macro - financial sector terms

Question 1

what are mortgages?

Answer 1

loans to buy property. The bank owns the property until the loan is repaid

Question 2

what are unsecured loans?

Answer 2

loans where banks cannot force the sale of an asset, like a house, to recover the loan’s cost if it isn’t repaid - not protected by collateral

Question 3

what are overdrafts?

Answer 3

loans to firms and individuals that occur when the funds in their account fall below zero.

Question 4

what are credit cards?

Answer 4

they allow their holders to borrow money from a bank when purchasing goods or service

Question 5

what is payday lending?

Answer 5

short term, unsecured loans with high interest rates that are typically expected to be repaid when the borrower receives their next pay cheque.

Question 6

what is equity finance?

Answer 6

raising capital through the sale of shares to investors. In return, shareholders receive profits in the form of dividends.

Question 7

what is debt finance?

Answer 7

borrowing money from an outside source with the promise of paying back the loan, plus interest at a later date.

Question 8

what are shares?

Answer 8

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Question 9

what are bonds?

Answer 9

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