Gr 12 Math Lit: Ch 1.6 Interest Banking
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Questions and Answers

What is the purpose of a deposit in a loan?

  • To pay the interest upfront
  • To reduce the loan amount and interest paid (correct)
  • To increase the loan amount
  • To determine the interest rate

    • What is the total amount paid over the life of a loan?

  • Real Cost of the Loan (correct)
  • Loan Amount
  • Monthly Repayment
  • Interest Paid

    • How does a shorter loan period affect the total interest paid?

  • It increases the total interest paid
  • It eliminates the interest paid
  • It reduces the total interest paid (correct)
  • It has no effect on the total interest paid

    • What is the benefit of a lower interest rate in a loan?

    <p>It reduces the total interest charged</p> Signup and view all the answers

    What is the primary purpose of an investment?

    <p>To gain interest and increase the original amount</p> Signup and view all the answers

    What is a stokvel?

    <p>A group pooling money for shared investments or purchases</p> Signup and view all the answers

    Who benefits from the interest in a loan?

    <p>The lender</p> Signup and view all the answers

    What is the purpose of a retirement annuity?

    <p>To provide income during retirement</p> Signup and view all the answers

    What is the primary effect of a higher interest rate on investments?

    <p>Increasing the returns on investments</p> Signup and view all the answers

    What is compound interest calculated on?

    <p>The current balance, including previous interest</p> Signup and view all the answers

    What is the benefit of investing early?

    <p>Greater accumulation due to the extended period of compounding interest</p> Signup and view all the answers

    What is the primary effect of a higher monthly repayment amount on loans?

    <p>Decreasing the total interest paid</p> Signup and view all the answers

    What is the purpose of a retirement annuity?

    <p>To provide income during retirement</p> Signup and view all the answers

    What is the effect of a shorter loan term on loans?

    <p>Higher monthly repayments but lower total interest paid</p> Signup and view all the answers

    What is the purpose of a stokvel?

    <p>To benefit from pooled funds</p> Signup and view all the answers

    What is the impact of a higher interest rate on loans?

    <p>Increasing the cost of the loan</p> Signup and view all the answers

    What is the benefit of choosing a loan with a lower interest rate?

    <p>Decreasing the total interest paid</p> Signup and view all the answers

    What is the primary goal of financial planning when it comes to loans?

    <p>To balance between monthly affordability and total cost</p> Signup and view all the answers

    What is the primary difference between a loan and an investment?

    <p>A loan involves borrowing money, while an investment involves placing money into a fund.</p> Signup and view all the answers

    How does the sale price of an item affect the loan amount?

    <p>The sale price minus the deposit equals the loan amount.</p> Signup and view all the answers

    What is the primary purpose of a loan length?

    <p>To specify the period over which the loan must be repaid.</p> Signup and view all the answers

    How does the interest rate affect the real cost of a loan?

    <p>A higher interest rate increases the real cost of the loan.</p> Signup and view all the answers

    What is the primary benefit of making a larger deposit on a loan?

    <p>A larger deposit reduces the loan amount and interest paid.</p> Signup and view all the answers

    What is the primary purpose of monthly repayments on a loan?

    <p>To pay off the loan amount and interest owed.</p> Signup and view all the answers

    What is the primary benefit of choosing a loan with a lower interest rate?

    <p>A lower interest rate reduces the total interest paid.</p> Signup and view all the answers

    What is the primary purpose of a retirement annuity?

    <p>To provide a guaranteed income stream during retirement.</p> Signup and view all the answers

    What is the main difference between simple interest and compound interest?

    <p>Simple interest is calculated on the original principal, while compound interest is calculated on the current balance.</p> Signup and view all the answers

    What is the effect of increasing the monthly investment amount on an investment?

    <p>It increases the total interest earned over time.</p> Signup and view all the answers

    What is the primary goal of financial planning when it comes to investments?

    <p>To maximize the returns on investment over time.</p> Signup and view all the answers

    What is the effect of a higher interest rate on a loan?

    <p>It increases the total interest paid over time.</p> Signup and view all the answers

    What is the main advantage of starting an investment early?

    <p>It maximizes the benefits of compound interest over time.</p> Signup and view all the answers

    What is the effect of a longer loan term on a loan?

    <p>It increases the total interest paid over time.</p> Signup and view all the answers

    What is the primary benefit of choosing a loan with a lower interest rate?

    <p>It reduces the total interest paid over time.</p> Signup and view all the answers

    What is the effect of a higher monthly repayment amount on a loan?

    <p>It reduces the total interest paid over time.</p> Signup and view all the answers

    What is the primary purpose of financial planning for investments?

    <p>To maximize the returns on investment over time.</p> Signup and view all the answers

    What is the effect of a higher interest rate on an investment?

    <p>It increases the total interest earned over time.</p> Signup and view all the answers

    What is the primary factor that determines the total interest paid on a loan?

    <p>Loan length</p> Signup and view all the answers

    Which of the following investment types is most likely to provide income during retirement?

    <p>Retirement annuity</p> Signup and view all the answers

    What is the primary way in which a loan differs from an investment?

    <p>Who benefits from the interest</p> Signup and view all the answers

    What is the effect of a larger deposit on the real cost of a loan?

    <p>It decreases the real cost of the loan</p> Signup and view all the answers

    What is the primary benefit of choosing a loan with a shorter loan period?

    <p>Lower total interest paid</p> Signup and view all the answers

    What is the primary effect of a higher monthly repayment amount on a loan?

    <p>It decreases the total interest paid</p> Signup and view all the answers

    What is the primary purpose of a retirement annuity?

    <p>To provide income during retirement</p> Signup and view all the answers

    What is the primary benefit of choosing a loan with a lower interest rate?

    <p>Lower total interest paid</p> Signup and view all the answers

    What is the primary effect of a higher monthly repayment amount on an investment?

    <p>It decreases the final investment value due to reduced compounding</p> Signup and view all the answers

    Which of the following statements about simple interest and compound interest is true?

    <p>Compound interest is calculated on the original principal only</p> Signup and view all the answers

    What is the primary goal of financial planning when it comes to both loans and investments?

    <p>To balance monthly affordability with total cost</p> Signup and view all the answers

    Which of the following statements about the impact of interest rate changes on investments is true?

    <p>A higher interest rate leads to a higher final investment value</p> Signup and view all the answers

    What is the primary effect of a higher monthly investment amount on an investment?

    <p>It increases the final investment value due to compounding</p> Signup and view all the answers

    What is the primary difference between a loan and an investment?

    <p>A loan involves borrowing, while an investment involves lending</p> Signup and view all the answers

    Which of the following statements about the impact of loan term changes on loans is true?

    <p>A shorter loan term leads to a lower total interest paid</p> Signup and view all the answers

    What is the primary effect of a higher initiation fee on a loan?

    <p>It increases the monthly repayment amount</p> Signup and view all the answers

    Which of the following statements about the impact of monthly administration fees on loans is true?

    <p>A higher monthly administration fee leads to a higher total interest paid</p> Signup and view all the answers

    What is the primary goal of financial planning when it comes to managing loans and investments?

    <p>To balance monthly affordability with total cost and maximize returns on investments</p> Signup and view all the answers

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