Question 1Dominic is in his 40s and lives in a two bedroom flat in Blackburn. He works at the local council. When he bought the flat in April 2019 the mortgage broker talked him through repayment and interest-only mortgages. He decided to use his savings as a deposit and chose a repayment mortgage, which by April 2021 was standing at £83,000. The market value of his flat had fallen by 2% over this time period on the original purchasing price of £95,000.In April 2021 Dominic earns a net monthly income of £1,600 and his expenditure has averaged £1,500 a month over the last two years. In April 2021 a personal loan to conduct initial refurbishment on the flat is down from £1,500 to £800, but his current account balance has dropped to zero and he has an overdraft on his current account of £1,300. Meanwhile his savings account holds just £50. He now owes £1,800 on a credit card. His cash holdings have dropped to £30. The rest of his balance sheet has not changed since April 2019.Dominic is now reviewing his finances.Table 1 shows his balance sheet and financial ratios in April 2019.Table 1 Dominic’s household balance sheet – April 2019 April 2019Assets (Total)96,400Liquid assets1,400Cash100Current account1,000Instant access savings account(s)300Other liquid assets0Other assets95,000Home95,000Liabilities (Total)86,750Short-term liabilities250Overdraft0Credit card250Other short-term liabilities0Other liabilities86,500Personal loans1,500Mortgage85,000Ratios Net worth / wealth9,650Current asset ratio5.60Leverage ratio89.991.1 Using the information provided in Table 1, complete Dominic’s balance sheet for April 2021. (4 marks)1.2 Explain the factors Dominic might have considered in choosing a repayment mortgage over an interest-only mortgage in 2019. (3 marks)1.3 Using the financial ratios and other relevant information, compare Dominic’s financial situation in April 2019 and April 2021. (4 marks)1.4 Briefly explain two other possible actions Dominic could take to improve his financial situation. (4 marks)Question 2Anita is living at home with her mother. But Anita has now found a job and is planning to move into her own flat. She wants to buy a flat four years from now, knowing that she will need a deposit of at least £9,000 in order to do so. Anita has £1,500 in a savings account.2.1 If Anita uses all of her savings and saves £110 per month, what rate of return will Anita need to reach her target of £9,000 after four years? (3 marks)2.2 Anita has seen that shares (equities) in a particular internet start-up company have given an 18 per cent return over the past two years. She is considering using all of her savings into buying this company’s shares. Give two reasons why putting all her savings into this one company’s shares might not generate anything close to the 18% return they’ve achieved over the past two years.(4 marks)2.3 Briefly explain another way that Anita could save the amount of her deposit if she is risk-averse or doesn’t have much risk capacity. (4 marks)2.4 How will Anita’s efforts to save for a deposit be affected if there is a fall in interest rates which causes a rise in house prices? (4 marks)Question 3Table 2