: an objective review of the product.

Q: If you take out a loan with a variable rate of interest, you could find that your repayments each month get bigger if:
- market rates go up.
- market rates go down.
- the term of your loan is extended for a longer period.
A: market rates go up.

Q: If you take advice from a financial adviser (for example, an IFA):
- you are guaranteed compensation if the investment that you buy goes
- you should receive advice on which products, from a wide range of providers, are suitable for your needs.
- providers, are suitable for your needs.
A: you should receive advice on which products, from a wide range of providers, are suitable for your needs.

Q: Key features documents tell you:
- who to go to for financial advice on a wide range of products
- the most important points that you should want to know about a specific
- all of the possible details that there are to know about a specific product
A: the most important points that you should want to know about a specific

Q: The Financial Services Authority is:
- a government department.
- an organisation owned by the providers in the UK.
- independent from, but backed by, the government.
A: independent from, but backed by, the government.

Q: Mark is having problems managing his debt. Where should he go to get free, reliable advice?
- The Citizens Advice Bureau
- The Office of Fair Trading
- His friends and family
A: The Citizens Advice Bureau

Q: Kay (aged 30) has set aside some money for her old age. She has invested it in a unit trust. The stock market falls and so does the value of her investment. She should:
- withdraw her money immediately to stop it losing more value.
- leave the money in the unit trust until the market recovers
- ask the fund managers to allocate her more units
A: leave the money in the unit trust until the market recovers

Q: Taking professional financial advice is something that you should do:
- once, to sort out your finances and develop a plan
- whenever you consider buying a financial product
- when your circumstances change significantly.
A: when your circumstances change significantly.

Q: Providers are responsible for giving you:
- advice on how suitable their products are for you.
- clear information about their products and the risks involved
- regular financial health checks to ensure the product still meets your needs.
A: clear information about their products and the risks involved

Q: Someone who wants a plastic card to withdraw money from ATMs and to buy goods in shops will be advised to get a
- debit card.
- credit card.
- store card.
A: debit card.

Q: Financial advisers that consider the products of several providers are called:
- tied.
- multi-tied.
- independent.
A: multi-tied.

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section 1

M3 - Explain what occurs at the lungs, diaphragm and rib cage during inspiration.

Explain what occurs at the lungs, diaphragm and rib cage during expiration.

P6 - Match the explanation with the volume.

Volume

- Tidal volume

- Vital capacity

- Residual volume

- Maximum inspiratory

- Maximum expiratory

Explanation

- The maximum amount of air you can forcibly inhale

- The amount of gas remaining in the lung at the end of a maximal exhalation

- The volume of gas inhaled and exhaled during one respiratory cycle

- The maximum amount of air you can forcibly exhale

- The maximum amount of air that a person can expel from the lungs after first filling the lungs to their maximum extent

P6 - Describe what chemical and neural control of breathing is by defining them .

M3 - Explain the chemical and neural control of our breathing. Include what happens and how.

P4 - Describe what each of the following functions is and explain how each occurs and why.

1. Movement

2. Support and posture

3. Heat production