Form 3 Chapter 3

Front

What is the formula to calculate simple interest?

Back

I = P * r * t, where I is interest, P is principal amount, r is rate of interest per annum, and t is time in years.

Front

What is the principal amount in a savings account?

Back

The principal amount is the initial sum of money deposited or invested, before any interest is added.

Front

If RMx is saved at an interest rate of 3.5% per annum, how do you calculate the total amount after 6 years?

Back

Total Amount = Principal + Interest, where Interest = P * r * t.

Front

What is the return on investment (ROI)?

Back

ROI = (Net Profit / Cost of Investment) * 100%.

Front

How do you calculate the total return from unit trusts?

Back

Total Return = Selling Price + Dividends - Initial Investment.

Front

What is a dividend in the context of investments?

Back

A dividend is a portion of a company's earnings distributed to shareholders.

Front

What is a capital gain?

Back

A capital gain is the profit from the sale of an asset or investment when the selling price exceeds the purchase price.

Front

What is the significance of the interest rate in savings?

Back

The interest rate determines how much money will be earned on the principal amount over time.

Front

How do you determine the time required for an investment to grow to a certain amount?

Back

Use the formula t = (A - P) / (P * r), where A is the final amount, P is the principal, and r is the interest rate.

Front

What is the difference between a commission and a dividend?

Back

A commission is a fee paid to a broker for facilitating a transaction, while a dividend is a share of profits paid to shareholders.