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New
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Year 10

Managing risk

I can assess different types of financial risk.

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New
New
Year 10

Managing risk

I can assess different types of financial risk.

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Lesson details

Key learning points

  1. Financial risks can have both positive and negative outcomes.
  2. Different types of financial risk and reward can be assessed and compared.
  3. Failing to assess and manage risk may lead to serious consequences.

Keywords

  • Rate of interest - The rate of interest is the percentage by which an amount will increase.

Common misconception

A fixed interest rate is always better than a variable interest rate.

A fixed interest rate means you know what you will be paying but a variable rate means you might have paid less or more than the fixed rate.


To help you plan your year 10 financial education lesson on: Managing risk, download all teaching resources for free and adapt to suit your pupils' needs...

Pupils could investigate using rounded values in subsequent calculations to see the impact.
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Content guidance

  • Depiction or discussion of sensitive content
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Supervision

Adult supervision recommended

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Licence

This content is © Oak National Academy Limited (2025), licensed on Open Government Licence version 3.0 except where otherwise stated. See Oak's terms & conditions (Collection 2).

Lesson video

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6 Questions

Q1.
Jacob wants to save money. Which option should he pick?
Put the money into a zero interest savings account.
Put the money into a low interest savings account.
Correct answer: Put the money into a high interest savings account.
Q2.
Jun wants to borrow money. Which option should he pick?
Correct answer: A loan with zero interest
A loan with low interest
A loan with high interest
Q3.
I invest £50 000 into a variable savings account. In the first year the interest rate is 3%. How much money will I have after 1 year?
Correct Answer: £51 500
Q4.
I invest £50 000 into a variable savings account. In the first year the interest rate is 3% and in the second year the interest rate is 4.7%. How much money will I have at the end of the 2 years?
Correct Answer: £53 920.50
Q5.
I invest £50 000 into a variable savings account. In the first year, the interest rate is 3% and in the second year, the interest rate is 4.7%. How much interest was earned over the 2 years?
Correct Answer: £3920.50
Q6.
I invest £50 000 into a variable savings account. In the first year the interest rate is 3% and in the second year the interest rate is 4.7%. What is the overall percentage increase?
Correct Answer: 7.841%, 7.841

6 Questions

Q1.
Lucas' parents are offered two options for borrowing money. Which option seems better for the first year?
A variable interest rate loan currently at 6.8%
Correct answer: A fixed interest loan at 5.5%
Q2.
Which of the following could be risks associated with choosing a fixed interest rate loan?
The interest is fixed so you know how much you need to pay each month.
Correct answer: There could be variable rates that drop below the fixed rate whilst repaying.
There could be variable rates that are higher than the fixed rate.
Q3.
Laura's cousin borrows £75 000. Her loan has a variable interest rate which is initially 6.65%. What is the balance of her loan at the end of year?
Correct Answer: £79 987.50
Q4.
Laura's cousin borrows £75 000. Her loan has a variable interest rate which is initially 6.65%. How much money has been added to the loan as interest?
Correct Answer: £4987.50
Q5.
Laura's cousin borrows £75 000. Her loan has a variable interest rate which is initially 6.65% but drops to 5.3% the following year. What is the balance of her loan at the end of the second year?
Correct Answer: £84 226.84
Q6.
Laura's cousin borrows £75 000. Her loan has a variable interest rate which is initially 6.65% but drops to 5.3% the following year. How much money has been added to the loan as interest?
Correct Answer: £9226.84