Practice Flashcards: BTEC Business: Personal Finance | Zestly

Question 1

Simple interest formula

Accepted Answer

$I = P \cdot r \cdot t$. The common mistake is forgetting that $P$ remains constant throughout the term.

Question 2

Compound interest

Accepted Answer

Interest calculated on the principal plus previously accumulated interest. The mistake is assuming it is the same as simple interest.

Question 3

APR

Accepted Answer

Annual Percentage Rate; the total cost of credit including interest and fees. Mistake: confusing it with the monthly interest rate.

Question 4

Hire purchase

Question 5

Overdraft

Question 6

Income protection insurance

Question 7

Credit record

Question 8

Budget surplus

Question 9

Budget deficit

Question 10

Debit card

Question 11

Credit card

Question 12

Risk and return