Introduction

Question 1

why do people save and invest

Answer 1

consumption in the future (to smooth spending)
retirement
childrens’ education
insurance (Sharing risk)

Question 2

what are the two periods in life where dissaving is high

Answer 2

youth
retirement

Question 3

what is the period in life when saving is high

Answer 3

middle

Question 4

what does DB stand for

Answer 4

defined benefit

Question 5

what is a defined benefit pension

Answer 5

companies pay a fixed amount of salary to you in retirement

Question 6

why did defined benefit pensions begin to go out of fashion

Answer 6

people started to live much longer and then companies has these massive liabilities to pay all of their retirees

Question 7

what does dc stand for

Answer 7

defined contribution

Question 8

what is a defined contribution pension

Answer 8

the person themselves decides how much of their salary to put into their retirement fun

you can contribute tax free (from gross salary)

Question 9

why are defined contribution pensions less risky to the compnay

Answer 9

risk shifts from the company to the individual, people are concerned for their own pensions

Question 10

how much you should save now is based on your future liabilities
such as…

Answer 10

retirement plans
plans to buy a house
plans to send children to education

Question 11

examples of real assets

Answer 11

land, building, machinary

Question 12

examples of financial assets

Answer 12

stocks, bonds

Question 13

examples of intangible assets

Answer 13

health, education

Question 14

which are easier to transfer -> real assets or financial assets

Answer 14

financial

Question 15

why do derivates exist

Answer 15

they can expand the world of trade and assets that you can trade eg weather for a farmer

Question 16

two steps to investing

Answer 16

1. specify options available and evalutate these through expected future risk and return
2. specify how to choose amongst these options

Question 17

what did the linear model of consumption assume

Answer 17

that natural resources were infinite and that the cost of waste and pollution were minimal

Question 18

what type of consumption are we trying to promote now

Answer 18

circular production and consumption (renewable energy and re use of materials)

Question 19

equation for the impact of people on nature

Answer 19

I = P * A * T

I = impact on natural resources
P = population
A = affluence (consumption per persion)
T = technology

Question 20

new vision in trading sees

Answer 20

financial system is only as good as the environment it occurs in

sustainable purchases by corporates and responsible consumption by households

Question 21

how does the financial system smooth spending

Answer 21

use asset to store wealth and transfer consumption to the future

Question 22

what is the ecological ceiling in donut economy

Answer 22

levels of climate change and its effects that we must stay below

Question 23

what is the social foundation in donut economy

Answer 23

the levels of food, water, energy, income, peace, equality etc we must stay above

ie no child labour, no slave labour and so on

Question 24

what is the sweet spot for the donut economy

Answer 24

above social foundations but below ecological ceilings

Question 25

main functions of financial system

Answer 25

1. money used as currency for exchange of goods and services
2. savers and borrowers are linked, savings are pooled and mobilised
3. produce information about possible investments and allocate capital
4. consumption is smoothed
5. monitor investments for transparency and accountability
6. facilitate trading

Question 26

what does it mean if an investor is bullish

Answer 26

they think a share will go up in price

Question 27

what does it mean if an investor is bearish

Answer 27

believes prices will go down

Question 28

what does it mean if a central bank is hawkish

Answer 28

expected to raise or not cut interest rates

Question 29

what does it mean if a central bank are dovish

Answer 29

are expected to cut interest rates or not raise them