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Comparing Variable & Fixed Interest Rate Loans Video

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

What is the economic term for the rate at which money loses value?

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1. When a variable interest rate is advertised as '5/1,' what do each of those numbers mean?

2. What is the primary difference between a fixed and variable loan?

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About This Quiz & Worksheet

Use this quiz/worksheet combo to test your knowledge of variable and fixed interest rate loans and why consumers have to pay interest on loans. The questions will quiz you on the primary difference between fixed and variable rate loans and why a lender may encourage a consumer to accept an adjustable rate mortgage.

Quiz & Worksheet Goals

This quiz and worksheet will test you on the following:

  • The economic term for the rate at which money loses value
  • The meaning of a 5/1 variable interest rate
  • A type of loan not commonly associated with variable interest rates

Skills Practiced

This quiz and worksheet will allow students to test their knowledge by using the following skills:

  • Distinguishing differences - identify the primary difference between a fixed and variable rate interest loan
  • Information recall - access the knowledge you've gained regarding why a lender might encourage a consumer to accept an adjustable rate mortgage
  • Knowledge application - use your knowledge to answer questions about 5/1 variable interest rate loans

Additional Learning

Learn more about interest rates for loans by reviewing the accompanying lesson, Comparing Variable & Fixed Interest Rate Loans. The lesson covers the following objectives:

  • Define principle as it applies to loans
  • Identify how a variable rate protects lenders
  • Calculate the amount of interest you would pay with a fixed rate loan
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