Math105 Chapter 13

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Number 1. The initial amount of money invested or borrowed

Correct Answer: Principal

Number 2. The percentage of the principal that will be paid or earned

Correct Answer: Interest rate

Number 3. Interest which is calculated and added to the principal once at the end of the loan or investment

Correct Answer: Simple interest

Number 4. The value of a loan or investment at the end of the term

Correct Answer: Future value

Number 5. Simple interest in which each month is assumed to have 30 days and each year 360 days

Correct Answer: Ordinary interest

Number 6. Simple interest in which the number of days is counted exactly

Correct Answer: Exact interest

Number 7. Interest which is calculated and added to the principal periodically throughout the loan or investment

Correct Answer: Compound interest

Number 8. Simple interest in which the number of days is counted exactly

Correct Answer: Exact interest

Number 9. Interest which is calculated and added to the principal periodically throughout the loan or investment

Correct Answer: Compound interest

Number 10. The length of time between interest calculations

Correct Answer: Compounding period

Number 11. The amount in an account at any point in time

Correct Answer: Balance

Number 12. The simple interest rate that would yield the same amount of interest in one year as does a given compound interest rate

Correct Answer: Effective annual rate

Number 13. A simple interest amount charged on a monthly basis, such as on a credit card

Correct Answer: Finance charge

Number 14. A simple interest loan in which equal periodic payments are made over the life of the loan

Correct Answer: Amortized loan

Number 15. The total length of a loan

Correct Answer: Term

Number 16. A record of the amounts paid to principal and interest over the life of an amortized loan

Correct Answer: Amortization schedule

Number 17. Formulas that help banks determine the total house price and the monthly housing expenses that a person can afford

Correct Answer: Affordability guidelines

Number 18. A loan that is secured by real estate

Correct Answer: Mortgage

Number 19. One percent of the loan amount, paid at closing

Correct Answer: Point

Number 20. Amount of cash paid to the seller at closing

Correct Answer: Down payment

Number 21. A reserve account in which monthly insurance and tax payments are placed by the bank until the annual payments are due

Correct Answer: Escrow account