Question 8

6 marks
Content - 2 marks
Application - 2 marks
Analysis - 2 marks
Content
1 mark - Defines the term loan or identifies one advantage / disdavantage
2 marks - Either identifies two advantages / disadvantages or identifies one advantage / disadvantage and gives a definition of the key term
Application
1 mark - Limited application to the case
2 marks - Good application
Analysis
1 mark - Limited analysis
2 marks - Good analysis

Possible Answers
A loan is an external source of finance usually borrowed from a bank which is paid back monthly with interest
An advantage of a loan is that you can choose a fixed interest rate so you know how much the monthly payments will be
A loan may be secured on property if Pete doesnt have a good credit record
If Pete fails to pay back his loan then the bank can take his property and personal possessions
Pete has to pay back interest on the loan making it more expensive than an internal source of finance