EPF - Unit 6 - Money Management
Exam Study Guide
Fiscal responsibility - Answer This refers to the practice of managing financial
resources in a responsible and sustainable manner. This includes making informed
decisions about spending, saving, investing, and borrowing money.
Personal Budget - Answer This is a financial plan that outlines an individual's income,
expenses, and savings goals over a set period of time, typically a month or a year. It is a
tool for managing personal finances and ensuring that expenses do not exceed income.
Renting - Answer This refers to the act of paying money to a landlord or property owner
in exchange for the right to occupy a house or apartment.
Leasing - Answer This is often used in commercial real estate or for high-end rental
properties where tenants may have specific needs or requirements that are not met by a
standard rental agreement. This is similar to renting but usually refers to longer-term
agreements, typically six months or more.
Owning (a home) - Answer refers to the act of purchasing a property outright and
becoming the legal owner of the house and the land it sits on. Here, they are responsible
for maintaining the property, paying property taxes, and any repairs or improvements
that may be needed.
Mortgage - Answer This is a loan used to purchase a property, such as a house or a
commercial building. The property being purchased serves as collateral for the loan,
meaning that if the borrower is unable to make their payments, the lender may foreclose
on the property and sell it to recover their losses.
Foreclosure - Answer This is a legal process by which a lender takes possession of a
property after the borrower has stopped paying on their home loan payments. In a
foreclosure, the lender files a lawsuit against the borrower to force the sale of the
property in order to recover the unpaid balance of the loan.
Fixed-rate mortgages - Answer These mortgages have a fixed interest rate throughout
the loan term, which means the monthly payment remains the same. The loan term can
range from 10 to 30 years.
Adjustable-rate mortgages (ARMs) - Answer These mortgages have an interest rate that
can fluctuate over time, typically based on a benchmark interest rate such as the prime
rate or the London Interbank Offered Rate (LIBOR).
Interest-only mortgages - Answer These mortgages allow borrowers to pay only the
interest for a specified period, typically 5 to 10 years. After that period, the borrower
must start paying the principal as well.
Exam Study Guide
Fiscal responsibility - Answer This refers to the practice of managing financial
resources in a responsible and sustainable manner. This includes making informed
decisions about spending, saving, investing, and borrowing money.
Personal Budget - Answer This is a financial plan that outlines an individual's income,
expenses, and savings goals over a set period of time, typically a month or a year. It is a
tool for managing personal finances and ensuring that expenses do not exceed income.
Renting - Answer This refers to the act of paying money to a landlord or property owner
in exchange for the right to occupy a house or apartment.
Leasing - Answer This is often used in commercial real estate or for high-end rental
properties where tenants may have specific needs or requirements that are not met by a
standard rental agreement. This is similar to renting but usually refers to longer-term
agreements, typically six months or more.
Owning (a home) - Answer refers to the act of purchasing a property outright and
becoming the legal owner of the house and the land it sits on. Here, they are responsible
for maintaining the property, paying property taxes, and any repairs or improvements
that may be needed.
Mortgage - Answer This is a loan used to purchase a property, such as a house or a
commercial building. The property being purchased serves as collateral for the loan,
meaning that if the borrower is unable to make their payments, the lender may foreclose
on the property and sell it to recover their losses.
Foreclosure - Answer This is a legal process by which a lender takes possession of a
property after the borrower has stopped paying on their home loan payments. In a
foreclosure, the lender files a lawsuit against the borrower to force the sale of the
property in order to recover the unpaid balance of the loan.
Fixed-rate mortgages - Answer These mortgages have a fixed interest rate throughout
the loan term, which means the monthly payment remains the same. The loan term can
range from 10 to 30 years.
Adjustable-rate mortgages (ARMs) - Answer These mortgages have an interest rate that
can fluctuate over time, typically based on a benchmark interest rate such as the prime
rate or the London Interbank Offered Rate (LIBOR).
Interest-only mortgages - Answer These mortgages allow borrowers to pay only the
interest for a specified period, typically 5 to 10 years. After that period, the borrower
must start paying the principal as well.
