Question 1

Sometimes it may be better to use savings rather than borrowing to make a purchase.This would be recommended when:

Accepted Answer

A)  the borrower has adequate savings. 
B)  interest rates are rising. 
C)  interest rates are falling. 
D)  the cost of borrowing is greater than the interest earned on the savings. 
E)  interest earned on savings is greater than the interest paid on the loan. 
A)  the borrower has adequate savings. 
B)  interest rates are rising. 
C)  interest rates are falling. 
D)  the cost of borrowing is greater than the interest earned on the savings. 
E)  interest earned on savings is greater than the interest paid on the loan.

Question 2

With the discount method,the finance charges are calculated and then added to the amount borrowed.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Consumer finance companies usually charge lower rates of interest than commercial banks.

Accepted Answer

A) True 
 B)False

Question 5

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

Question 6

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 7

Bob Shockey borrowed $25,000 from his $250,000 cash value life insurance policy to send his daughter to private college.Assuming he pays interest as in accrues,if Bob dies before the debt is repaid his beneficiary will receive:

Accepted Answer

A)  $275,000. 
B)  $250,000. 
C)  $225,000. 
D)  $25,000. 
E)  $0. 
A)  $275,000. 
B)  $250,000. 
C)  $225,000. 
D)  $25,000. 
E)  $0.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

If the add-on method is used to calculate a finance charge of $150.80 on a $2,200 loan,the amount to be repaid is $2,200.

Accepted Answer

A) True 
 B)False

Question 10

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.
-Consolidation loans are generally [inexpensive | expensive].

Accepted Answer

The answer of Choose the word or phrase in [...

Question 11

Commercial banks are generally more selective in granting loans than finance companies.

Accepted Answer

A) True 
 B)False

Question 12

Which source of consumer loans specializes in home mortgage lending?

Accepted Answer

A)  Commercial banks 
B)  Credit unions 
C)  Consumer finance companies 
D)  Savings and loan associations 
E)  None of the above 
A)  Commercial banks 
B)  Credit unions 
C)  Consumer finance companies 
D)  Savings and loan associations 
E)  None of the above

Question 13

Long-term financial goals often depend on borrowing funds.The type of loan that does not fulfill the long-term goal achievement is _____ loans.

Accepted Answer

A)  consumer 
B)  installment 
C)  automobile 
D)  mortgage 
E)  single-payment 
A)  consumer 
B)  installment 
C)  automobile 
D)  mortgage 
E)  single-payment

Question 14

A chattel mortgage is a legal claim that gives lenders the right to liquidate specific personal property to satisfy their claims in the event of default.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A)  Charge interest at a rate comparable to any high-risk security. 
B)  Always consider offering cash as a gift instead of extending a loan. 
C)  Put the agreement in writing. 
D)  Make the loan due within one year or less. 
E)  Make informal transactions for friends and relatives. 
A)  Charge interest at a rate comparable to any high-risk security. 
B)  Always consider offering cash as a gift instead of extending a loan. 
C)  Put the agreement in writing. 
D)  Make the loan due within one year or less. 
E)  Make informal transactions for friends and relatives.

Question 16

Credit unions lend money to qualified people who are:

Accepted Answer

A)  employees. 
B)  members. 
C)  students. 
D)  policyholders. 
E)  stockholders. 
A)  employees. 
B)  members. 
C)  students. 
D)  policyholders. 
E)  stockholders.

Question 17

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 Choose the word or phrase in [...

Question 18

Sales finance companies:

Accepted Answer

A)  lend money to retailers. 
B)  buy installment loans from retailers. 
C)  sell installment loans to retailers. 
D)  lend money to consumers. 
E)  sell installment loans to banks. 
A)  lend money to retailers. 
B)  buy installment loans from retailers. 
C)  sell installment loans to retailers. 
D)  lend money to consumers. 
E)  sell installment loans to banks.

Question 19

The majority of loans made by savings and loan associations are _____ loans.

Accepted Answer

A)  home improvement 
B)  auto 
C)  mortgage 
D)  education 
E)  consolidation 
A)  home improvement 
B)  auto 
C)  mortgage 
D)  education 
E)  consolidation

Question 20

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 are borrowing $1,000,APR is 10%,and the loan maturity is one year.Total interest charges will be higher if [you pay off the loan in 12 monthly installments | you make one payment in full at the end of the year].

Accepted Answer

The answer of Choose the word or phrase in [...

Sometimes it may be better to use savings rather than borrowing to make a purchase.This would be recommended when:

With the discount method,the finance charges are calculated and then added to the amount borrowed.

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

Consumer finance companies usually charge lower rates of interest than commercial banks.

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

Installment loans using the simple interest method:

Bob Shockey borrowed $25,000 from his $250,000 cash value life insurance policy to send his daughter to private college.Assuming he pays interest as in accrues,if Bob dies before the debt is repaid his beneficiary will receive:

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

If the add-on method is used to calculate a finance charge of $150.80 on a $2,200 loan,the amount to be repaid is $2,200.

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. -Consolidation loans are generally [inexpensive | expensive].

Commercial banks are generally more selective in granting loans than finance companies.

Which source of consumer loans specializes in home mortgage lending?

Long-term financial goals often depend on borrowing funds.The type of loan that does not fulfill the long-term goal achievement is _____ loans.

A chattel mortgage is a legal claim that gives lenders the right to liquidate specific personal property to satisfy their claims in the event of default.

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

Credit unions lend money to qualified people who are:

Sales finance companies:

The majority of loans made by savings and loan associations are _____ loans.

Understanding the Financial Planning Process

Using Financial Statements and Budgets

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

Sometimes it may be better to use savings rather than borrowing to make a purchase.This would be recommended when:

With the discount method,the finance charges are calculated and then added to the amount borrowed.

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

Consumer finance companies usually charge lower rates of interest than commercial banks.

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

Installment loans using the simple interest method:

Bob Shockey borrowed $25,000 from his $250,000 cash value life insurance policy to send his daughter to private college.Assuming he pays interest as in accrues,if Bob dies before the debt is repaid his beneficiary will receive:

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

If the add-on method is used to calculate a finance charge of $150.80 on a $2,200 loan,the amount to be repaid is $2,200.

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. -Consolidation loans are generally [inexpensive | expensive].

Commercial banks are generally more selective in granting loans than finance companies.

Which source of consumer loans specializes in home mortgage lending?

Long-term financial goals often depend on borrowing funds.The type of loan that does not fulfill the long-term goal achievement is _____ loans.

A chattel mortgage is a legal claim that gives lenders the right to liquidate specific personal property to satisfy their claims in the event of default.

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

Credit unions lend money to qualified people who are:

Sales finance companies:

The majority of loans made by savings and loan associations are _____ loans.

Understanding the Financial Planning Process

Using Financial Statements and Budgets

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