Question 1

Which method of payment is likely to be the least expensive in the long run?

Accepted Answer

A) bank credit card 
B) check written on a home equity line of credit 
C) cash 
D) store credit card 
E) cash advance on a Visa credit card 
A) bank credit card 
B) check written on a home equity line of credit 
C) cash 
D) store credit card 
E) cash advance on a Visa credit card

Question 2

You can often obtain medium-priced loans from commercial banks and credit unions.

Accepted Answer

A) True 
 B)False

Question 3

_____________ families rely heaviest on student loans to finance college.

Accepted Answer

A) Low-income 
B) Middle-income 
C) High-income 
D) Large 
E) Small 
A) Low-income 
B) Middle-income 
C) High-income 
D) Large 
E) Small

Question 4

If creditors give you no credit for payments made during the billing period,this is called the:

Accepted Answer

A) APR method. 
B) discount method. 
C) previous balance method. 
D) adjusted balance methoD. 
E) average daily balance method. 
A) APR method. 
B) discount method. 
C) previous balance method. 
D) adjusted balance methoD. 
E) average daily balance method.

Question 5

Which lender is likely to ask you to write a check for $115 before granting you a $100 loan?

Accepted Answer

A) credit union 
B) payday advance company 
C) finance company 
D) department store 
E) commercial bank 
A) credit union 
B) payday advance company 
C) finance company 
D) department store 
E) commercial bank

Question 6

What is (are)the signal(s)of potential debt problems?

Accepted Answer

A) Paying only the minimum balance each month. 
B) Missing payments or paying late. 
C) Using savings to pay normal bills. 
D) Depending on overtime to meet normal expenses. 
E) All of the above are danger signals. 
A) Paying only the minimum balance each month. 
B) Missing payments or paying late. 
C) Using savings to pay normal bills. 
D) Depending on overtime to meet normal expenses. 
E) All of the above are danger signals.

Question 7

Randy Ice starts the month with a balance on his credit card of $1000.On the 10th day of the month,he purchases $200 in clothes with his credit card.On the 15th day of the month he makes a payment on his credit card of $500.The average daily balance for the month including the new purchase is $883.The average daily balance for the month excluding the new purchase is $750.The bank charges 1.5 percent per month and uses the average daily balance excluding new purchases method.What would Randy's finance charges be for the month?

Accepted Answer

A) $7.50 
B) $13.25 
C) $11.25 
D) $15.00 
E) $18.00 
A) $7.50 
B) $13.25 
C) $11.25 
D) $15.00 
E) $18.00

Question 8

Patricia Newton is going to buy a new car,and she needs to apply for a loan to cover the purchase.She knows she can get a loan for up to 6 years,but she would prefer a shorter-term loan.She selects a 4-year loan.Patricia reducing her lender's risk by:

Accepted Answer

A) Sharing the interest rate risk. 
B) Pledging collateral. 
C) Paying a larger cash deposit. 
D) Repaying the loan faster. 
E) Sharing inflation risk with her lender. 
A) Sharing the interest rate risk. 
B) Pledging collateral. 
C) Paying a larger cash deposit. 
D) Repaying the loan faster. 
E) Sharing inflation risk with her lender.

Question 9

If Marjorie Wilcox borrows $200 for one year with an APR of 12% and an annual service fee of $10,what is her total cost of credit?

Accepted Answer

A) $10 
B) $12 
C) $24 
D) $34 
E) $42 
A) $10 
B) $12 
C) $24 
D) $34 
E) $42

Question 10

If you default on your automobile loan:

Accepted Answer

A) an advance notice to you is required before your car is repossessed. 
B) no advance notice is required before repossession. 
C) the federal consumer credit laws give you protection from your car being repossessed. 
D) you don't have to pay the full balance due on your automobile loan. 
E) you pay fifty percent of the balance due on your automobile loan. 
A) an advance notice to you is required before your car is repossessed. 
B) no advance notice is required before repossession. 
C) the federal consumer credit laws give you protection from your car being repossessed. 
D) you don't have to pay the full balance due on your automobile loan. 
E) you pay fifty percent of the balance due on your automobile loan.

Question 11

Gary Simpson notices that his neighbor has a brand new Ford F150 truck parked in the driveway.Even though his current car is fine,Gary decides that he needs a new car and goes out and purchases a Hummer with a six-year loan.Which one of the answers best explains Gary's spending?

Accepted Answer

A) misunderstanding or lack of communication 
B) the use of money to punish 
C) the expectation of instant comfort 
D) keeping up with the Joneses 
E) overindulgence of children 
A) misunderstanding or lack of communication 
B) the use of money to punish 
C) the expectation of instant comfort 
D) keeping up with the Joneses 
E) overindulgence of children

Question 12

The Consumer Credit Counseling Service will refinance all of your existing debts for you.

Accepted Answer

A) True 
 B)False

Question 13

Shelly Sanders gets a loan for $3,000 and repays the loan in 12 monthly payments of $258 per month.Under the rule of 78s,what is the amount of interest included in her first payment?

Accepted Answer

A) $16.00 
B) $14.77 
C) $8.96 
D) $4.87 
E) $1.23 
A) $16.00 
B) $14.77 
C) $8.96 
D) $4.87 
E) $1.23

Question 14

Chuck Spencer wants to borrow money for three years to purchase a new car.He has been offered a seven percent fixed rate loan and also a variable rate loan that has an initial rate of five percent.By choosing the variable rate loan,Chuck is reducing the lender's risk by:

Accepted Answer

A) sharing the interest rate risk. 
B) increasing his monthly payments. 
C) taking a larger stake in the asset he is purchasing. 
D) repaying the loan over a faster period of time. 
E) pledging collateral. 
A) sharing the interest rate risk. 
B) increasing his monthly payments. 
C) taking a larger stake in the asset he is purchasing. 
D) repaying the loan over a faster period of time. 
E) pledging collateral.

Question 15

If creditors give you no credit for payments made during the billing period,it is called the adjusted balance method.

Accepted Answer

A) True 
 B)False

Question 16

Under the rule of 78s,loans for a year or less usually do not allow for a finance charge rebate.

Accepted Answer

A) True 
 B)False

Question 17

The most commonly purchased type of credit insurance is credit life insurance.

Accepted Answer

A) True 
 B)False

Question 18

You can deduct interest paid on consumer loans for state and federal income tax returns.

Accepted Answer

A) True 
 B)False

Question 19

Anyone overburdened by credit obligations can phone,write,or visit a Consumer
Credit Counseling Service office.

Accepted Answer

A) True 
 B)False

Question 20

Both Chapter 7 and Chapter 13 bankruptcy are considered an easy way out of debt.

Accepted Answer

A) True 
 B)False

Which method of payment is likely to be the least expensive in the long run?

You can often obtain medium-priced loans from commercial banks and credit unions.

_____________ families rely heaviest on student loans to finance college.

If creditors give you no credit for payments made during the billing period,this is called the:

Which lender is likely to ask you to write a check for $115 before granting you a $100 loan?

What is (are)the signal(s)of potential debt problems?

Patricia Newton is going to buy a new car,and she needs to apply for a loan to cover the purchase.She knows she can get a loan for up to 6 years,but she would prefer a shorter-term loan.She selects a 4-year loan.Patricia reducing her lender's risk by:

If Marjorie Wilcox borrows $200 for one year with an APR of 12% and an annual service fee of $10,what is her total cost of credit?

If you default on your automobile loan:

Gary Simpson notices that his neighbor has a brand new Ford F150 truck parked in the driveway.Even though his current car is fine,Gary decides that he needs a new car and goes out and purchases a Hummer with a six-year loan.Which one of the answers best explains Gary's spending?

The Consumer Credit Counseling Service will refinance all of your existing debts for you.

Shelly Sanders gets a loan for $3,000 and repays the loan in 12 monthly payments of $258 per month.Under the rule of 78s,what is the amount of interest included in her first payment?

Chuck Spencer wants to borrow money for three years to purchase a new car.He has been offered a seven percent fixed rate loan and also a variable rate loan that has an initial rate of five percent.By choosing the variable rate loan,Chuck is reducing the lender's risk by:

If creditors give you no credit for payments made during the billing period,it is called the adjusted balance method.

Under the rule of 78s,loans for a year or less usually do not allow for a finance charge rebate.

The most commonly purchased type of credit insurance is credit life insurance.

You can deduct interest paid on consumer loans for state and federal income tax returns.

Anyone overburdened by credit obligations can phone,write,or visit a Consumer Credit Counseling Service office.

Both Chapter 7 and Chapter 13 bankruptcy are considered an easy way out of debt.

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

Introduction to Consumer Credit

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 7: Choosing a Source of Credit: The Costs of Credit Alternatives

Which method of payment is likely to be the least expensive in the long run?

You can often obtain medium-priced loans from commercial banks and credit unions.

_____________ families rely heaviest on student loans to finance college.

If creditors give you no credit for payments made during the billing period,this is called the:

Which lender is likely to ask you to write a check for $115 before granting you a $100 loan?

What is (are)the signal(s)of potential debt problems?

Patricia Newton is going to buy a new car,and she needs to apply for a loan to cover the purchase.She knows she can get a loan for up to 6 years,but she would prefer a shorter-term loan.She selects a 4-year loan.Patricia reducing her lender's risk by:

If Marjorie Wilcox borrows $200 for one year with an APR of 12% and an annual service fee of $10,what is her total cost of credit?

If you default on your automobile loan:

Gary Simpson notices that his neighbor has a brand new Ford F150 truck parked in the driveway.Even though his current car is fine,Gary decides that he needs a new car and goes out and purchases a Hummer with a six-year loan.Which one of the answers best explains Gary's spending?

The Consumer Credit Counseling Service will refinance all of your existing debts for you.

Shelly Sanders gets a loan for $3,000 and repays the loan in 12 monthly payments of $258 per month.Under the rule of 78s,what is the amount of interest included in her first payment?

Chuck Spencer wants to borrow money for three years to purchase a new car.He has been offered a seven percent fixed rate loan and also a variable rate loan that has an initial rate of five percent.By choosing the variable rate loan,Chuck is reducing the lender's risk by:

If creditors give you no credit for payments made during the billing period,it is called the adjusted balance method.

Under the rule of 78s,loans for a year or less usually do not allow for a finance charge rebate.

The most commonly purchased type of credit insurance is credit life insurance.

You can deduct interest paid on consumer loans for state and federal income tax returns.

Anyone overburdened by credit obligations can phone,write,or visit a Consumer Credit Counseling Service office.

Both Chapter 7 and Chapter 13 bankruptcy are considered an easy way out of debt.

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

Introduction to Consumer Credit

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