Examples and Risk Levels

Maths Form 3 Chapter 3

 U^
A ^
Examples
S H
E E
M
Banks and what they offer
A
PR
 ^
Banks in Malaysia can be grouped under four categories;
U
^
commercial, Islamic, investment banks and development
A
H
financial institutions (in short, DFIs)
S
E E
AM
PR
 U^
Commercial
A ^
S H
These banks target the general public as

 Opening Bank Accounts

E E
customers. Some of their services include:

AM
 Transferring Funds

PR
 Making payments
 Offering financing and credit facilities
 And more, depending on the bank.
 U^
Islamic
A ^
S H
Unlike conventional banking, the Islamic
banking system:

E E
 Based on Islamic law (syarak)

AM
 Manages risk according to agreement

R
 Based on the principle of justice, halal &

P
profit-sharing and without usury
 No specific rate of return on early stages
of savings (known upon maturity)
 U^
Investment banks
A ^
S H
Investment banks, unlike commercial and

E
institutional accounts.
E
Islamic banks, manage corporate or

M
These corporate or institutional accounts

A
R
are assigned to investment bankers –

P
people who ‘help their clients raise money
in the capital markets, provide various
financial advisory services and assist with
mergers and acquisition activity’.
 Development Financial
Institutions (hereafter
U^
DFI[s])
A ^
S H
According to Bank Negara Malaysia, DFIs

E E
are institutions established by the
government to give financial assistance to

M
certain priority sectors of the economy and

A
largely funded by the government.

PR
If you’re dealing with these entities, you’re
either conducting business, investing or
obtaining financing with or from them.
 U^
A ^
H
Risk Levels
S
E E
M
Potential risks of various types of savings and investments
A
PR
 Brief Explanation on Potential Investment
Risk (henceforth risk[s])
U^
A ^
• Among the factors that should be considered before making an
investment.
S H
E E
• Defined as the uncertainty of losses that may be incurred from the
investments made.
AM
PR
 Comparison of savings and investments by
individuals in terms of risk levels
U^
A ^
Type of investment
H
Risk level
S
Saving
E
→ Risk free
E
TIPS

M
One way to reduce investment
Fixed deposits → Risk free
A
risk is to diversify one’s

R
Company shares → High investment portfolio. This

Real estate P → Moderate

helps to offset risks from each
investment and thus further
reduce the risk in the
Unit trust → Low investment portfolio.