Starter quiz
- Jacob wants to save money. Which option should he pick?
- Put the money into a zero interest savings account.
- Put the money into a low interest savings account.
- Put the money into a high interest savings account. ✓
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- Jun wants to borrow money. Which option should he pick?
- A loan with zero interest ✓
- A loan with low interest
- A loan with high interest
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- I invest £50 000 into a variable savings account. In the first year the interest rate is 3%. How much money will I have after 1 year?
- '£51 500' ✓
- I invest £50 000 into a variable savings account. In the first year the interest rate is 3% and in the second year the interest rate is 4.7%. How much money will I have at the end of the 2 years?
- '£53 920.50' ✓
- I invest £50 000 into a variable savings account. In the first year, the interest rate is 3% and in the second year, the interest rate is 4.7%. How much interest was earned over the 2 years?
- '£3920.50' ✓
- I invest £50 000 into a variable savings account. In the first year the interest rate is 3% and in the second year the interest rate is 4.7%. What is the overall percentage increase?
- '7.841%' ✓
Exit quiz
- Lucas' parents are offered two options for borrowing money. Which option seems better for the first year?
- A variable interest rate loan currently at 6.8%
- A fixed interest loan at 5.5% ✓
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- Which of the following could be risks associated with choosing a fixed interest rate loan?
- The interest is fixed so you know how much you need to pay each month.
- There could be variable rates that drop below the fixed rate whilst repaying. ✓
- There could be variable rates that are higher than the fixed rate.
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- Laura's cousin borrows £75 000. Her loan has a variable interest rate which is initially 6.65%. What is the balance of her loan at the end of year?
- '£79 987.50' ✓
- Laura's cousin borrows £75 000. Her loan has a variable interest rate which is initially 6.65%. How much money has been added to the loan as interest?
- '£4987.50' ✓
- Laura's cousin borrows £75 000. Her loan has a variable interest rate which is initially 6.65% but drops to 5.3% the following year. What is the balance of her loan at the end of the second year?
- '£84 226.84' ✓
- Laura's cousin borrows £75 000. Her loan has a variable interest rate which is initially 6.65% but drops to 5.3% the following year. How much money has been added to the loan as interest?
- '£9226.84' ✓
Worksheet
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Lesson Details
Key learning points
- Financial risks can have both positive and negative outcomes.
- Different types of financial risk and reward can be assessed and compared.
- Failing to assess and manage risk may lead to serious consequences.
Common misconception
A fixed interest rate is always better than a variable interest rate.
A fixed interest rate means you know what you will be paying but a variable rate means you might have paid less or more than the fixed rate.
Keywords
Rate of interest - The rate of interest is the percentage by which an amount will increase.
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