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LIBF level 3 unit 2 - case study question, specimen A

Hi, Has anyone looked at the spec A exam question??If so can anyone help me with this exam question?
Analyse how Hussain’s decision to open a savings account rather than investing in stocks and shares illustrates the
possible trade-off between risk and reward.(10 marks):
mark scheme:

Factors for Hussain to consider
Hussain is keen to open a savings account, which is less risky than investing in stocks and shares.
As a result of the low risk, the interest rates paid on savings accounts is relatively low.



Page 5
CeFS Unit 2 Specimen A Mark Scheme


There is a risk that a financial services provider might go bust, but the Financial
Services Compensation Scheme guarantees savings up to £85,000 (£75,000 from 1
January 2016).
If savings are in NS&I products the guarantee is unlimited.
Hussain is concerned about the risk of investing in stocks and shares.
An investment in stocks and shares has the potential for higher reward but carries more risk.
The value of shares can go up or down.

Is the question asking me the trade offs between the 2 products or just the trade offs of a savings and an investment product? Like in the mark scheme where it says that low risk means low return (for savings account). I just don't know how to answer the Question.
Reply 1
Original post by WingsDan
Hi, Has anyone looked at the spec A exam question??If so can anyone help me with this exam question?
Analyse how Hussain’s decision to open a savings account rather than investing in stocks and shares illustrates the
possible trade-off between risk and reward.(10 marks):
mark scheme:

Factors for Hussain to consider
Hussain is keen to open a savings account, which is less risky than investing in stocks and shares.
As a result of the low risk, the interest rates paid on savings accounts is relatively low.



Page 5
CeFS Unit 2 Specimen A Mark Scheme


There is a risk that a financial services provider might go bust, but the Financial
Services Compensation Scheme guarantees savings up to £85,000 (£75,000 from 1
January 2016).
If savings are in NS&I products the guarantee is unlimited.
Hussain is concerned about the risk of investing in stocks and shares.
An investment in stocks and shares has the potential for higher reward but carries more risk.
The value of shares can go up or down.

Is the question asking me the trade offs between the 2 products or just the trade offs of a savings and an investment product? Like in the mark scheme where it says that low risk means low return (for savings account). I just don't know how to answer the Question.

so there's no trade off in savings??
Reply 2
Original post by WingsDan
so there's no trade off in savings??

like does the question just mean to state the relationship between risk and reward between these products?
Reply 3
Do you have any past papers for the unit 2 by any chance thanks

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