Question 1

Which of the following is accurate concerning 529 college savings plans?

Accepted Answer

A)  Contributions are tax deductible for both state and federal income taxes. 
B)  Earnings are tax-free when used for qualifying educational expenses. 
C)  They have no impact on qualifying for financial aid. 
D)  There is no limit on how much can be contributed. 
E)  All of the above. 
A)  Contributions are tax deductible for both state and federal income taxes. 
B)  Earnings are tax-free when used for qualifying educational expenses. 
C)  They have no impact on qualifying for financial aid. 
D)  There is no limit on how much can be contributed. 
E)  All of the above.

Question 2

PLUS loans are made to parents or legal guardians rather than to the student.

Accepted Answer

A) True 
 B)False

Question 3

Borrowing to pay for a college education is a legitimate use of credit.

Accepted Answer

A) True 
 B)False

Question 4

The primary type of loan made by a savings and loan association is the long-term installment loan used for the purchase of a home.

Accepted Answer

A) True 
 B)False

Question 5

The repayment period on most installment loans is six to twelve months.

Accepted Answer

A) True 
 B)False

Question 6

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.
-If the proceeds from the sale of your repossessed collateral are insufficient to pay the balance due on your loan,the lender usually [can | cannot] collect the deficiency from you.

Accepted Answer

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

Question 7

The add-on method is less expensive than the simple interest method when stated rates of interest are identical.

Accepted Answer

A) True 
 B)False

Question 8

If a loan has a prepayment penalty,there will be an additional cost to repays a loan early.

Accepted Answer

A) True 
 B)False

Question 9

The monthly payment on an 8%,36-month,add-on loan for $10,000 would be

Accepted Answer

A)  $278 
B)  $300 
C)  $314 
D)  $344 
E)  $380 
A)  $278 
B)  $300 
C)  $314 
D)  $344 
E)  $380

Question 10

The majority of consumer loans are set up with fixed interest rates.

Accepted Answer

A) True 
 B)False

Question 11

A ____ is often a source of low-rate automobile financing on specific models of vehicles.

Accepted Answer

A)  savings and loan association 
B)  credit union 
C)  commercial bank 
D)  consumer finance company 
E)  captive finance company 
A)  savings and loan association 
B)  credit union 
C)  commercial bank 
D)  consumer finance company 
E)  captive finance company

Question 12

A personal consumer loan could be used to

Accepted Answer

A)  consolidate several loans into one. 
B)  purchase a car. 
C)  cover a temporary cash shortfall. 
D)  buy a mobile home. 
E)  do all these things. 
A)  consolidate several loans into one. 
B)  purchase a car. 
C)  cover a temporary cash shortfall. 
D)  buy a mobile home. 
E)  do all these things.

Question 13

The student loans with the best loan terms are the Stafford and the Perkins loans.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following are recommended if you loan money to a friend or relative?

Accepted Answer

A)  Do it in a business-like fashion. 
B)  Charge interest if the loan is not to be quickly repaid. 
C)  Be sure both parties understand it is a loan,not a gift. 
D)  Lend only money you can afford to give away. 
E)  All of the above 
A)  Do it in a business-like fashion. 
B)  Charge interest if the loan is not to be quickly repaid. 
C)  Be sure both parties understand it is a loan,not a gift. 
D)  Lend only money you can afford to give away. 
E)  All of the above

Question 15

The ____ legally binds the borrower and lender to all items and conditions of an installment contract.

Accepted Answer

A)  note 
B)  contract 
C)  security agreement 
D)  sales contract 
E)  bond 
A)  note 
B)  contract 
C)  security agreement 
D)  sales contract 
E)  bond

Question 16

Annual percentage rate is equivalent to

Accepted Answer

A)  dollar cost of credit method. 
B)  discount method. 
C)  average loan balance method. 
D)  add-on method. 
E)  simple interest method. 
A)  dollar cost of credit method. 
B)  discount method. 
C)  average loan balance method. 
D)  add-on method. 
E)  simple interest method.

Question 17

Consumer loans,like open account credit,result from a rather informal process.

Accepted Answer

A) True 
 B)False

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.
-When the interest rate on savings is lower than the interest rate on a loan,it is less expensive to [borrow | use savings] to make a purchase.

Accepted Answer

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

Question 19

Which of the following are recommended if you loan money to a friend or relative?

Accepted Answer

A)  Charge a market rate of interest. 
B)  Have a lawyer draft a loan contract. 
C)  Put the agreement in writing. 
D)  Make the loan due within one year or less. 
E)  All of the above 
A)  Charge a market rate of interest. 
B)  Have a lawyer draft a loan contract. 
C)  Put the agreement in writing. 
D)  Make the loan due within one year or less. 
E)  All of the above

Question 20

The cash value of a whole life insurance policy can be used as a source of loan collateral.

Accepted Answer

A) True 
 B)False

Which of the following is accurate concerning 529 college savings plans?

PLUS loans are made to parents or legal guardians rather than to the student.

Borrowing to pay for a college education is a legitimate use of credit.

The primary type of loan made by a savings and loan association is the long-term installment loan used for the purchase of a home.

The repayment period on most installment loans is six to twelve months.

The add-on method is less expensive than the simple interest method when stated rates of interest are identical.

If a loan has a prepayment penalty,there will be an additional cost to repays a loan early.

The monthly payment on an 8%,36-month,add-on loan for $10,000 would be

The majority of consumer loans are set up with fixed interest rates.

A ____ is often a source of low-rate automobile financing on specific models of vehicles.

A personal consumer loan could be used to

The student loans with the best loan terms are the Stafford and the Perkins loans.

Which of the following are recommended if you loan money to a friend or relative?

The ____ legally binds the borrower and lender to all items and conditions of an installment contract.

Annual percentage rate is equivalent to

Consumer loans,like open account credit,result from a rather informal process.

Which of the following are recommended if you loan money to a friend or relative?

The cash value of a whole life insurance policy can be used as a source of loan collateral.

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

Which of the following is accurate concerning 529 college savings plans?

PLUS loans are made to parents or legal guardians rather than to the student.

Borrowing to pay for a college education is a legitimate use of credit.

The primary type of loan made by a savings and loan association is the long-term installment loan used for the purchase of a home.

The repayment period on most installment loans is six to twelve months.

The add-on method is less expensive than the simple interest method when stated rates of interest are identical.

If a loan has a prepayment penalty,there will be an additional cost to repays a loan early.

The monthly payment on an 8%,36-month,add-on loan for $10,000 would be

The majority of consumer loans are set up with fixed interest rates.

A ____ is often a source of low-rate automobile financing on specific models of vehicles.

A personal consumer loan could be used to

The student loans with the best loan terms are the Stafford and the Perkins loans.

Which of the following are recommended if you loan money to a friend or relative?

The ____ legally binds the borrower and lender to all items and conditions of an installment contract.

Annual percentage rate is equivalent to

Consumer loans,like open account credit,result from a rather informal process.

Which of the following are recommended if you loan money to a friend or relative?

The cash value of a whole life insurance policy can be used as a source of loan collateral.

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