1. You are considering buying a house for £500,000 and you are deciding between fixed and variable rate mortgage. The fixed rate for 20 years is 5%, while the variable rate is the Bank of England
base rate plus 1.5%. The required rate of return – the discount rate – is
the base rate + 0.5 percent. (a) Calculate, which mortgage is cheaper, if the Bank of England base rate is currently at 0.5% and is expected to grow 1% every year for next 4 years before
stabilising for the remaining period. Use annual compounding. (b) Adjust your analysis from the part a to reflect 20% uncertainty regarding the base rates (at any moment the base rate could be 20%
higher or lower) (10 marks)
2. The Bank of England has decided to lower its base interest rate by 0.5%. What impact will this have on the values of stocks and bonds in your portfolio? Explain critically, using the
required rate of return and find a recent examples using the FTSE 100 index and UK Gilt yields. (10 marks)
3. What are, in your opinion, the underlying reasons for the growing income inequality which has occurred in the UK during the past 30 years? Use real data in your analysis, such as mean and
median income as well as income and other taxes. (10 marks)
[LO 1,3]
Task 2 (20 Marks):
Examine the purpose of a credit score and how you can manage and assess your personal credit score. Ensure you are addressing risk, Annual Percentage Rate, credit agencies and their functions, and
what affects credit scores. Critically evaluate how personal credit score positively and negatively influences the credit market. Include moral issues in your analysis.
[LO 2]
Task 3 (20 Marks):
Analyse the role of Corporate tax in the United Kingdom. You are required to provide a detailed explanation on its application and how it came to be. Your analysis should also cover any relevant
historical events that have helped to shape the current tax structure in the U.K and the scope of the current rules. Critically evaluate what impact the current tax structure in the U.K. has on
individual income groups.
[LO 3]
Task 4 (30 Marks):
1. a) Gather together your records of income (pay slips, bursary awards, etc.) and expenditures (phone bills, food bills, utilities, etc.). Use these to help you construct a monthly personal
budget in which you record your expected income and expenditures. You can use the budget template in Microsoft Excel, find another template on the internet, or even design your own. With this
information, determine how much you can afford to spend on a monthly vehicle payment. (10 Marks)
2. b) Using autotrader.com, find 10 prices for a vehicle of your choice and find the average price based on the prices found (5 Marks).
Price 1
Price 2
Price 3
Price 4
Price 5
Price 6
Price 7
Price 8
Price 9
Price 10
Average Price
c) Using the Average Price from question B, calculate the monthly payment for each Interest period listed below. (5 Marks)
Average Price:
Rate Time Monthly Payment
4.3% 5 years
5% 6 years
7.5% 5 years

d) Pick a vehicle of your choice. For each model year listed below, find 5 prices for the vehicle you selected and determine the average price for each year. (5 Marks)
e) Graph the 5 average prices you found in Excel. Add a trend line and display the equation. This is how much your car depreciates over time. Attach a copy of the chart to the exam. (5 Marks)
f) Finally, estimate the number of miles you expect to drive annually and based on the current gas prices and an Average MPG of 26MPG, estimate how much your monthly gasoline expense would be.
Determine if this new car purchase would fit into your current budget and describe how you can improve your current budget. (5 Marks)