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