Test Review: Unit 6 (Part B)

Front

What is the formula to calculate the monthly periodic rate from an annual percentage rate (APR)?

Back

Monthly Periodic Rate = APR / 12

Front

What is the monthly periodic rate if the APR is 24.6%?

Back

2.05% (Monthly Periodic Rate = 24.6% / 12)

Front

Do private student loans have better interest rates than government student loans?

Back

False

Front

What is the grace period in relation to student loans?

Back

The time between graduation and when repayment must begin.

Front

What is the purpose of a credit report?

Back

To help lenders determine if you are a qualified candidate for credit.

Front

How is the finance charge calculated on a credit card?

Back

Finance Charge = Ending Balance x Monthly Periodic Rate.

Front

If Maryanne's ending balance is $1,789 and the monthly periodic rate is 1.85%, what is her finance charge?

Back

$33.10 (Finance Charge = $1,789 x 0.0185)

Front

What does subsidized mean in the context of student loans?

Back

Loans where the government pays the interest while the student is in school.

Front

What is an unsubsidized student loan?

Back

Loans where the borrower is responsible for all interest that accrues.

Front

What is an award letter?

Back

A document that outlines the financial aid awarded to a student.