Financial Literacy Terms Exam Questions & Answers.
Adjustable rate mortgage (ARM) - CORRECT ANSWER An adjustable rate mortgage is a long-term loan you use to finance a real estate purchase, typically a home. The interest rate on an ARM is adjusted, or changed, during its term.
Annual percen...
Adjustable rate mortgage (ARM) - CORRECT ANSWER An adjustable rate mortgage is a long-term loan
you use to finance a real estate purchase, typically a home. The interest rate on an ARM is adjusted, or
changed, during its term.
Annual percentage rate (APR) - CORRECT ANSWER What credit costs you each year, expressed as a
percentage of the loan amount.
Asset - CORRECT ANSWER Assets are everything you own that has any monetary value, plus any money
you are owed.
Award Letter - CORRECT ANSWER The award letter is sent by the Office of Financial Aid and provides
information on the types and amounts of aid offered as well as specific program information, student
responsibilities and the conditions that govern the award.
Award Year - CORRECT ANSWER The Hope College Award Year includes the fall and spring semesters
and the subsequent summer sessions.
Bankruptcy - CORRECT ANSWER Bankruptcy means being insolvent, or unable to pay your debts. In that
case, you can file a bankruptcy petition to seek a legal resolution.
Beneficiary - CORRECT ANSWER A beneficiary is the person or organization who receives assets that are
held in your name in a retirement plan, or are paid on your behalf by an insurance company, after your
death.
Bond - CORRECT ANSWER Bonds are debt securities issued by corporations and governments.
Budget - CORRECT ANSWER A budget is a written record of income and expenses during a specific time
frame, typically a year.
, Capital - CORRECT ANSWER Capital is money that is used to generate income or make an investment.
Capital gain - CORRECT ANSWER When you sell an asset at a higher price than you paid for it.
Capital loss - CORRECT ANSWER When you sell a capital asset for less than you paid for it.
Capitalization of Interest - CORRECT ANSWER Capitalizing interest means adding unpaid, accumulated
interest to the principal balance of your loan. Capitalization increases the total cost of your loan. If you
choose to let your interest be capitalized, you repay more money in total than if you pay the interest
while you are in school. Whichever option you choose, you are responsible for paying the full amount of
all interest on the loan.
Car insurance - CORRECT ANSWER Car insurance covers theft of and damage to your car or damage that
your car causes, plus liability protection in case you are sued as a result of an accident.
Cash flow - CORRECT ANSWER Money coming into your accounts and the money you are spending over
a specific period.
Cash value - CORRECT ANSWER Cash value is the amount that an account is worth at any given time.
Central Processing System (CPS) - CORRECT ANSWER The federal contractor that processes your FAFSA
data. The CPS performs database matches and calculates your official Expected Family Contribution
(EFC), sends you your electronic Student Aid Report (SAR), and electronically transmits your FAFSA data
(your ISIR record) to Hope College.
Checking account - CORRECT ANSWER Checking accounts are transaction accounts that allow you to
authorize the transfer of money to another person or organization either by writing a check that
includes the words "Pay to the order of" or by making an electronic transfer.
Closing costs - CORRECT ANSWER Expenses paid to finalize a transaction over and above the cost of
property/real estate.
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