5279187
Description
Flashcards by Jevgenija Zukova, updated more than 1 year ago
|
Created by Jevgenija Zukova
about 8 years ago
|
|
| Question | Answer |
| The greater the risk... | ...the greater the reward! :D |
| The greater the reward... | ...the greater the risk. :/ |
| What are the features of risk? | >Physical injury or death >Loss of or damage to possessions >A legal liability >A financial loss |
| With what the risk is associated? | >Uncertainty - we don't know the future. >Probability - situation can higher the risk. >Chance - speculative risk. >Unachieved expectations - failed plans. |
| Why a person would take a risk? | It's worth it! >A person receives their reward(assuming that probability of risk is low) >Higher risk must give higher return >An individual is risk tolerant/averse (depends on the probability of risk) |
| How risky is current account? | Little-bit risky = as long as you are not overdrawn, you're safe(FSCS)! |
| How risky are premium bonds? | SAFE! =100% backed by the government *but probability of wining cash is small x) |
| How risky is saving account? | Little bit :/ If you don't put money into the account for few months, the interest is lost -_- And you lock up your money. (Too bad, you can't make rain out of it ) :c |
| How risky are unit trusts? | Quite risky =value can go up and down(stock market movements) *however, the risk is spread over many different companies = possibility of good return |
| How risky are shares? | VERY RISKY in newly quoted company. Quite risky in an established company. |
| How the risk applies to interest rates? | 1. Interest rates varies. =people who own shares hopes that the price of shares will rice at the stock market. +dividends 2. If a person wants to have greater interest rate on their investment, they will take greater risk = saving for medium term. |
| What's the trade off of risk/reward for a person, who is borrowing medium-long term? | Risk = may be unable to keep up with their repayments (inflation). Reward = will be able to buy a property or other product. |
| Are people are just risk tolerant and averse? | No, they have different degrees of risk acceptance. e.g. high risk acceptance, average risk tolerance, risk averse, highly risk averse. |
| How do you transfer the risk? | INSURANCE *some people may not take insurance for some things because they believe that they can deal with it without help. |
| IMPACT OF RISK | 1. The amount of money involved 2. The effect on lifestyle 3. The timing of the event 4. The frequency of the event |
| PROBABILITY OF RISK | Probability x Impact = Degree of risk It means how likely it is that it will happen. Impacts = external and internal factors |
Want to create your own Flashcards for free with GoConqr? Learn more.