Term

### What does the term "term" in the context of loans refer to? - [x] The period over which the loan is to be repaid. - [ ] The total principal amount of the loan. - [ ] The interest rate applied to the loan. - [ ] The name of the borrower. > **Explanation:** In the context of loans, "term" refers to the period over which the loan is to be repaid, such as a 5-year or 10-year loan term. ### What typically happens at the end of a certificate of deposit term? - [x] The interest is paid out or capitalized, and the principal is returned to the holder. - [ ] The bank keeps the principal indefinitely. - [ ] The interest rate is locked permanently. - [ ] The certificate of deposit must be renewed automatically. > **Explanation:** At the end of the term, the interest earnings are either paid out to the holder or capitalized (added to the principal), and the principal amount is returned to the holder. ### Can a term life insurance policy be converted to whole life insurance? - [x] Yes, many term life policies offer a conversion option. - [ ] No, term life policies cannot be converted. - [ ] Only if the conversion is requested in the first year. - [ ] Conversion is limited to policies over $1 million. > **Explanation:** Many term life insurance policies have options that allow the policyholder to convert to a whole life policy within a certain timeframe. ### What does "breach of contract" mean? - [ ] Following the contract terms fully. - [ ] Creating a new contract within the same term. - [x] Failure to comply with the contract terms and conditions. - [ ] Extending the contract term without consent. > **Explanation:** A "breach of contract" occurs when one party fails to comply with the stipulated terms and conditions of the agreement. ### What is generally included in the "terms and conditions" section of a contract? - [ ] Only the names of the parties involved. - [ ] Contact information of the parties. - [x] Detailed provisions pertaining to the obligations and rights of parties. - [ ] Execution date of the contract. > **Explanation:** "Terms and conditions" contain detailed provisions outlining each party's obligations, rights, expectations, and penalties for non-compliance. ### How is the interest rate related to the term of an investment? - [ ] Interest rates are unrelated to the term. - [x] Longer terms often mean higher interest rates. - [ ] Shorter terms always have higher interest rates. - [ ] The term determines the currency used. > **Explanation:** Generally, longer investment terms may offer higher interest rates due to the extended commitment of funds, although this is not a fixed rule. ### What does "amortization period" refer to in a term loan? - [ ] The initial down payment required. - [ ] The grace period before payments start. - [x] The total period over which the loan is repaid. - [ ] The initial setup fee for the loan. > **Explanation:** "Amortization period" is the total time frame over which the borrower is expected to repay the loan in full through regular payments. ### What must be specified for a term life insurance policy to be effective? - [ ] The color of the insured's car. - [x] The coverage period or term length. - [ ] The quantity of the insured's assets. - [ ] The employment history of the insured. > **Explanation:** An effective term life insurance policy must specify the coverage period or term length during which the policy provides benefits. ### Who benefits from a term life insurance policy if the insured dies during the term? - [ ] The insurance company. - [x] The designated beneficiaries. - [ ] The state government. - [ ] The policyholder only if alive. > **Explanation:** If the insured passes away during the term, the designated beneficiaries receive the death benefit specified in the policy. ### What is a common feature of a contract with a flexible term? - [ ] It ends without notice. - [x] It may allow for extensions or renegotiation. - [ ] Requires no compliance. - [ ] It has a fixed end date. > **Explanation:** Contracts with flexible terms often include clauses that allow for extensions, amendments, or renegotiation of the contractual obligations.