Question 1

College costs have been escalating faster than the overall rate of inflation.

Accepted Answer

A) True 
 B)False

Question 2

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement.
-The interest paid on a student loan [is sometimes | is not] tax deductible.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 3

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement.
-A finance company uses the discount method of calculating interest.The loan principal is $5,000,the interest rate is 10%,and repayment is expected in two years.You will receive [$5,000 | $4,000] from the lender.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 4

Commercial banks generally charge lower interest rates than other lending institutions because

Accepted Answer

A)  they make shorter term loans. 
B)  they usually take only the best credit risks. 
C)  depositors require lower rates. 
D)  they get their funds in the open credit market. 
E)  they make secured loans only. 
A)  they make shorter term loans. 
B)  they usually take only the best credit risks. 
C)  depositors require lower rates. 
D)  they get their funds in the open credit market. 
E)  they make secured loans only.

Question 5

If the discount method is used to calculate a finance charge of $250.60 on a $2,400 loan,the amount to be repaid is $2,400.

Accepted Answer

A) True 
 B)False

Question 6

If the add-on method is used to calculate a finance charge of $100.80 on a $1,800 loan,the amount to be repaid is $1,900.80.

Accepted Answer

A) True 
 B)False

Question 7

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement.
-You are borrowing $5,000 at 9%.You may choose a 24 or 36 month repayment plan.The total finance cost will be higher with the [24 | 36] month plan.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 8

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement.
-The legal method of getting an employer to pay a portion of the borrower's wages to the lender is known as wage [withholding | garnishment].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 9

A consumer loan probably would not be used to

Accepted Answer

A)  purchase an auto. 
B)  pay for college tuition. 
C)  consolidate several loans into one. 
D)  finance a special vacation. 
E)  buy back-to-school clothes. 
A)  purchase an auto. 
B)  pay for college tuition. 
C)  consolidate several loans into one. 
D)  finance a special vacation. 
E)  buy back-to-school clothes.

Question 10

When shopping for an automobile,it is best to shop for the loan after you go to the dealer's showroom.

Accepted Answer

A) True 
 B)False

Question 11

Both single-payment and installment loans can have variable interest rates.

Accepted Answer

A) True 
 B)False

Question 12

Jamil is purchasing a new truck for $30,000.Jamil is making a $2,000 down payment,and he will make 60 monthly payments of $541 each.What are the total finance costs on this loan?

Accepted Answer

Loan amount = $28,000 ($30,000

Question 13

A loan from the cash value of your life insurance policy would be characterized by

Accepted Answer

A)  increased death benefits to beneficiaries. 
B)  increased premiums. 
C)  unchanged death benefits available to beneficiaries. 
D)  no specific repayment date. 
E)  annual percentage rates higher than other sources. 
A)  increased death benefits to beneficiaries. 
B)  increased premiums. 
C)  unchanged death benefits available to beneficiaries. 
D)  no specific repayment date. 
E)  annual percentage rates higher than other sources.

Question 14

Student loan debt can be discharged by filing for bankruptcy.

Accepted Answer

A) True 
 B)False

Question 15

Credit unions lend money to qualified people who are

Accepted Answer

A)  employees. 
B)  members. 
C)  previous borrowers. 
D)  policyholders. 
E)  stockholders. 
A)  employees. 
B)  members. 
C)  previous borrowers. 
D)  policyholders. 
E)  stockholders.

Question 16

If the discount method is used to calculate a finance charge of $250.60 on a $2,400 loan,the amount to be disbursed to the borrower is $2,400.

Accepted Answer

A) True 
 B)False

Question 17

Sometimes it may be better to use savings rather than borrow to make a purchase.This would be recommended when

Accepted Answer

A)  the borrower has adequate savings. 
B)  interest rates are rising. 
C)  interest rates are falling. 
D)  the cost of borrowing is greater than the interest earned on the savings. 
E)  interest earned on savings is greater than the interest paid on the loan. 
A)  the borrower has adequate savings. 
B)  interest rates are rising. 
C)  interest rates are falling. 
D)  the cost of borrowing is greater than the interest earned on the savings. 
E)  interest earned on savings is greater than the interest paid on the loan.

Question 18

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement.
-You are borrowing $5,000 at 9%.You may choose a 24 or 36 month repayment plan.Monthly payments will be higher with the [24 | 36] month plan.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 19

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement.
-[Consumer finance companies | Credit unions] obtain funds from their shareholders and through open market borrowing.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 20

A personal,unsecured consumer loan is most frequently used to help borrowers straighten out a critical financial situation.

Accepted Answer

A) True 
 B)False

College costs have been escalating faster than the overall rate of inflation.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -The interest paid on a student loan [is sometimes | is not] tax deductible.

Commercial banks generally charge lower interest rates than other lending institutions because

If the discount method is used to calculate a finance charge of $250.60 on a $2,400 loan,the amount to be repaid is $2,400.

If the add-on method is used to calculate a finance charge of $100.80 on a $1,800 loan,the amount to be repaid is $1,900.80.

A consumer loan probably would not be used to

When shopping for an automobile,it is best to shop for the loan after you go to the dealer's showroom.

Both single-payment and installment loans can have variable interest rates.

Jamil is purchasing a new truck for $30,000.Jamil is making a $2,000 down payment,and he will make 60 monthly payments of $541 each.What are the total finance costs on this loan?

A loan from the cash value of your life insurance policy would be characterized by

Student loan debt can be discharged by filing for bankruptcy.

Credit unions lend money to qualified people who are

If the discount method is used to calculate a finance charge of $250.60 on a $2,400 loan,the amount to be disbursed to the borrower is $2,400.

Sometimes it may be better to use savings rather than borrow to make a purchase.This would be recommended when

A personal,unsecured consumer loan is most frequently used to help borrowers straighten out a critical financial situation.

Understanding the Financial Planning Process

Your Financial Statements and Plans

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds

Planning for Retirement

Preserving Your Estate

Filters

Exam 7: Using Consumer Loans

College costs have been escalating faster than the overall rate of inflation.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -The interest paid on a student loan [is sometimes | is not] tax deductible.

Commercial banks generally charge lower interest rates than other lending institutions because

If the discount method is used to calculate a finance charge of $250.60 on a $2,400 loan,the amount to be repaid is $2,400.

If the add-on method is used to calculate a finance charge of $100.80 on a $1,800 loan,the amount to be repaid is $1,900.80.

A consumer loan probably would not be used to

When shopping for an automobile,it is best to shop for the loan after you go to the dealer's showroom.

Both single-payment and installment loans can have variable interest rates.

Jamil is purchasing a new truck for $30,000.Jamil is making a $2,000 down payment,and he will make 60 monthly payments of $541 each.What are the total finance costs on this loan?

A loan from the cash value of your life insurance policy would be characterized by

Student loan debt can be discharged by filing for bankruptcy.

Credit unions lend money to qualified people who are

If the discount method is used to calculate a finance charge of $250.60 on a $2,400 loan,the amount to be disbursed to the borrower is $2,400.

Sometimes it may be better to use savings rather than borrow to make a purchase.This would be recommended when

A personal,unsecured consumer loan is most frequently used to help borrowers straighten out a critical financial situation.

Understanding the Financial Planning Process

Your Financial Statements and Plans

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds

Planning for Retirement

Preserving Your Estate

Filters