Question 1

Single payment loans are used mostly for short-term financing.

Accepted Answer

A) True 
 B)False

Question 2

Christine just finished her first year of work following graduation,and she feels it is time she assess her financial situation.Her annual gross income is $45,000,and her income after taxes is $35,800.She has the following liabilities.What is Christine's debt safety ratio,and what does it say about Christine's financial situation?

Accepted Answer

($265 + $250 + $58 + $195)/($3

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.
-When interest rates are rising,you would prefer a [fixed-rate | variable-rate] loan.

Accepted Answer

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

Question 4

The largest sales finance companies are captive finance companies such as

Accepted Answer

A)  Bank of America. 
B)  the Federal Home Loan Bank. 
C)  Ford Credit Corporation. 
D)  credit unions. 
E)  Home Savings and Loan Association. 
A)  Bank of America. 
B)  the Federal Home Loan Bank. 
C)  Ford Credit Corporation. 
D)  credit unions. 
E)  Home Savings and Loan Association.

Question 5

To qualify for a Perkins loan,you must

Accepted Answer

A)  demonstrate financial need. 
B)  visit the financial institution. 
C)  apply through your parents. 
D)  all of the above 
E)  a and c only 
A)  demonstrate financial need. 
B)  visit the financial institution. 
C)  apply through your parents. 
D)  all of the above 
E)  a and c only

Question 6

Cash value loans are available from all types of life insurance policies.

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.
-Using [simple | add-on] interest would be less expensive for the borrower when determining the total to be paid to the lender.

Accepted Answer

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

Question 8

If you borrow money on a single payment loan and discover you cannot pay it back when it is due you should

Accepted Answer

A)  let the payment become past due. 
B)  consolidate the loan. 
C)  convert the loan to installments. 
D)  negotiate a rollover 
E)  file bankruptcy 
A)  let the payment become past due. 
B)  consolidate the loan. 
C)  convert the loan to installments. 
D)  negotiate a rollover 
E)  file bankruptcy

Question 9

Generally speaking,variable rate loans are desirable if interest rates are expected to increase over the course of the loan.

Accepted Answer

A) True 
 B)False

Question 10

In order to receive student loans,the student must be making satisfactory progress in his academic program.

Accepted Answer

A) True 
 B)False

Question 11

Tom and Jane have been reviewing their financial statements.Using the following information,they have asked you to determine their debt safety ratio and advise them about assuming more debt in the future.

Accepted Answer

A)  Tom and Jane have a manageable debt ratio and can assume more debt. 
B)  Tom and Jane have a debt ratio that is very low and can consider assuming more debt. 
C)  Tom and Jane have a debt ratio around the danger range and should wait before assuming more debt. 
D)  Tom and Jane have a debt ratio that is very high and should assume no more debt. 
E)  It is impossible to tell what they should do. 
A)  Tom and Jane have a manageable debt ratio and can assume more debt. 
B)  Tom and Jane have a debt ratio that is very low and can consider assuming more debt. 
C)  Tom and Jane have a debt ratio around the danger range and should wait before assuming more debt. 
D)  Tom and Jane have a debt ratio that is very high and should assume no more debt. 
E)  It is impossible to tell what they should do.

Question 12

Installment loans are typically repaid in monthly payments.

Accepted Answer

A) True 
 B)False

Question 13

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 you want to calculate whether to take the rebate or the low interest rate on an auto financing deal,it would be most useful to have [time value of money tables | a financial calculator].

Accepted Answer

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

Question 14

You want to borrow $1,000 at an interest rate of 10%.The most expensive method of calculating the dollar cost of the interest on this installment loan will be the

Accepted Answer

A)  add-on method. 
B)  double declining balance method. 
C)  discount method. 
D)  simple interest method. 
E)  past-due balance method. 
A)  add-on method. 
B)  double declining balance method. 
C)  discount method. 
D)  simple interest method. 
E)  past-due balance method.

Question 15

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.
-Credit life insurance [is | is not] a good financial deal from the perspective of the borrower.

Accepted Answer

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

Question 16

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 must be a member of a [credit union | S&L] in order to borrow money there.

Accepted Answer

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

Question 17

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.
-Borrowing from relatives is [highly | seldom] recommended by financial advisors.

Accepted Answer

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

Question 18

To qualify for a Stafford loan,you must

Accepted Answer

A)  demonstrate financial need. 
B)  have a good credit rating. 
C)  make satisfactory academic progress. 
D)  all of the above 
E)  a and c only 
A)  demonstrate financial need. 
B)  have a good credit rating. 
C)  make satisfactory academic progress. 
D)  all of the above 
E)  a and c only

Question 19

Installment loans using the simple interest method

Accepted Answer

A)  have the highest finance charges of any method. 
B)  have interest charged only on the monthly loan balance. 
C)  do not have balloon payments. 
D)  have a lower APR than the stated interest rate. 
E)  have a higher APR than the stated interest rate. 
A)  have the highest finance charges of any method. 
B)  have interest charged only on the monthly loan balance. 
C)  do not have balloon payments. 
D)  have a lower APR than the stated interest rate. 
E)  have a higher APR than the stated interest rate.

Question 20

If a 12-month installment loan is prepaid at the end of 6 months,less than one half of the interest would be saved.

Accepted Answer

A) True 
 B)False

Single payment loans are used mostly for short-term financing.

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 interest rates are rising,you would prefer a [fixed-rate | variable-rate] loan.

The largest sales finance companies are captive finance companies such as

To qualify for a Perkins loan,you must

Cash value loans are available from all types of life insurance policies.

If you borrow money on a single payment loan and discover you cannot pay it back when it is due you should

Generally speaking,variable rate loans are desirable if interest rates are expected to increase over the course of the loan.

In order to receive student loans,the student must be making satisfactory progress in his academic program.

Tom and Jane have been reviewing their financial statements.Using the following information,they have asked you to determine their debt safety ratio and advise them about assuming more debt in the future.

Installment loans are typically repaid in monthly payments.

You want to borrow $1,000 at an interest rate of 10%.The most expensive method of calculating the dollar cost of the interest on this installment loan will be the

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. -Credit life insurance [is | is not] a good financial deal from the perspective of the borrower.

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 must be a member of a [credit union | S&L] in order to borrow money there.

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. -Borrowing from relatives is [highly | seldom] recommended by financial advisors.

To qualify for a Stafford loan,you must

Installment loans using the simple interest method

If a 12-month installment loan is prepaid at the end of 6 months,less than one half of the interest would be saved.

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

Single payment loans are used mostly for short-term financing.

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 interest rates are rising,you would prefer a [fixed-rate | variable-rate] loan.

The largest sales finance companies are captive finance companies such as

To qualify for a Perkins loan,you must

Cash value loans are available from all types of life insurance policies.

If you borrow money on a single payment loan and discover you cannot pay it back when it is due you should

Generally speaking,variable rate loans are desirable if interest rates are expected to increase over the course of the loan.

In order to receive student loans,the student must be making satisfactory progress in his academic program.

Tom and Jane have been reviewing their financial statements.Using the following information,they have asked you to determine their debt safety ratio and advise them about assuming more debt in the future.

Installment loans are typically repaid in monthly payments.

You want to borrow $1,000 at an interest rate of 10%.The most expensive method of calculating the dollar cost of the interest on this installment loan will be the

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. -Credit life insurance [is | is not] a good financial deal from the perspective of the borrower.

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 must be a member of a [credit union | S&L] in order to borrow money there.

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. -Borrowing from relatives is [highly | seldom] recommended by financial advisors.

To qualify for a Stafford loan,you must

Installment loans using the simple interest method

If a 12-month installment loan is prepaid at the end of 6 months,less than one half of the interest would be saved.

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