Personal Investment Test Questions

1. What benefits can be looked for from any investment?

2. What do you understand by the term 'liquidity' as applied to an investment?

3. Define the term 'money deposit'.

4. When choosing a method of depositing money what factors would you take into consideration?

5. If the next change in market levels of interest rates is likely to be up rather than down, would you choose to deposit money at a fluctuating rate of interest or a fixed one, other things being equal?

6. Is the interest earned on a building society investment tax-free?

7. In what circumstances is it inadvisable to invest money in a building society?

8. By what means can one obtain interest rates on a building society investment at levels above ordinary share rate?

9. If you are saving in order to build up a sum of money for a single large expenditure in three years' time, would you select National Savings Certificates? Explain your reasons.

10. Describe one method of regular saving and investment where your capital is index-linked.

11. What is understood by a 'negative yield'?

12. Discover by enquiry the current interest rates available on deposits with the commercial banks, in ordinary building society shares, and on investment accounts at the National Savings Bank. Say which gives the best yield, and explain what considerations other than interest rate should be allowed for in selecting the most suitable for investment.

Inflation And Interest Yield

When assessing the security of capital in any investment, whether money-deposit or any other kind, you should bear in mind the consequences of continuing inflation. For example, if you invest £100 on deposit at 15% gross for a year, and draw out the £100 capital at the end of the year, the money at that time will not buy as much as it would have done at the beginning of the year if inflation has been running at, say, 18% during the year. After a year your £100 will be worth only £82 in current money.

To make an investment really worthwhile from a yield point of view, the interest rate should... see: Inflation And Interest Yield

Personal And Business Finance 2018

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