Sources of Finance

What is a term loan? 

• A loan that must be repaid within a month 

• A loan with a specified repayment schedule and fixed interest rate 

• A loan that can be repaid at any time without a schedule 

• A loan that does not require collateral 

Which of the following is a typical feature of a term loan? 

• A. Variable interest rates 

• B. No repayment schedule 

• C. Fixed repayment schedule 

• D. No interest charges 

What is hire purchase? 

• A. Renting an asset for a short period 

• B. Purchasing an asset with a single payment 

• C. Paying for an asset in instalments while using it 

• D. Leasing an asset without the option to buy 

When does ownership of the asset transfer to the buyer in a hire purchase agreement? 

• A. Immediately upon signing the agreement 

• B. After the first instalment is paid 

• C. After all instalments are paid 

• D. Never, the asset remains with the seller 

What is a key difference between renting and buying? 

• A. Renting involves ownership of the property 

• B. Renting typically requires a long-term commitment 

• C. Renting involves paying for the use of property without ownership 

• D. Renting usually has higher upfront costs than buying 

Which of the following is an advantage of renting? 

• A. Building equity in the property 

• B. Flexibility to move without selling a property 

• C. Tax benefits from mortgage interest 

• C. Tax benefits from mortgage interest 

What is a mortgage? 

• A. A short-term loan for purchasing a car 

• B. A long-term loan for purchasing real estate 

• C. A type of credit card 

• D. A loan for personal expenses 

Which of the following is a common feature of a mortgage? 

• A. No interest charges 

• B. Short repayment period 

• C. Collateral in the form of the property being purchased 

• D. No need for a down payment 

What is the benefit of a fixed-rate mortgage? 

• A. Interest rates that change with the market 

• B. Predictable monthly payments 

• C. Lower initial interest rates 

• D. No need for credit checks 

What is a moneylender?

• • A. A person or organization that lends money at high interest rates

• • B. A bank that offers savings accounts

  
  

• • C. A financial advisor

  
  

• • D. A credit card issuer