Question 1

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

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. 
Single-payment loans are [ more | less ] popular than installment loans.

Accepted Answer

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

Question 3

A chattel mortgage is an instrument that gives lenders title to movable personal property in the event of default.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is a nondepository institution?

Accepted Answer

A)  A commercial bank 
B)  A credit union 
C)  A consumer finance company 
D)  A savings and loan association (S&L) 
E)  A savings bank 
A)  A commercial bank 
B)  A credit union 
C)  A consumer finance company 
D)  A savings and loan association (S&L) 
E)  A savings bank

Question 5

Commercial banks are able to charge lower interest rates than other lending institutions because:

Accepted Answer

A)  they make shorter-term loans. 
B)  they take only the best credit risks. 
C)  their depositors require higher rates. 
D)  they obtain their funds from the money market. 
E)  they make only secured loans. 
A)  they make shorter-term loans. 
B)  they take only the best credit risks. 
C)  their depositors require higher rates. 
D)  they obtain their funds from the money market. 
E)  they make only secured loans.

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. 
The longer the loan maturity, the [ lower | higher ] the monthly payments will be.

Accepted Answer

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

Question 7

Loan repayment under the Parent Loans for Undergraduate Students (PLUS) program normally begins within _____ of loan disbursement.

Accepted Answer

A)  30 days 
B)  60 days 
C)  90 days 
D)  120 days 
E)  180 days 
A)  30 days 
B)  60 days 
C)  90 days 
D)  120 days 
E)  180 days

Question 8

Only stocks can be used as collateral for personal loans.

Accepted Answer

A) True 
 B)False

Question 9

Calculate the finance charge and the monthly payment on a $20,000 add-on installment loan with an interest rate of 9% and a term of 5 years. (Show all work.)

Accepted Answer

Finance Charge = $20,000 × .09

Question 10

The frequency of longer-term installment loans carrying variable interest rates is increasing.

Accepted Answer

A) True 
 B)False

Question 11

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 the [ simple interest method | add-on method ] 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 12

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 average student debt is about [ $35,000 | $75,000 ].

Accepted Answer

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

Question 13

A loan rollover means that:

Accepted Answer

A)  the loan is paid off by taking out another loan. 
B)  the loan is repaid without any defaults in payments. 
C)  the interest on the new loan is lower than the previous loan. 
D)  the maturity period of the new loan is longer than the maturity period of the original loan. 
E)  the new loan will not have any processing fees. 
A)  the loan is paid off by taking out another loan. 
B)  the loan is repaid without any defaults in payments. 
C)  the interest on the new loan is lower than the previous loan. 
D)  the maturity period of the new loan is longer than the maturity period of the original loan. 
E)  the new loan will not have any processing fees.

Question 14

Parent Loans for Undergraduate Students (PLUS) loans are made to the parents or legal guardians rather than to the students.

Accepted Answer

A) True 
 B)False

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

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. Single-payment loans are [ more | less ] popular than installment loans.

A chattel mortgage is an instrument that gives lenders title to movable personal property in the event of default.

Which of the following is a nondepository institution?

Commercial banks are able to charge lower interest rates than other lending institutions because:

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 longer the loan maturity, the [ lower | higher ] the monthly payments will be.

Loan repayment under the Parent Loans for Undergraduate Students (PLUS) program normally begins within _____ of loan disbursement.

Only stocks can be used as collateral for personal loans.

Calculate the finance charge and the monthly payment on a $20,000 add-on installment loan with an interest rate of 9% and a term of 5 years. (Show all work.)

The frequency of longer-term installment loans carrying variable interest rates is increasing.

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 average student debt is about [ $35,000 | $75,000 ].

A loan rollover means that:

Parent Loans for Undergraduate Students (PLUS) loans are made to the parents or legal guardians rather than to the students.

Understanding the Financial Planning Process

Developing 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 and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

Exam 7: Using Consumer Loans

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

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. Single-payment loans are [ more | less ] popular than installment loans.

A chattel mortgage is an instrument that gives lenders title to movable personal property in the event of default.

Which of the following is a nondepository institution?

Commercial banks are able to charge lower interest rates than other lending institutions because:

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 longer the loan maturity, the [ lower | higher ] the monthly payments will be.

Loan repayment under the Parent Loans for Undergraduate Students (PLUS) program normally begins within _____ of loan disbursement.

Only stocks can be used as collateral for personal loans.

Calculate the finance charge and the monthly payment on a $20,000 add-on installment loan with an interest rate of 9% and a term of 5 years. (Show all work.)

The frequency of longer-term installment loans carrying variable interest rates is increasing.

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 average student debt is about [ $35,000 | $75,000 ].

A loan rollover means that:

Parent Loans for Undergraduate Students (PLUS) loans are made to the parents or legal guardians rather than to the students.

Understanding the Financial Planning Process

Developing 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 and Real Estate

Planning for Retirement

Preserving Your Estate

Filters