Test 3

Question 1

issue of money, goods or services to an individual or entity with the expectation of future payments

Answer 1

credit

Question 2

trusted institutions where money is kept secure

Answer 2

bank

Question 3

process of borrowing money from an individual or investor without a bank’s consent

Answer 3

peer-to-peer lending

Question 4

amount of money charged by a bank to borrow money

Answer 4

interest

Question 5

short-term, high cost loan typically for $500 or less and due on the next payday
or when income is received

Answer 5

payday loan

Question 6

valuable asset the borrower offers to lender for securement of the loan provided

Answer 6

collateral

Question 7

maximum amount being loaned to the borrower by the creditor

Answer 7

revolving credit

Question 8

determines a series of fixed or installment payments a borrower must repay over a determined period of time

Answer 8

installment credit

Question 9

right to keep possession of property of another until a debt owed by the person is discharged

Answer 9

lien

Question 10

loan which is issued and supported by a borrower’s reliability, rather than value of an asset

Answer 10

unsecured credit

Question 11

provides a line of credit from a lending institution which can be accessed with a card, has a maximum limit (credit limit) which can be spent and requires monthly repayments

Answer 11

credit card

Question 12

draws money directly from the consumer’s checking account when a purchase
is made

Answer 12

debit card

Question 13

document or spreadsheet outlining an individual’s financial position at a given
point of time

Answer 13

income statement

Question 14

report which provides a list of assets and debts owed

Answer 14

net worth statement

Question 15

number given to an individual which indicates to the lender their ability to repay a loan

Answer 15

credit score

Question 16

shows how an individual has used credit in the past, how much debt they currently have and whether or not they pay their bills on time

Answer 16

credit report

Question 17

annual or yearly rate charged for borrowing or earned through an investment

Answer 17

annual percentage rate

Question 18

interest rate which stays the same throughout the loan

Answer 18

fixed interest

Question 19

interest rate which fluctuates overtime as market rates change

Answer 19

variable interest

Question 20

process which involves paying off a debt with a fixed payment plan over a specific period of time

Answer 20

loan amortization

Question 21

money which is agreed to be paid back and only goes towards the principal of the loan

Answer 21

principal payment

Question 22

companies engaged in the business of dealing with the monetary transactions
of individual and commercial clients

Answer 22

financial institutions

Question 23

secure means of storing money in which individuals or business can deposit or
withdraw money as needed

Answer 23

checking account

Question 24

secure means of storing money while earning interest

Answer 24

savings account

Question 25

fee paid regularly at a set rate

Answer 25

interest

Question 26

money borrowed for personal reasons; to be repaid within a specific time frame and with added interest

Answer 26

personal loan

Question 27

money borrowed for the purchase of real estate; to be repaid within a specific time frame and with added interest

Answer 27

mortgage loan

Question 28

money borrowed for business reasons; to be repaid within a specific time frame and with added interest

Answer 28

business loan

Question 29

money borrowed for the purchase of a vehicle; to be repaid within a specific time frame and with added interest

Answer 29

auto loan

Question 30

form of payment in which customers draw money directly from their checking account

Answer 30

debit card

Question 31

form of payment in which customers borrow money from a financial institution up to a certain limit, with added interest

Answer 31

credit card

Question 31

allows an individual to borrow against their home’s value to finance major expenses; to be repaid within a specific time frame and with added interest

Answer 31

home equity loan

Question 32

allows banks to manage and protect an account on behalf of a beneficiary

Answer 32

trust account

Question 33

individual who holds legal control of the assets in a trust account

Answer 33

beneficiary

Question 34

electronic movement of money from one account to another

Answer 34

electronic funds transfer

Question 35

allows individuals to have their paycheck or other payments deposited directly into their account

Answer 35

direct deposits

Question 35

electronic banking terminal which allows customers to complete basic transactions, such as deposits or withdrawals

Answer 35

automated teller machine

Question 36

electronic banking systems allowing customers to conduct financial transactions via the Internet

Answer 36

online banking

Question 37

line of credit issued to customers to cover checks or debits exceeding the amount in their account

Answer 37

overdraft protection

Question 38

form on online payment where money is electronically withdrawn from the customer’s account

Answer 38

electronic checks

Question 39

allows customers to pay bills or transfer money between accounts over the phone

Answer 39

pay-by-phone system

Question 40

organizations which accept deposits and provide loans

Answer 40

depository financial institutions

Question 41

receive, transfer and lend money to individuals, businesses and government

Answer 41

commercial banks

Question 42

provide financial services, such as checking and savings accounts, mortgages, credit cards and auto loans for individuals, families and small businesses

Answer 42

retail banks

Question 43

offer financial services such as checking and savings accounts, debit and credit cards, mortgage and auto loans and lines of credit at an affordable rate for its members

Answer 43

credit unions

Question 44

handle deposit accounts, personal loans and mortgage lending

Answer 44

savings and loan associations

Question 45

do not offer federally insured deposit accounts

Answer 45

non-depository financial institutions

Question 46

private organizations which hold and manage securities for investment purposes

Answer 46

Investment Banks & Companies

Question 47

financial instruments with ownership rights, debt rights, or rights to buy, sell or trade, such as stocks and bonds

Answer 47

securities

Question 48

assist individuals in buying and selling securities among investors

Answer 48

brokerage firms

Question 49

provide financial coverage to protect individuals or organizations against possible adverse events in exchange for premium payments

Answer 49

insurance companies

Question 50

amount paid for an insurance policy

Answer 50

premium

Question 51

provides loans for prospective home buyers

Answer 51

mortgage company

Question 52

requiring more than one method of credential authentication to verify a user’s identity

Answer 52

multifactor authentication

Question 53

continued actions of a business

Answer 53

business continuity

Question 54

wrongful or criminal deception used for financial gain

Answer 54

fraud

Question 55

sending forged e-mails impersonating an online bank

Answer 55

phishing