FIN 2100 Midterm 2 Test Questions
and All Correct Answers 2025-2026
Updated.
impulse buying - Answer Unplanned Buying. Can result in financial problems
cooperative - Answer a non-profit organization whose member-owners may save money on
certain products or services
open dating - Answer information about freshness or shelf life found on the package of a
perishable product.
unit pricing - Answer The use of a standard unit of measurement to compare the prices of
packages of different sizes.
rebate - Answer a partial refund of the price of a product.
warranty - Answer A written guarantee from the manufacturer or distributor of a product
that specifies the conditions under which the product can be returned, replaced, or repaired.
service contract - Answer An agreement between a business and a consumer to cover the
repair costs of a product.
meditation - Answer The attempt by an impartial third party to resolve a difference between
two parties through discussion and negotiation.
arbitration - Answer The settlement of a difference by a third party whose decision is legally
binding.
small claims court - Answer A court that settles legal differences involving amounts below a
set limit and employs a process in which the litigants usually do not use a lawyer.
class-action suit - Answer A legal action taken by a few individuals on behalf of all the people
who have suffered the same alleged injustice.
legal aid society - Answer One of a network of publicly supported community law offices that
provide legal assistance to consumers who cannot afford their own attorney.
,lease - Answer A legal document that defines the conditions of a rental agreement.
condominium - Answer An individually owned housing unit in a building with several such
units.
cooperative housing - Answer A form of housing in which a building containing a number of
housing units is owned by a non profit organization whose members rent the units.
manufactured home - Answer A housing unit that is fully or partially assembled in a factory
before being moved to the living site.
zoning laws - Answer Restrictions on how the property in an area can be used.
earnest money - Answer A portion of the price of a home that the buyer deposits as
evidence of good faith to indicate a serious purchase offer.
mortgage - Answer A long-term loan on a specific piece of property such as a home or other
real estate
point - Answer 1% of a mortgage; represents "prepaid" interest at closing (in
exchange for a lower interest rate)
conventional mortgage - Answer A fixed-rate, fixed-payment home loan with equal
payments over 15, 20, or 30 years.
amortization - Answer The reduction of a loan balance through payments made over a
period of time.
balloon mortgage - Answer A home loan with fixed monthly payments and a large final
payment, usually after 3, 5 or 7 years.
adjustable-rate mortgage (ARM) - Answer A home loan with an interest rate that can change
during the mortgage term due to changes in market interest rates; also called a flexible-rate
mortgage or a variable-rate mortgage.
rate cap - Answer A limit on the increases and decreases in the interest rate charged on an
adjustable-rate mortgage.
,payment cap - Answer A limit on the payment increases for an adjustable-rate mortage.
growing-equity mortgage - Answer A home loan agreement that provides for payment
increases to allow the amount owed to be paid off more quickly.
buy-down - Answer An interest rate subsidy from a home builder, a real estate developer or
by the buyer that reduces a home buyer's mortgage payments during the first few year of the
loan.
second mortgage - Answer A cash advance based on the paid-up value of a home; also called
a home equity loan.
reverse mortgage - Answer A loan based on the equity in a home, that provides elderly
homeowners with tax-free income and is paid back with interest when the home is sold or the
homeowner dies.
refinance - Answer obtaining a new mortgage on a home to get a lower interest rate.
closing costs - Answer Fees and charges paid when a real estate transaction is completed;
also called settlement costs.
title insurance - Answer Insurance that, during the mortgage term, protects the owner or the
lender against financial loss resulting from future defects in the title and from other unforeseen
property claims not excluded by the policy.
deed - Answer A document that transfers ownership of property from one party to another.
escrow account - Answer Money, usually deposited with the lending financial institution, for
the payment of property taxes and homeowner's insurance
appraisal - Answer An estimate of the current value of a property.
insurance - Answer Protection against possible financial loss.
insurance company - Answer A risk-sharing firm that assumes financial responsibility for
losses that may result from an insured risk.
insurer - Answer An insurance company.
, policy - Answer A written contract for insurance.
premium - Answer The amount of money a policyholder is charged for an insurance policy.
insured - Answer A person covered by an insurance policy.
policyholder - Answer A person who owns an insurance policy.
risk - Answer Chance or uncertainty of loss; also used to mean "the insured".
peril - Answer The cause of a possible loss.
hazard - Answer A factor that increases the likelihood of loss through some peril.
pure risk - Answer A risk in which there is only a chance of loss; also called insurable risk.
speculative risk - Answer A risk in which there is a chance of either loss or gain.
self-insurance - Answer The process of establishing a monetary fund to cover the cost of a
loss.
liability - Answer Legal responsibility for the financial cost of another person's losses or
injuries.
negligence - Answer Failure to take ordinary or reasonable care in a situation.
strict liability - Answer A situation in which a person is held responsible for intentional or
unintentional actions.
vicarious liability - Answer A situation in which a person is held legally responsible for the
actions of another person.
homeowner's insurance - Answer coverage for your home and its associated financial risks
(damages to personal property/injuries)
and All Correct Answers 2025-2026
Updated.
impulse buying - Answer Unplanned Buying. Can result in financial problems
cooperative - Answer a non-profit organization whose member-owners may save money on
certain products or services
open dating - Answer information about freshness or shelf life found on the package of a
perishable product.
unit pricing - Answer The use of a standard unit of measurement to compare the prices of
packages of different sizes.
rebate - Answer a partial refund of the price of a product.
warranty - Answer A written guarantee from the manufacturer or distributor of a product
that specifies the conditions under which the product can be returned, replaced, or repaired.
service contract - Answer An agreement between a business and a consumer to cover the
repair costs of a product.
meditation - Answer The attempt by an impartial third party to resolve a difference between
two parties through discussion and negotiation.
arbitration - Answer The settlement of a difference by a third party whose decision is legally
binding.
small claims court - Answer A court that settles legal differences involving amounts below a
set limit and employs a process in which the litigants usually do not use a lawyer.
class-action suit - Answer A legal action taken by a few individuals on behalf of all the people
who have suffered the same alleged injustice.
legal aid society - Answer One of a network of publicly supported community law offices that
provide legal assistance to consumers who cannot afford their own attorney.
,lease - Answer A legal document that defines the conditions of a rental agreement.
condominium - Answer An individually owned housing unit in a building with several such
units.
cooperative housing - Answer A form of housing in which a building containing a number of
housing units is owned by a non profit organization whose members rent the units.
manufactured home - Answer A housing unit that is fully or partially assembled in a factory
before being moved to the living site.
zoning laws - Answer Restrictions on how the property in an area can be used.
earnest money - Answer A portion of the price of a home that the buyer deposits as
evidence of good faith to indicate a serious purchase offer.
mortgage - Answer A long-term loan on a specific piece of property such as a home or other
real estate
point - Answer 1% of a mortgage; represents "prepaid" interest at closing (in
exchange for a lower interest rate)
conventional mortgage - Answer A fixed-rate, fixed-payment home loan with equal
payments over 15, 20, or 30 years.
amortization - Answer The reduction of a loan balance through payments made over a
period of time.
balloon mortgage - Answer A home loan with fixed monthly payments and a large final
payment, usually after 3, 5 or 7 years.
adjustable-rate mortgage (ARM) - Answer A home loan with an interest rate that can change
during the mortgage term due to changes in market interest rates; also called a flexible-rate
mortgage or a variable-rate mortgage.
rate cap - Answer A limit on the increases and decreases in the interest rate charged on an
adjustable-rate mortgage.
,payment cap - Answer A limit on the payment increases for an adjustable-rate mortage.
growing-equity mortgage - Answer A home loan agreement that provides for payment
increases to allow the amount owed to be paid off more quickly.
buy-down - Answer An interest rate subsidy from a home builder, a real estate developer or
by the buyer that reduces a home buyer's mortgage payments during the first few year of the
loan.
second mortgage - Answer A cash advance based on the paid-up value of a home; also called
a home equity loan.
reverse mortgage - Answer A loan based on the equity in a home, that provides elderly
homeowners with tax-free income and is paid back with interest when the home is sold or the
homeowner dies.
refinance - Answer obtaining a new mortgage on a home to get a lower interest rate.
closing costs - Answer Fees and charges paid when a real estate transaction is completed;
also called settlement costs.
title insurance - Answer Insurance that, during the mortgage term, protects the owner or the
lender against financial loss resulting from future defects in the title and from other unforeseen
property claims not excluded by the policy.
deed - Answer A document that transfers ownership of property from one party to another.
escrow account - Answer Money, usually deposited with the lending financial institution, for
the payment of property taxes and homeowner's insurance
appraisal - Answer An estimate of the current value of a property.
insurance - Answer Protection against possible financial loss.
insurance company - Answer A risk-sharing firm that assumes financial responsibility for
losses that may result from an insured risk.
insurer - Answer An insurance company.
, policy - Answer A written contract for insurance.
premium - Answer The amount of money a policyholder is charged for an insurance policy.
insured - Answer A person covered by an insurance policy.
policyholder - Answer A person who owns an insurance policy.
risk - Answer Chance or uncertainty of loss; also used to mean "the insured".
peril - Answer The cause of a possible loss.
hazard - Answer A factor that increases the likelihood of loss through some peril.
pure risk - Answer A risk in which there is only a chance of loss; also called insurable risk.
speculative risk - Answer A risk in which there is a chance of either loss or gain.
self-insurance - Answer The process of establishing a monetary fund to cover the cost of a
loss.
liability - Answer Legal responsibility for the financial cost of another person's losses or
injuries.
negligence - Answer Failure to take ordinary or reasonable care in a situation.
strict liability - Answer A situation in which a person is held responsible for intentional or
unintentional actions.
vicarious liability - Answer A situation in which a person is held legally responsible for the
actions of another person.
homeowner's insurance - Answer coverage for your home and its associated financial risks
(damages to personal property/injuries)
