FINANCIAL EDUCATION AND INVESTMENT

1. Define bankinn ?
Banking is like a fnancial hub where you can keep your money
safe and manage it. It ofers various services like savings
accounts, loans, and credit cards. Banks help with transactions,
investments, and contribute to the economy's growth.
2. what is Economics?
“Economics is the study of how people and society choose, with or without
the use of money, to employ scarce productive resources which could have
alternative uses, to produce various commodities over time and distribute them
for consumption now and in the future among various persons and groups of
society.”

3. what do you mean by Financial Statements?

Financial statements are documents that provide a summary of a
company's fnancial performance. They include the balance sheet,
income statement, and cash fow statement, which help investors and
stakeholders assess the company's proftability, liquidity, and overall
fnancial health. 📊�

4. Mention different types of assets.

 intangible assets (Intangible assets are things of value that you can't touch’.)
 patents
 trademarks
 Copyrights
 Goodwill
 Brand equity
 Designs
 Intellectual property
 current assets (Current assets in financial terms are resources that a company
expects to convert into cash or use up within a year)
 cash
 accounts receivable
 inventory
 prepaid expenses
tangible assets(Tangible Assets are the capital assets which have some physical existence.
These assets can be seen, touched, and felt.)
 plant
  machinery
 furniture fittings
 land and buildings
 books
 computers
 vehicles

 fixed assets(Fixed assets in simple terms are the physical things that a company owns
and uses for a long time, like buildings, equipment, and vehicles. They're not meant to be
sold quickly for cash.)
 buildings
 machinery
 vehicles
 land
5. List out the reasons to investment?
 To Keep Money Safe
 To Help Money Grow
 To Earn a Steady Stream of Income
 To Minimize the Burden of Tax
 To Save up for Retirement
 To Meet your Financial Goals
6. Mention the differences between Capital market and money.

7.write a note on mutual fund?

A Mutual Fund is a body corporate registered with SEBI (Securities Exchange Board of India)
that pools money from individuals/corporate investors and invests the same in a variety of
different financial instruments or securities such as equity shares, Government securities,
Bonds, debentures etc.
8.what is personal Budget?

A personal or household budget is like a summary that shows how much money you
make and how much you spend each month. It helps you plan and keep track of
your spending habits. Budgeting doesn't mean you have to restrict yourself. It's a
way to be smart about your money and make sure you're using it wisely.
9. what is Family Budget?
A family budget is like a plan that helps a family track and manage their income and
expenses.
Family budget include:-
 Housing loan repayment or rent
 Utilities expenses – gas, electricity, water, phone, internet/wi-fi, etc
 Property taxes
 School/college fees
 Health, car, and household insurance payments
 Fuel/transportation expenses
 Entertainment expenses – Dining, movies, concerts, etc.
10.write a note on PMvvy / PMJDY / PPF/NSC ?
 PMVVY (Pradhan Mantri Vaya Vandana Yojana) is a government-backed
pension scheme for senior citizens.
 PMJDY (Pradhan Mantri Jan Dhan Yojana) is a financial inclusion program
that aims to provide banking services to the unbanked population.
 PPF (Public Provident Fund) is a long-term investment scheme with tax
benefits
 NSC (National Savings Certificate) is a fixed-income investment scheme
offered by the Indian government. These schemes provide individuals with
opportunities to save, invest, and secure their financial future.

11. what is Taxation? mention types of taxation.

Taxation is when the government collects money from individuals and
businesses to fund public services.
There are two main types of taxation:
direct tax:-Direct tax is like income tax, where individuals and businesses pay a
percentage of their income directly to the government.
indirect tax :- Indirect tax is like sales tax, where a percentage is added to the price
of goods and services when you make a purchase. Both types of taxation help fund
important public services and programs.
12.write about portfolio management?
Managing a portfolio means choosing investments that match your goals and risk
tolerance. Active management involves buying and selling assets to beat the
market, while passive management aims to match market returns by following an
index.
13. Mention the advantages of mutual funds?
 Variety of investment structures
 Affordable and accessible
 Ability to make regular and systematic investments
 Wealth creation
 Liquidity
 Well-regulated and controlled
 Expertise of fund managers
 Tax benefits and deferrals
14. List out / mention different factors of production..
Factors of production are the different things that are needed to make goods and
services.
 Land(land which is natural resources like oil or timber)
 Labour (labour is the work people do to make things)
 Capital (capital is the tools and equipment used in production)
15.Insurance meaning?
Insurance is a way to protect yourself from financial loss. It's like a safety net that
you pay for, and if something bad happens, like a car accident or a fire, the
insurance company helps cover the costs. It gives you peace of mind knowing that
you're financially protected.
16.Meaning of Asset allocation?
Asset allocation is when you divide your investments into
different types, like stocks and gold. This helps balance the impact of different
economic conditions on your portfolio. For example, if stocks are doing poorly, gold
may perform better, giving you better overall returns. It's like spreading your
investments to reduce risk.
Types:-
 Strategic Asset Allocation
 Tactical Asset Allocation
17.Time value of money?
The concept of time value of money means that money available now is more
valuable than the same amount in the future. This is because you can invest the
money and earn a return, making it grow in value over time. So, receiving Rs.100
now is preferred over receiving it after a year, as you can invest it and potentially
have more than Rs.100 in the future.
18.mention need of bank?
 Savings and Capital Formation: Banks play a vital role in mobilizing the
savings of the people and promoting the capital formation for the economic
development of a country.
 Channelization of Savings: The mobilized savings are allocated by the banks
for the development of various fields such as agriculture, industry,
communication, transport, etc.
 Implementation of Monetary Policy: A structured banking system can easily
implement the monetary policy because development of the economy
depends upon the control of credit given by the banks. So, banks are
necessary for the effective implementation of monetary policies.
 Encouragement of Industries: Banks provide various types of financial
services such as granting cash credit loans, issuing letter of credit, bill
discounting, etc., which encourages the development of various
industries in the country.
 Regional Development: By transferring surplus money from the developed
regions to the less developed regions, banks reduce regional imbalances.
 Development of Agriculture and Other Neglected Sectors: Banks are
necessary for the farmers. It also encourages the development of small-
scale and cottage industries in rural areas.
19.Debit card / Credit Card meaning?
Debit card:- Debit cards are given by banks for current or savings accounts. When
you use a debit card to make a payment or withdraw money, the amount is taken
directly from your account. But if you don't have enough money in your account, it
can be a problem during emergencies.
Credit card:-A credit card gives the cardholder a credit limit from where he/she can
borrow funds to make payments as and when required. The cardholder needs to
pay back the borrowed amount within a stipulated time, following which the limit is
restored.

6 marks
1.Breifly Explain the factors that influence on decision making in financial
investments?
 Macro-environment factors
The macro environment consists of external factors like demographics,
technology, and natural conditions. These factors impact the economy
and financial markets.
 Demographics factors:-
Demographics include age, language, lifestyle, income distribution,
and cultural differences. Financial literacy is influenced by
demographics.
 Technology factors:-
Technological advancements impact the production and sale of
goods or services. Examples include innovation, automation, and
internet facilities.
 Natural and physical factors
The performance of businesses is influenced by factors like natural
resources, climate change, weather conditions, and pollution.
 Political and legal factors
The government has regulations that impact businesses, such as
employment, import/export, copyright, labour, health and safety,
and discrimination laws. These are political and legal factors.
 Social and cultural factors
to be successful, businesses must be socially responsible and
culturally aware. Socio-cultural factors include education,
population growth, life expectancy, social status, buying
habits, and religion.
 Economic factors
Macroeconomic factors like demand-supply, inflation, interest rates,
taxes, exchange rates, and recession greatly influence consumer
buying decisions and investments.
 Inflation
inflation is the increase in prices over time, which affects
purchasing power and savings/investments. In India, inflation is
measured by the Wholesale Price Index (WPI) and Consumer
Price Index (CPI).
 interest rates
Interest is the extra money charged by a lender for borrowing and
the money earned by depositing in a bank.
 Savings account or term deposit account.
RBI sets interest rates based on factors like demand for money,
inflation, and its monetary policy objectives. It can raise rates to
control inflation and lower rates to stimulate growth. RBI uses tools
like CRR, SLR, Repo Rate, Bank Rate, and MSF Rate to
regulate money supply.
  Micro-environment factors
The micro environment of an organization includes controllable elements
like customers, suppliers, competitors, and the general public. However,
its impact can vary based on factors like size, capacity,
capability, and strategies.
some of the key micro-environment business factors are listed below:
1. Customers
2. Suppliers
3. Competitors
4. The general public
When it comes to investment decisions, the micro factors are focussed
on the individual’s attributes like:
1. Desire, want, and demand
2. Disposable personal income (DPI)
3. Financial goals & their timing

2.Explain different investment Avenues (products) available to make an investment?

each investment avenue has its own risks, returns, and suitability based on your
financial goals, risk tolerance, and time horizon. It's important to do thorough
research and consider seeking advice from a financial professional before making
any investment decisions
 Stocks: Investing in individual company stocks allows you to become a
partial owner of the company and participate in its growth and profits.
 Bonds: Bonds are debt securities issued by governments, municipalities,
or corporations. They pay interest over a fixed period and return the
principal amount at maturity.
 Mutual Funds: Mutual funds pool money from multiple investors to invest
in a diversified portfolio of stocks, bonds, or other securities, managed by
professional fund managers.

 Exchange-Traded Funds (ETFs): ETFs are similar to mutual funds but

trade on stock exchanges like individual stocks. They offer diversification
and can track specific indices or sectors.
 Real Estate Investment Trusts (REITs): REITs allow you to invest in real
estate properties without directly owning them. They generate income
through rental properties or real estate development.
 Commodities: Investing in commodities like gold, silver, oil, or agricultural
products can provide diversification and act as a hedge against inflation.
  Cryptocurrencies: Digital currencies like Bitcoin and Ethereum have
gained popularity as investment assets, but they come with higher
volatility and risk.
 Government Securities: Government bonds or treasury bills are
considered low-risk investments as they are backed by the government
and provide a fixed income.
 Certificates of Deposit (CDs): CDs are time deposits offered by banks
with a fixed interest rate and maturity date. They provide a guaranteed
return on investment.
 Options and Futures: These are derivative instruments that allow you to
speculate on the future price movements of underlying assets like stocks,
commodities, or indices.
3.Explain the different functions of Bank/significance / or of bank both
 Acceptance of Deposit: A bank accepts money from the people in the form of
deposits which are usually repayable on demand or after the expiry of a fixed
period. It gives safety to the deposits of its customers. It also acts as a
custodian of funds of its customers.
 Giving Advances/Loans: A bank lends out money in the form of loans to those
who require it for different purposes. These loans can be in the form of retail
loans (loans given to individuals) or corporate loans (loans given to
businesses).
 Payment and Withdrawal: A bank provides easy payment and withdrawal
facility to its customers in the form of cheques, drafts, debit cards, Automated
Teller Machines (ATMs), etc. It also brings bank money in circulation. The new
age banking focusses on providing payment services using mobile technology
to enable faster transfers, using Unified Payment Interface (UPI), etc.
 Ever increasing Functions including agency and utility services: Banking is an
evolutionary concept. There is continuous expansion and diversification as
regards the functions, services and activities of a bank, which includes
wealth/portfolio management services, utility services, agency services,
insurance/mutual fund advisory services, etc
4.what is mutual funds? Discuss various advantages and Schemes
of mutual funds?
Mutual funds are like a team of investors who put their money together to buy a
bunch of different investments, like stocks or bonds. A professional manager takes
care of all the buying and selling, so you don't have to worry about it. It's an easy
way to invest and get a piece of the action in the financial markets.
 advantages of mutual funds
 Variety of investment structures
 Affordable and accessible
 Ability to make regular and systematic investments
  Wealth creation
 Liquidity
 Well-regulated and controlled
 Expertise of fund managers
 Tax benefits and deferrals

 Types of Mutual Fund Schemes:

 Equity Funds: Invest in stocks of companies and aim for long-term
capital appreciation.
 Debt Funds: Invest in fixed-income securities like bonds and aim for
regular income.
 Balanced Funds: Invest in a mix of stocks and bonds to provide both
capital appreciation and income.
 Index Funds: Mirror the performance of a specific market index, like the
S&P 500.
 Money Market Funds: Invest in short-term, low-risk instruments,
providing stability and liquidity.

Each scheme has its own investment objective and risk profile, so it's
important to choose one that aligns with your financial goals and risk
tolerance.
5.Discuss the needs / role and functions Banks
 Acceptance of Deposit: A bank accepts money from the people in the form of
deposits which are usually repayable on demand or after the expiry of a fixed
period. It gives safety to the deposits of its customers. It also acts as a
custodian of funds of its customers.
 Giving Advances/Loans: A bank lends out money in the form of loans to those
who require it for different purposes. These loans can be in the form of retail
loans (loans given to individuals) or corporate loans (loans given to
businesses).
 Payment and Withdrawal: A bank provides easy payment and withdrawal
facility to its customers in the form of cheques, drafts, debit cards, Automated
Teller Machines (ATMs), etc. It also brings bank money in circulation. The new
age banking focusses on providing payment services using mobile technology
to enable faster transfers, using Unified Payment Interface (UPI), etc.
 Ever increasing Functions including agency and utility services: Banking is an
evolutionary concept. There is continuous expansion and diversification as
regards the functions, services and activities of a bank, which includes
wealth/portfolio management services, utility services, agency services,
insurance/mutual fund advisory services, etc
1. Acceptance of Deposit: A bank accepts money from the people in the form of
deposits which are usually repayable on demand or after the expiry of a fixed period.
It gives safety to the deposits of its customers. It also acts as a custodian of funds of
its customers.
2. Giving Advances/Loans: A bank lends out money in the form of loans to those
who require it for different purposes. These loans can be in the form of retail loans
(loans given to individuals) or corporate loans (loans given to businesses).
3. Payment and Withdrawal: A bank provides easy payment and withdrawal facility
to its customers in the form of cheques, drafts, debit cards, Automated Teller
Machines (ATMs), etc. It also brings bank money in circulation. The new age
banking focusses on providing payment services using mobile technology to enable
faster transfers, using Unified Payment Interface (UPI), etc.
4. Ever increasing Functions including agency and utility services: Banking is an
evolutionary concept. There is continuous expansion and diversification as regards
the functions, services and activities of a bank, which includes wealth/portfolio
management services, utility services, agency services, insurance/mutual fund
advisory services, etc

10 MARKS
1.sample financial plan for Mr/Mrs_______(Age may younger Or elder)
note
 assuming different financial Goals
 Time required to fulfil each goal or time horizon
 amount Finance required to attain goal
 action plan required to attain goal.

 Let's create a financial plan for Mr./Mrs. _______ based on their different
financial goals, the time required to fulfil each goal, the amount of finance
required to attain each goal, and the action plan needed to achieve those
goals.

a) Assuming different financial goals: We will identify their goals, such as

buying a house, saving for retirement, starting a business, or funding their
children's education.

b) Time required to fulfil each goal or time horizon: We will determine the time
frame for each goal, whether it's short-term (1-5 years), medium-term (5-10
years), or long-term (10+ years).
 c) Amount of finance required to attain each goal: We will calculate the amount
of money needed for each goal by considering factors like inflation, expected
returns, and their current financial situation.

d) Action plan required to attain each goal: We will develop a specific action
plan, including saving strategies, investment options, and potentially seeking
professional advice, to help them achieve their financial goals.

By considering these factors and creating a personalized financial plan, we

can set them on the path to financial success. Let's get started and work
together to achieve their goals!

2.Mrs. 'X' have 500000 ₹ and Mrs. ‘Y’ have 10.00.000 ₹ to investment
Suggest suitable financial investment Avenues / option by Considering
risk and return in each investment option.
Based on the available funds, Mrs. 'X' with 500,000 ₹ and Mrs. Yash with 1,000,000
₹, there are several suitable financial investment options to consider. Let's look at
some options with varying levels of risk and return:
 Stocks: Investing in individual stocks can offer higher returns, but it also
comes with higher risk. It's important to research and diversify your portfolio.
 Mutual Funds: Mutual funds provide diversification and are managed by
professionals. They offer a balance of risk and return, making them a popular
choice for many investors.
 Bonds: Bonds are relatively safer investments with fixed returns. They can be
a good option for those who prioritize stability and regular income.
 Real Estate: Investing in real estate can provide long-term appreciation, but it
requires careful research and management. It can be a good option for those
with a longer investment horizon.
 Fixed Deposits: Fixed deposits with banks offer a fixed interest rate and lower
risk. They can be a suitable option for those seeking stability and guaranteed
returns.

Remember, it is important to assess your risk tolerance and investment goals

before making any decisions. Consulting with a financial advisor can provide
personalized guidance based on your specific circumstances.

3.preparation of family Budget by considering Various income available and

Expenses incurred by family in a month.
Note:
  you have to identify each & Total Income first
 Identify various Expenses & Total the Expenses
 Deduct total Expenses from Total Income
 remaining amount shows as Savings
Let us break down the steps for preparing a family budget:

 Identify each source of income: Make a list of all the different income sources
your family has. This can include salaries, rental income, investments, or any
other sources of money coming into the household.
 Total the income: Add up all the income sources to calculate the total income
for the month.
 Identify various expenses: List down all the expenses your family incurs in a
month. This can include rent/mortgage payments, utility bills, groceries,
transportation, education, healthcare, entertainment, and any other expenses.
 Total the expenses: Add up all the expenses to calculate the total expenses
for the month.
 Deduct total expenses from total income: Subtract the total expenses from the
total income. This will give you the remaining amount.
 Savings: The remaining amount after deducting expenses from income
represents the savings for the month. It is important to have a positive savings
amount to ensure financial stability and the ability to meet future goals.

Remember, budgeting helps in tracking expenses, identifying areas where

adjustments can be made, and ensuring that income is allocated wisely.
Regularly reviewing and adjusting the budget is key to maintaining financial
stability.