Question 1

If a loan is cosigned and the borrower defaults, the lender has the right to sue the cosigner or try to seize the cosigner's assets just as if that person were the borrower.

Accepted Answer

A) True 
 B)False

Question 2

The most common source of financing for a personal loan is from a financial institution.

Accepted Answer

A) True 
 B)False

Question 3

All of the following are true regarding a cosigner on an account, except

Accepted Answer

A)  the cosigner is responsible for any unpaid balance. 
B)  the lender may not seize the assets of the cosigner. 
C)  cosigning an account is a big liability and should be taken seriously. 
D)  cosigning on a loan can restrict the amount that the cosigner is able to borrow. 
A)  the cosigner is responsible for any unpaid balance. 
B)  the lender may not seize the assets of the cosigner. 
C)  cosigning an account is a big liability and should be taken seriously. 
D)  cosigning on a loan can restrict the amount that the cosigner is able to borrow.

Question 4

Automobile insurance rates are likely to differ for all of the following reasons, except some cars

Accepted Answer

A)  are more popular than others. 
B)  cost more to repair after accidents. 
C)  are more common theft targets. 
D)  are higher priced. 
A)  are more popular than others. 
B)  cost more to repair after accidents. 
C)  are more common theft targets. 
D)  are higher priced.

Question 5

On an amortization schedule, more interest and less principal is paid each month as the loan matures.

Accepted Answer

A) True 
 B)False

Question 6

Use the following two columns of items to answer the matching questions below:
-simple interest
A)assets of a borrower that back a secured loan
B)rate that measures the finance expenses
C)interest rate multiplied by the principal

Accepted Answer

The answer of Use the following two columns of items...

Question 7

Which of the following statements about student loans is not true?

Accepted Answer

A)  If you don't complete your education, you will not have to pay back your student loan. 
B)  A school's financial aid office is a good source of information on student loans. 
C)  Both the federal government and financial institutions participate in the student loan program. 
D)  Interest is often deferred and there can be tax savings on the interest paid on student loans. 
A)  If you don't complete your education, you will not have to pay back your student loan. 
B)  A school's financial aid office is a good source of information on student loans. 
C)  Both the federal government and financial institutions participate in the student loan program. 
D)  Interest is often deferred and there can be tax savings on the interest paid on student loans.

Question 8

The ________ the maturity of a loan, the ________ the payments.

Accepted Answer

A)  longer; smaller 
B)  shorter; larger 
C)  shorter; smaller 
D)  Both A and B are correct 
A)  longer; smaller 
B)  shorter; larger 
C)  shorter; smaller 
D)  Both A and B are correct

Question 9

The method of determining the monthly interest amount by adding the interest and loan principal together and dividing by the number of payments is the

Accepted Answer

A)  simple-interest method. 
B)  annual percentage method. 
C)  simple-interest declining balance method. 
D)  add-on interest method. 
A)  simple-interest method. 
B)  annual percentage method. 
C)  simple-interest declining balance method. 
D)  add-on interest method.

Question 10

There are limits on how much a student can borrow through federal student loans, so many students also have to obtain private loans from financial institutions.

Accepted Answer

A) True 
 B)False

Question 11

Longer maturities for loans result in lower monthly payments and therefore make it easier to cover payments each month.

Accepted Answer

A) True 
 B)False

Question 12

Leasing a car is a good option if you drive many miles a year.

Accepted Answer

A) True 
 B)False

Question 13

What is the total cost of leasing a vehicle for three years that requires a security deposit of $300 (would earn 3% interest in a money market account otherwise), has monthly lease payments of $385, and has a mileage restriction of 10,000 with excess mileage resulting in a 10 cents per mile charge. Assume that over the life of the lease you exceed this limitation by 8,000 miles.

Accepted Answer

A)  $14,160 
B)  $13,860 
C)  $14,687 
D)  $14,660 
A)  $14,160 
B)  $13,860 
C)  $14,687 
D)  $14,660

Question 14

Even though you don't use the proceeds to improve your home, the interest on a home equity loan is deductible for federal income tax purposes.

Accepted Answer

A) True 
 B)False

Question 15

Disadvantages of leasing a vehicle include all of the following, except

Accepted Answer

A)  no equity in the car. 
B)  cost of finding a buyer for the car at the termination of the lease. 
C)  responsibility for maintenance costs. 
D)  additional charges beyond the monthly lease payments. 
A)  no equity in the car. 
B)  cost of finding a buyer for the car at the termination of the lease. 
C)  responsibility for maintenance costs. 
D)  additional charges beyond the monthly lease payments.

Question 16

Making extra payments on a loan does all of the following, except

Accepted Answer

A)  reduces the total amount of interest paid. 
B)  gives you extra income for living expenses. 
C)  reduces the maturity of the loan. 
D)  helps assure your good credit rating. 
A)  reduces the total amount of interest paid. 
B)  gives you extra income for living expenses. 
C)  reduces the maturity of the loan. 
D)  helps assure your good credit rating.

Question 17

Because the market value of homes may decline, lenders do not like to lend the full amount of the equity when extending a home equity loan.

Accepted Answer

A) True 
 B)False

Question 18

One alternative to payday loans is to avoid borrowing until you have the funds to spend.

Accepted Answer

A) True 
 B)False

Question 19

If the lender has the right to take certain specified assets of the borrower in the event of a default on the loan, the loan is a(n) ________ loan.

Accepted Answer

The answer of If the lender has the right to...

Question 20

A few years ago, Mary purchased a home for $100,000. Today the home is worth $150,000. The remaining balance on the mortgage is $50,000. If Mary can borrow up to 80% of the market value of the equity, the maximum amount she can borrow is

Accepted Answer

A)  $80,000. 
B)  $70,000. 
C)  $100,000. 
D)  $50,000. 
A)  $80,000. 
B)  $70,000. 
C)  $100,000. 
D)  $50,000.

If a loan is cosigned and the borrower defaults, the lender has the right to sue the cosigner or try to seize the cosigner's assets just as if that person were the borrower.

The most common source of financing for a personal loan is from a financial institution.

All of the following are true regarding a cosigner on an account, except

Automobile insurance rates are likely to differ for all of the following reasons, except some cars

On an amortization schedule, more interest and less principal is paid each month as the loan matures.

Use the following two columns of items to answer the matching questions below: -simple interest A)assets of a borrower that back a secured loan B)rate that measures the finance expenses C)interest rate multiplied by the principal

Which of the following statements about student loans is not true?

The the maturity of a loan, the the payments.

The method of determining the monthly interest amount by adding the interest and loan principal together and dividing by the number of payments is the

There are limits on how much a student can borrow through federal student loans, so many students also have to obtain private loans from financial institutions.

Longer maturities for loans result in lower monthly payments and therefore make it easier to cover payments each month.

Leasing a car is a good option if you drive many miles a year.

Even though you don't use the proceeds to improve your home, the interest on a home equity loan is deductible for federal income tax purposes.

Disadvantages of leasing a vehicle include all of the following, except

Making extra payments on a loan does all of the following, except

Because the market value of homes may decline, lenders do not like to lend the full amount of the equity when extending a home equity loan.

One alternative to payday loans is to avoid borrowing until you have the funds to spend.

If the lender has the right to take certain specified assets of the borrower in the event of a default on the loan, the loan is a(n) ________ loan.

A few years ago, Mary purchased a home for $100,000. Today the home is worth $150,000. The remaining balance on the mortgage is $50,000. If Mary can borrow up to 80% of the market value of the equity, the maximum amount she can borrow is

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters

Exam 9: Personal Loans

If a loan is cosigned and the borrower defaults, the lender has the right to sue the cosigner or try to seize the cosigner's assets just as if that person were the borrower.

The most common source of financing for a personal loan is from a financial institution.

All of the following are true regarding a cosigner on an account, except

Automobile insurance rates are likely to differ for all of the following reasons, except some cars

On an amortization schedule, more interest and less principal is paid each month as the loan matures.

Use the following two columns of items to answer the matching questions below: -simple interest A)assets of a borrower that back a secured loan B)rate that measures the finance expenses C)interest rate multiplied by the principal

Which of the following statements about student loans is not true?

The ________ the maturity of a loan, the ________ the payments.

The method of determining the monthly interest amount by adding the interest and loan principal together and dividing by the number of payments is the

There are limits on how much a student can borrow through federal student loans, so many students also have to obtain private loans from financial institutions.

Longer maturities for loans result in lower monthly payments and therefore make it easier to cover payments each month.

Leasing a car is a good option if you drive many miles a year.

Even though you don't use the proceeds to improve your home, the interest on a home equity loan is deductible for federal income tax purposes.

Disadvantages of leasing a vehicle include all of the following, except

Making extra payments on a loan does all of the following, except

Because the market value of homes may decline, lenders do not like to lend the full amount of the equity when extending a home equity loan.

One alternative to payday loans is to avoid borrowing until you have the funds to spend.

If the lender has the right to take certain specified assets of the borrower in the event of a default on the loan, the loan is a(n) ________ loan.

A few years ago, Mary purchased a home for $100,000. Today the home is worth $150,000. The remaining balance on the mortgage is $50,000. If Mary can borrow up to 80% of the market value of the equity, the maximum amount she can borrow is

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters

The the maturity of a loan, the the payments.