
Loan and Credit Basics Flashcard
Flashcard
•
Mathematics
•
12th Grade
•
Practice Problem
•
Hard
Wayground Content
FREE Resource
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15 questions
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1.
FLASHCARD QUESTION
Front
What is revolving credit?
Back
Revolving credit is a type of credit that allows the borrower to use or withdraw funds up to a certain limit, repay it, and borrow again. A common example is a credit card.
2.
FLASHCARD QUESTION
Front
What are the three main components of a loan?
Back
The three main components of a loan are the principal (the amount borrowed), the interest (the cost of borrowing), and the loan term (the duration for repayment).
3.
FLASHCARD QUESTION
Front
Why are secured loans considered less risky for lenders?
Back
Secured loans are less risky for lenders because they are backed by collateral, which means the lender can take the collateral if the borrower fails to repay the loan.
4.
FLASHCARD QUESTION
Front
What is the formula for calculating simple interest?
Back
The formula for calculating simple interest is: Interest = Principal x Rate x Time.
5.
FLASHCARD QUESTION
Front
If JJ takes a $10,000 loan at 5% interest for 3 years, how much total will he pay back?
Back
JJ will pay back a total of $11,500.
6.
FLASHCARD QUESTION
Front
What is the difference between secured and unsecured loans?
Back
Secured loans are backed by collateral, while unsecured loans are not and are based solely on the borrower's creditworthiness.
7.
FLASHCARD QUESTION
Front
What does the term 'principal' refer to in a loan?
Back
The principal is the original sum of money borrowed in a loan, excluding interest.
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