Gr 11 Math Lit: Ch 3.11 Interest loans and Banking
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Questions and Answers

What is the formula for calculating simple interest?

  • P × r
  • P × r × t (correct)
  • P × (1 + r)^t
  • P + (r × t)
  • What is the main difference between simple and compound interest?

  • Simple interest is only used for short-term investments
  • Simple interest is calculated on the principal amount, while compound interest is calculated on the principal plus any accumulated interest (correct)
  • Simple interest is always higher than compound interest
  • Compound interest is only used for long-term investments
  • What is the shape of a compound interest graph?

  • Exponential (correct)
  • Quadratic
  • Linear
  • Cubic
  • What is the total amount in a simple interest scenario?

    <p>P + (P × r × t) (B)</p> Signup and view all the answers

    In a compound interest scenario, what happens to the principal at the end of each period?

    <p>It increases by the interest amount (D)</p> Signup and view all the answers

    What is the formula for calculating the total amount in a compound interest scenario?

    <p>P × (1 + r)^t (A)</p> Signup and view all the answers

    What is the formula for calculating the total amount in a simple interest calculation?

    <p>P + (P × r × t) (D)</p> Signup and view all the answers

    In a fixed deposit account, when is the interest calculated?

    <p>At the beginning of each month (B)</p> Signup and view all the answers

    What is the term for purchasing an item now and paying for it later through installments?

    <p>Buying on Credit (B)</p> Signup and view all the answers

    What is the total cost of a loan or hire purchase?

    <p>The deposit plus the monthly payments plus interest (A)</p> Signup and view all the answers

    What is the formula for calculating the fee in Structure 1 of a bank fee?

    <p>Fee = Fixed cost + (Percentage of transaction value) (B)</p> Signup and view all the answers

    What is the shape of the graph for Structure 2 of a bank fee?

    <p>Linear graph increasing at a rate of the given percentage, becoming a horizontal line when the maximum fee is reached (C)</p> Signup and view all the answers

    What is the formula for calculating the amount in a compound interest calculation?

    <p>P × (1 + r)^t (D)</p> Signup and view all the answers

    In a transactional account, how is the interest calculated?

    <p>Daily based on the balance at the end of the day (B)</p> Signup and view all the answers

    What is the difference between a loan and a hire purchase?

    <p>A loan is for buying an item, while a hire purchase is for borrowing money (B)</p> Signup and view all the answers

    What is the formula for calculating the fee in Structure 3 of a bank fee?

    <p>Fee = (Variable fee per unit × Transaction value / Unit) (D)</p> Signup and view all the answers

    What is the primary factor that determines the interest calculated in a simple interest scenario?

    <p>Principal amount (A)</p> Signup and view all the answers

    What is the main characteristic of a simple interest graph?

    <p>Constant increase (D)</p> Signup and view all the answers

    What is the key difference between simple and compound interest in terms of principal?

    <p>Simple interest is calculated on the principal only, while compound interest is calculated on the principal and interest (D)</p> Signup and view all the answers

    What is the result of compound interest over time?

    <p>An exponential growth in interest (D)</p> Signup and view all the answers

    What is the primary advantage of compound interest over simple interest?

    <p>Compound interest results in a greater total amount over time (A)</p> Signup and view all the answers

    What is the relationship between the principal and interest in a compound interest scenario?

    <p>The principal increases as the interest increases (D)</p> Signup and view all the answers

    What is the main purpose of a fixed deposit account?

    <p>To invest money for a fixed period (B)</p> Signup and view all the answers

    What is added to the principal amount in a loan or hire purchase?

    <p>Interest (B)</p> Signup and view all the answers

    How is the interest calculated in a transactional account?

    <p>Daily, based on the end-of-day balance (B)</p> Signup and view all the answers

    What is the purpose of a deposit in a loan or hire purchase?

    <p>To make an initial payment (A)</p> Signup and view all the answers

    How does the length of the loan affect the total cost?

    <p>It increases the total cost (C)</p> Signup and view all the answers

    What is the difference between a loan and a hire purchase?

    <p>A loan is borrowed money, while a hire purchase is buying an item with interest (D)</p> Signup and view all the answers

    What is the purpose of a maximum fee limit in bank fee Structure 2?

    <p>To prevent the fee from exceeding a certain amount (D)</p> Signup and view all the answers

    What is the shape of the graph for bank fee Structure 1?

    <p>Linear, increasing at a fixed rate (A)</p> Signup and view all the answers

    What is the main difference between bank fee Structures 1 and 3?

    <p>Structure 1 has a percentage of the transaction value, while Structure 3 has a fixed fee per unit (A)</p> Signup and view all the answers

    What is the purpose of the formula for calculating the total amount in a simple interest scenario?

    <p>To calculate the total amount, including interest (C)</p> Signup and view all the answers

    What is the main difference between a transactional account and a fixed deposit account?

    <p>The frequency of interest calculation (B)</p> Signup and view all the answers

    Which of the following is a key characteristic of a hire purchase?

    <p>The total cost is higher than the original price due to interest (B)</p> Signup and view all the answers

    What is the purpose of a deposit in a loan or hire purchase?

    <p>To show commitment to the agreement (A)</p> Signup and view all the answers

    How does the length of the loan affect the total cost?

    <p>It increases the total cost (D)</p> Signup and view all the answers

    What is the main difference between bank fee Structure 1 and Structure 2?

    <p>The presence of a maximum fee limit (A)</p> Signup and view all the answers

    Why is compound interest more beneficial than simple interest?

    <p>It adds interest to the principal over time (A)</p> Signup and view all the answers

    What is the primary factor that determines the interest calculated in a compound interest scenario?

    <p>The time period (A)</p> Signup and view all the answers

    What is the result of compound interest over time?

    <p>The principal amount increases (D)</p> Signup and view all the answers

    What is the main purpose of a fixed deposit account?

    <p>To invest money for a fixed period (C)</p> Signup and view all the answers

    What is the relationship between the principal and interest in a compound interest scenario?

    <p>The principal is added to the interest (D)</p> Signup and view all the answers

    What is the primary factor that determines the rate of growth in a compound interest scenario?

    <p>Interest rate per period (B)</p> Signup and view all the answers

    How does the principal amount change in a simple interest scenario?

    <p>It remains the same throughout the period (C)</p> Signup and view all the answers

    What is the main characteristic of a compound interest graph?

    <p>A curve showing exponential growth (C)</p> Signup and view all the answers

    What is the result of applying simple interest to a loan or hire purchase?

    <p>The total amount paid increases at a constant rate over time (B)</p> Signup and view all the answers

    What is the primary advantage of compound interest over simple interest?

    <p>It results in faster growth over time (D)</p> Signup and view all the answers

    What is the key difference between simple and compound interest in terms of interest calculation?

    <p>Simple interest is calculated on the principal, while compound interest is calculated on the principal and interest (B)</p> Signup and view all the answers

    What is the effect of the interest rate on the total amount in a simple interest scenario?

    <p>The total amount increases linearly with the interest rate. (A)</p> Signup and view all the answers

    In a compound interest scenario, what happens to the principal amount and the interest over time?

    <p>The principal amount and interest both increase exponentially. (B)</p> Signup and view all the answers

    What is the main difference between the graph representation of simple and compound interest?

    <p>The graph of simple interest is linear, while the graph of compound interest is exponential. (D)</p> Signup and view all the answers

    What happens to the total amount in a compound interest scenario if the interest rate remains constant but the time period increases?

    <p>The total amount increases exponentially with the time period. (B)</p> Signup and view all the answers

    What is the relationship between the principal and interest in a simple interest scenario?

    <p>The principal and interest are directly proportional. (A)</p> Signup and view all the answers

    What is the effect of the time period on the total amount in a simple interest scenario?

    <p>The total amount increases linearly with the time period. (C)</p> Signup and view all the answers

    What is the primary difference between the interest calculation in a transactional account and a fixed deposit account?

    <p>The interest is calculated based on the daily balance in a transactional account and the monthly balance in a fixed deposit account. (D)</p> Signup and view all the answers

    What is the effect of increasing the length of the loan on the total cost?

    <p>The total cost increases as the length of the loan increases. (A)</p> Signup and view all the answers

    What is the purpose of a deposit in a loan or hire purchase?

    <p>To provide an initial payment towards the loan or hire purchase. (A)</p> Signup and view all the answers

    What is the main difference between bank fee Structure 1 and Structure 3?

    <p>Structure 1 has a fixed cost and a percentage of the transaction value, while Structure 3 has a variable fee per unit. (C)</p> Signup and view all the answers

    What is the primary factor that determines the interest calculated in a simple interest scenario?

    <p>The principal amount, interest rate, and time period. (B)</p> Signup and view all the answers

    What is the main difference between a loan and a hire purchase?

    <p>A loan is for a general purpose, while a hire purchase is for a specific item. (B)</p> Signup and view all the answers

    What is the primary advantage of compound interest over simple interest?

    <p>Compound interest is calculated on the principal amount and interest. (C)</p> Signup and view all the answers

    What is the main characteristic of a compound interest graph?

    <p>It is a curved graph. (B)</p> Signup and view all the answers

    What is the result of applying simple interest to a loan or hire purchase?

    <p>The total cost increases linearly. (B)</p> Signup and view all the answers

    What is the purpose of a maximum fee limit in bank fee Structure 2?

    <p>To cap the fee at a certain amount. (C)</p> Signup and view all the answers

    If the interest rate is 5% per annum, and the principal is $1000, how much interest will be earned in 2 years under a simple interest scenario?

    <p>$120 (D)</p> Signup and view all the answers

    A savings account has a principal of $5000, and an interest rate of 3% per annum. If the interest is compounded annually, what will be the total amount after 3 years?

    <p>$5819.51 (D)</p> Signup and view all the answers

    Which of the following statements is true about the graph of a simple interest scenario?

    <p>It is a straight line showing a constant increase. (A)</p> Signup and view all the answers

    What is the main difference between simple and compound interest in terms of the principal amount?

    <p>Simple interest is calculated on the principal, while compound interest is calculated on the principal and interest. (A)</p> Signup and view all the answers

    If the principal is $2000, and the interest rate is 4% per annum, what will be the total amount after 5 years under a compound interest scenario?

    <p>$2549.15 (B)</p> Signup and view all the answers

    Which of the following statements is true about the relationship between the principal and interest in a compound interest scenario?

    <p>The principal and interest grow together. (D)</p> Signup and view all the answers

    What is the primary reason for the difference in interest calculation between a transactional account and a fixed deposit account?

    <p>The balance at the end of the day (A)</p> Signup and view all the answers

    Which of the following is a characteristic of a loan, but not a hire purchase?

    <p>The interest rate is fixed (A)</p> Signup and view all the answers

    What is the primary purpose of the maximum fee limit in bank fee Structure 2?

    <p>To prevent the fee from exceeding a certain amount (B)</p> Signup and view all the answers

    What is the result of applying compound interest to a principal amount over a long period of time?

    <p>The principal amount increases exponentially (A)</p> Signup and view all the answers

    What is the primary factor that determines the total cost of a loan or hire purchase?

    <p>The length of the loan (D)</p> Signup and view all the answers

    What is the main difference between bank fee Structures 1 and 3?

    <p>Structure 1 is based on a fixed cost plus a percentage, while Structure 3 is based on a variable fee per unit (C)</p> Signup and view all the answers

    What is the effect of a higher interest rate on the total amount in a simple interest scenario?

    <p>The total amount increases linearly (A)</p> Signup and view all the answers

    What is the primary advantage of using a fixed deposit account?

    <p>The guaranteed return on investment (C)</p> Signup and view all the answers

    What is the relationship between the principal and interest in a simple interest scenario?

    <p>The principal and interest are separate and do not affect each other (A)</p> Signup and view all the answers

    What is the purpose of a deposit in a loan or hire purchase?

    <p>To provide a guarantee for the lender (B)</p> Signup and view all the answers

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