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15 Cards in this Set
- Front
- Back
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A bank deposit account is a good place to hold a rainy day fund. True or false? |
True. Deposit account allow instant access to funds and they are low risk because savings are protected by the financial services compensation scheme up to a limit of £85,000 |
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What, if any, is the minimum age at which a person can take out an NS&I direct saver? |
16 |
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Interest on NS&I income bonds is tax-free. True or false? |
False, interest is paid gross but is taxable |
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State two reasons why offshore bank accounts might be more risky than similar UK deposit accounts? |
-If the investment is held in a currency other than sterling, it's value might be affected by diverse exchange rates if it has to be converted to sterling. - I can't held offshore might not be covered by invest protection schemes to the same extent as onshore UK investments. |
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In relation to gilts , what is the 'coupon'? |
The coupon is the interest rate payable on the power value of a gilt |
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Jane has invested in short dated gilts. According to UK debt management office (DMO) definition, this means that: |
The gilts will have a redemption date within the next 7 years |
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Connor is considering buying gilt, 3% treasury 2025. The guilt is currently trading at a price of £107. What is the running yield? |
The running yield is £3 (Coupon) ÷ £107(Price paid)= 2.8% |
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The main difference between corporate bonds and gilts is that corporate bonds: |
Corporate bonds are considered to be a higher risk investments |
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The main difference between a debenture and other types of corporate bonds is that a debenture: |
A debenture is usually secured on the assets of the company. |
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Jack opens an account for his wages depending to it, but he cannot have an overdraft. What kind of account does he have? |
A basic bank account |
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Eurobond? Is the equivalent of gilt, but issued by a government within the Eurozone. True or false? |
False. Eurobon is a bond issued or traded in a country that uses a currency other than the one in which the bond is denominated, and they can be issued by large companies, not just governments. |
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What's the UKs debt management office think medium dated gilts are? |
7-15 years |
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What are Gilts? |
Gilts belong to a category of direct investment called fixed interest securities. The full name is gilt edge security and they are a form of borrowing by the UK government. Gilts are regarded as a safe investment because the government is not expected to default on capital repayment or interest. |
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Gilts and redemption dates? |
The date on which the government must redeem the Gilt by paying back it's original issue value or par value, normally quoted as a nominal £100. This works in the same way as redeeming and interest only mortgage |
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What is a structured deposit? |
Deposit based account of a fixed term. The original capital is guaranteed to be returned, but an additional return is linked to the performance of a stock index or indices and so is variable. |
