Banking and Simple Interest

Question 1

What is a percentage?

Answer 1

A percentage is a fraction out of 100.

So if you got a mark of 86% on a test that means you got the equivalent of 86 out of 100.

% = a/b x 100% or decimal x 100% = %

Decimal = % / 100%

Question 2

What is a proportion?

Answer 2

Often we are asked to find a percent of number. This can be done wiht a proportion, remembering that a percent is a number always out of 100. It can also be done by converting the percent to a deimal and mupliplyingq

Question 3

Where can money be stored in Canada?

Answer 3

Money can be stored in different types of bank accounts (such as saving or chequing accounts)

Question 4

What is interest on a bank account?

Answer 4

Some accounts have interest. This is the amount of money you either earn or pay for keeping your money in an account of for borrowing/lending money to another person.

Question 5

What are service fees?

Answer 5

Some banks charge service fees for taking are of your money

Question 6

What is an ATM

Answer 6

automated teller machine

Question 7

What can you do at an ATM

Answer 7

ATM are another way to do transcations (transfer money) without having to talk to a teller. It allows you to do similar services by using your bank cared and its assocaited PINs.

Question 8

What is it called when you put money into your account?

What is another name for this?

Answer 8

A deposit and it is added to your total balance.

It is also known as a credit whenever money is added to your account

Question 9

What is it called when money is removed from your account?

Answer 9

It is a called a debit when money is removed from your account and it is substracted from your total balance.

Question 10

What is a withdrawl?

Answer 10

A withdrawal is a transaction that moves money out of your account.

Question 11

What are bank statements?

Answer 11

All banks offer bank statements which are records of transactions and balances in the account over a period of time, usually each month.

Question 12

What is a transaction?

Answer 12

It is when you transfer money in or out of a bank account

Question 13

What happens with interest when you put money into your bank account?

Answer 13

When you deposit money into an account or make an investment you earn interest from your financial institutions because you are eldning them your money.

Question 14

What happens with interest wehn you borrow money?

Answer 14

When you borrow money, or take out a loan, you must pay interest to the financial institution. This interest is the cost for borrowing their money.

Question 15

What is interest?

Answer 15

The amount of money paid or charged when you deposit or borrow money.

There are two ways interest can be calculated – simple interest and compound interest

Question 16

What is simple interest?

Answer 16

Simple interest is interest that is based only on the original amount borrowed or invested.

Question 17

For a loan or investment what is the original amount called (that you get from the bank)?

Answer 17

The principal

Question 18

What is the interest rate?

Answer 18

The percentage of the principal that is paid or earned as interest is called the interest rate.

The interest rate is often stated as “per annum” which means per year.

Question 19

What is the term of a loan or investement?

Answer 19

This is the length of time in years over which the money is deposited or borrowed.

Question 20

What is the formula to calculate simple interest?

Answer 20

Interest (I) = Principal (P) x term (t)

I=P x t

Remember the interest rates is written as a percentage and it must be changed to a non-percentage number before being used in a formula. To do this, divide by 100.

Question 21

What do you do when the term is not given in years but in days, weeks or months?

Answer 21

To use these lengths of time, divide each by how many there are in year to get a part of a year.

365 days in one year
52 weeks in one year
12 months in one year