Unit 3: CFA 1 (Standard 4)

What is the definition of an interest rate?

• The amount of money borrowed from a bank

• The percentage charged or paid for the use of money

• The total amount of a loan

• The time period for repaying a loan

Tags

GA.SS.12.SSEPF4

Which of the following is an example of a fixed interest rate?

• An interest rate that changes every month

• An interest rate that stays the same throughout the loan term

• An interest rate that depends on the stock market

• An interest rate that is only charged on weekends

Tags

GA.SS.12.SSEPF4

What does APR stand for in the context of loans and credit cards?

• Annual Payment Rate

• Annual Percentage Rate

• Average Payment Ratio

• Annual Principal Return

Tags

GA.SS.12.SSEPF4

Which of the following best describes compound interest?

• Interest calculated only on the original principal

• Interest calculated on both the principal and previously earned interest

• Interest that decreases over time

• Interest that is paid in cash only

Tags

GA.SS.12.SSEPF4

A higher interest rate on a loan will result in which of the following?

• Lower total repayment amount

• Higher total repayment amount

• No change in repayment amount

• Repayment amount depends on the borrower's age

Tags

GA.SS.12.SSEPF4

If the interest rate on a savings account increases, what is the likely effect on the amount of interest earned?

• It will decrease

• It will stay the same

• It will increase

• It will be eliminated

Tags

GA.SS.12.SSEPF4

Which of the following is a direct result of a decrease in interest rates for consumers?

• Higher loan payments

• Lower loan payments

• No change in loan payments

• Loan payments are delayed

Tags

GA.SS.12.SSEPF4

A consumer is deciding between two credit cards: one with a 12% APR and one with a 20% APR. Which card will result in less interest paid if the balance is not paid in full each month?

• The card with 12% APR

• The card with 20% APR

• Both will result in the same interest

• It depends on the credit limit

Tags

GA.SS.12.SSEPF4

If a consumer wants to maximize the interest earned on their savings, which type of account should they choose?

• An account with a low interest rate

• An account with a high interest rate

• An account with no interest

• An account with a fixed fee

Tags

GA.SS.12.SSEPF4

A consumer is considering taking out a loan. How would a higher interest rate affect their monthly payments?

• Monthly payments would decrease

• Monthly payments would increase

• Monthly payments would stay the same

• Monthly payments would be eliminated

Tags

GA.SS.12.SSEPF4