Question 1

There are very few valid reasons for using credit.

Accepted Answer

A) True 
 B)False

Question 2

Installment sales credit is a loan that allows you to receive high-priced items, such as large appliances or furniture.

Accepted Answer

A) True 
 B)False

Question 3

Installment sales credit is a:

Accepted Answer

A)  direct loan of money for personal purposes. 
B)  direct loan of money for home improvement. 
C)  loan that allows you to receive merchandise such as a refrigerator or furniture. 
D)  direct loan for vacation purposes. 
E)  synonym for a single lump-sum credit. 
A)  direct loan of money for personal purposes. 
B)  direct loan of money for home improvement. 
C)  loan that allows you to receive merchandise such as a refrigerator or furniture. 
D)  direct loan for vacation purposes. 
E)  synonym for a single lump-sum credit.

Question 4

The maximum amount of credit you are allowed by a creditor is called:

Accepted Answer

A)  revolving credit. 
B)  line of credit. 
C)  convenience credit. 
D)  installment cash credit. 
E)  single lump-sum credit. 
A)  revolving credit. 
B)  line of credit. 
C)  convenience credit. 
D)  installment cash credit. 
E)  single lump-sum credit.

Question 5

The information in your credit report is primarily used by the credit bureau to compute your:

Accepted Answer

A)  debt to equity ratio. 
B)  FICO credit score. 
C)  debt payment to income ratio. 
D)  liquidity ratio. 
E)  long term capitalization ratio. 
A)  debt to equity ratio. 
B)  FICO credit score. 
C)  debt payment to income ratio. 
D)  liquidity ratio. 
E)  long term capitalization ratio.

Question 6

In the 5 Cs of credit, capital refers to your assets or net worth.

Accepted Answer

A) True 
 B)False

Question 7

Maryann Lawrence wants to get a loan in just her name. She knows the creditor cannot:

Accepted Answer

A)  refuse her credit if she is creditworthy. 
B)  consider income from her part-time job. 
C)  consider the payment history of all her joint accounts. 
D)  consider alimony payments she receives from her ex-husband. 
E)  consider child support payments she receives from her ex-husband. 
A)  refuse her credit if she is creditworthy. 
B)  consider income from her part-time job. 
C)  consider the payment history of all her joint accounts. 
D)  consider alimony payments she receives from her ex-husband. 
E)  consider child support payments she receives from her ex-husband.

Question 8

While you are resolving a billing dispute, a creditor may:

Accepted Answer

A)  not threaten your credit rating. 
B)  send this information to a credit bureau. 
C)  require you to pay the bill in full and then credit your account if the error is found. 
D)  start the collection process. 
E)  demand that you surrender your credit card. 
A)  not threaten your credit rating. 
B)  send this information to a credit bureau. 
C)  require you to pay the bill in full and then credit your account if the error is found. 
D)  start the collection process. 
E)  demand that you surrender your credit card.

Question 9

Affan Chawdry has monthly net income of $1,050. He has a house payment of $450 per month, a car loan with payments of $250 per month, a Visa card with payments of $50 per month, and a credit card with a local department store with payments of $100 per month. What is Affan's debt payments-to-income ratio?

Accepted Answer

A)  2.63 
B)  1.24 
C)  0.81 
D)  0.38 
E)  0.50 
A)  2.63 
B)  1.24 
C)  0.81 
D)  0.38 
E)  0.50

Question 10

A home equity loan is based on the difference between the current market value of your home and the amount you still owe on your mortgage.

Accepted Answer

A) True 
 B)False

Question 11

A term that refers to the borrower's assets or net worth is called:

Accepted Answer

A)  capacity. 
B)  character. 
C)  capital. 
D)  collateral. 
E)  conditions. 
A)  capacity. 
B)  character. 
C)  capital. 
D)  collateral. 
E)  conditions.

Question 12

Dave's take-home-pay per month is $2,200. What is the maximum dollar amount of debt payments, excluding a home mortgage, he should have?

Accepted Answer

A)  $880 
B)  $440 
C)  $330 
D)  $220 
E)  $0 
A)  $880 
B)  $440 
C)  $330 
D)  $220 
E)  $0

Question 13

In addition to department stores, where else is a good place to obtain your first credit card?

Accepted Answer

A)  Banks 
B)  Credit unions 
C)  Savings and loans associations 
D)  Gasoline companies 
E)  Investment companies 
A)  Banks 
B)  Credit unions 
C)  Savings and loans associations 
D)  Gasoline companies 
E)  Investment companies

Question 14

In the 5 Cs of credit, capital refers to your financial ability to meet credit obligations.

Accepted Answer

A) True 
 B)False

Question 15

If you cosign and the debt is not paid off, that fact does not become a part of your credit record.

Accepted Answer

A) True 
 B)False

Question 16

Credit bureaus obtain data from which of the following?

Accepted Answer

A)  banks. 
B)  finance companies. 
C)  merchants. 
D)  credit card companies. 
E)  All of these 
A)  banks. 
B)  finance companies. 
C)  merchants. 
D)  credit card companies. 
E)  All of these

Question 17

Michael Flowers believes that his credit card company has made an error in its monthly statement to him. Which consumer protection law specifies procedures he can use to dispute this monthly statement?

Accepted Answer

A)  Fair Credit Reporting Act 
B)  Fair Credit Billing Act 
C)  Equal Credit Opportunity Act 
D)  Fair Debt Collection Practices Act 
E)  Truth in Lending Act 
A)  Fair Credit Reporting Act 
B)  Fair Credit Billing Act 
C)  Equal Credit Opportunity Act 
D)  Fair Debt Collection Practices Act 
E)  Truth in Lending Act

Question 18

In the 5 Cs of credit, collateral is an asset that you pledge to a financial institution to obtain a loan.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is most likely not a valid reason for using credit?

Accepted Answer

A)  Borrowing for a stay in a hospital because of appendicitis 
B)  Borrowing to purchase a car so that you can go to work full-time 
C)  Borrowing to buy a printer for your home office now because you know it will be twice as expensive in two years 
D)  Borrowing to pay for your expensive dinner and movie every week 
E)  All of these are valid reasons for using credit. 
A)  Borrowing for a stay in a hospital because of appendicitis 
B)  Borrowing to purchase a car so that you can go to work full-time 
C)  Borrowing to buy a printer for your home office now because you know it will be twice as expensive in two years 
D)  Borrowing to pay for your expensive dinner and movie every week 
E)  All of these are valid reasons for using credit.

Question 20

A good example of open-end credit is:

Accepted Answer

A)  the use of a bank credit card to make a purchase. 
B)  a mortgage loan from a savings and loan institution. 
C)  an automobile loan from a credit union. 
D)  an installment loan from a furniture store. 
E)  an installment loan for purchasing a major appliance. 
A)  the use of a bank credit card to make a purchase. 
B)  a mortgage loan from a savings and loan institution. 
C)  an automobile loan from a credit union. 
D)  an installment loan from a furniture store. 
E)  an installment loan for purchasing a major appliance.

There are very few valid reasons for using credit.

Installment sales credit is a loan that allows you to receive high-priced items, such as large appliances or furniture.

Installment sales credit is a:

The maximum amount of credit you are allowed by a creditor is called:

The information in your credit report is primarily used by the credit bureau to compute your:

In the 5 Cs of credit, capital refers to your assets or net worth.

Maryann Lawrence wants to get a loan in just her name. She knows the creditor cannot:

While you are resolving a billing dispute, a creditor may:

A home equity loan is based on the difference between the current market value of your home and the amount you still owe on your mortgage.

A term that refers to the borrower's assets or net worth is called:

Dave's take-home-pay per month is $2,200. What is the maximum dollar amount of debt payments, excluding a home mortgage, he should have?

In addition to department stores, where else is a good place to obtain your first credit card?

In the 5 Cs of credit, capital refers to your financial ability to meet credit obligations.

If you cosign and the debt is not paid off, that fact does not become a part of your credit record.

Credit bureaus obtain data from which of the following?

Michael Flowers believes that his credit card company has made an error in its monthly statement to him. Which consumer protection law specifies procedures he can use to dispute this monthly statement?

In the 5 Cs of credit, collateral is an asset that you pledge to a financial institution to obtain a loan.

Which of the following is most likely not a valid reason for using credit?

A good example of open-end credit is:

Personal Finance Basics and the Time Value of Money

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

Financial Services: Savings Plans and Payment Accounts

Choosing a Source of Credit: The Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health, Disability, and Long-Term Care Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

Filters

Exam 6: Introduction to Consumer Credit

There are very few valid reasons for using credit.

Installment sales credit is a loan that allows you to receive high-priced items, such as large appliances or furniture.

Installment sales credit is a:

The maximum amount of credit you are allowed by a creditor is called:

The information in your credit report is primarily used by the credit bureau to compute your:

In the 5 Cs of credit, capital refers to your assets or net worth.

Maryann Lawrence wants to get a loan in just her name. She knows the creditor cannot:

While you are resolving a billing dispute, a creditor may:

A home equity loan is based on the difference between the current market value of your home and the amount you still owe on your mortgage.

A term that refers to the borrower's assets or net worth is called:

Dave's take-home-pay per month is $2,200. What is the maximum dollar amount of debt payments, excluding a home mortgage, he should have?

In addition to department stores, where else is a good place to obtain your first credit card?

In the 5 Cs of credit, capital refers to your financial ability to meet credit obligations.

If you cosign and the debt is not paid off, that fact does not become a part of your credit record.

Credit bureaus obtain data from which of the following?

Michael Flowers believes that his credit card company has made an error in its monthly statement to him. Which consumer protection law specifies procedures he can use to dispute this monthly statement?

In the 5 Cs of credit, collateral is an asset that you pledge to a financial institution to obtain a loan.

Which of the following is most likely not a valid reason for using credit?

A good example of open-end credit is:

Personal Finance Basics and the Time Value of Money

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

Financial Services: Savings Plans and Payment Accounts

Choosing a Source of Credit: The Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health, Disability, and Long-Term Care Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

Filters