Question 1

Which of the following methods of calculating interest is the most expensive?

Accepted Answer

A)  Annual percentage rate or APR 
B)  Simple interest 
C)  Add-on interest 
D)  Sum of the digits 
A)  Annual percentage rate or APR 
B)  Simple interest 
C)  Add-on interest 
D)  Sum of the digits

Question 2

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

Accepted Answer

A)  no substantial down payment. 
B)  don't have to worry about resale of the car when you are finished with it. 
C)  less hassle than purchasing a vehicle. 
D)  no maintenance costs. 
A)  no substantial down payment. 
B)  don't have to worry about resale of the car when you are finished with it. 
C)  less hassle than purchasing a vehicle. 
D)  no maintenance costs.

Question 3

If you agree to allow the lender to take your computer in the event you fail to make payments, the loan is which of the following?

Accepted Answer

A)  Amortized 
B)  Unsecured 
C)  Secured 
D)  Interest free 
A)  Amortized 
B)  Unsecured 
C)  Secured 
D)  Interest free

Question 4

Which of the following would probably not be required when applying for a personal loan?

Accepted Answer

A)  A personal résumé 
B)  A personal balance sheet 
C)  A personal cash flow statement 
D)  A loan application 
A)  A personal résumé 
B)  A personal balance sheet 
C)  A personal cash flow statement 
D)  A loan application

Question 5

When assessing the condition of a used car, you should carefully consider all of the following, except

Accepted Answer

A)  the condition of the interior. 
B)  the insurance premium the previous owner paid. 
C)  the condition of the exterior. 
D)  the history of routine maintenance. 
A)  the condition of the interior. 
B)  the insurance premium the previous owner paid. 
C)  the condition of the exterior. 
D)  the history of routine maintenance.

Question 6

When the borrower and the lender have agreed to the specific terms of a loan, these will be included in the ________.

Accepted Answer

The answer of When the borrower and the lender have...

Question 7

Which kind of loan generally charges the lowest interest rate?

Accepted Answer

A)  Unsecured loan 
B)  Secured loan 
C)  Cash advance 
D)  Vacation loan 
A)  Unsecured loan 
B)  Secured loan 
C)  Cash advance 
D)  Vacation loan

Question 8

Collateral

Accepted Answer

A)  gives the lender additional recourse if the payments are not made. 
B)  is used on unsecured loans. 
C)  increases the interest rate on loans. 
D)  is required on all loans. 
A)  gives the lender additional recourse if the payments are not made. 
B)  is used on unsecured loans. 
C)  increases the interest rate on loans. 
D)  is required on all loans.

Question 9

Which of the following are important factors in determining the monthly lease price of a new car?

Accepted Answer

A)  Purchase price or capitalized value 
B)  "Money factor" or interest rate embedded in the lease 
C)  Residual value of the car included in the lease contract 
D)  A, B and C are all key factors in determining the monthly lease payment 
A)  Purchase price or capitalized value 
B)  "Money factor" or interest rate embedded in the lease 
C)  Residual value of the car included in the lease contract 
D)  A, B and C are all key factors in determining the monthly lease payment

Question 10

Personal loans from family members or friends

Accepted Answer

A)  are not good sources of financing. 
B)  are more expensive than loans from other sources. 
C)  should have a loan agreement in writing to avoid problems later on. 
D)  are not desirable from the lender's point of view. 
A)  are not good sources of financing. 
B)  are more expensive than loans from other sources. 
C)  should have a loan agreement in writing to avoid problems later on. 
D)  are not desirable from the lender's point of view.

Question 11

In making the purchase versus leasing decision, it is important to remember that

Accepted Answer

A)  dealers may impose an additional mileage cost. 
B)  leasing is less risky than a purchase. 
C)  leasing is less expensive that a purchase. 
D)  you won't be required to pay maintenance costs on the leased car. 
A)  dealers may impose an additional mileage cost. 
B)  leasing is less risky than a purchase. 
C)  leasing is less expensive that a purchase. 
D)  you won't be required to pay maintenance costs on the leased car.

Question 12

What does the Truth-in-Lending Act of 1969 require lenders to do? What is the APR, and how does it fulfill the purpose of the Act?

Accepted Answer

Lenders are required to disclose a stand

Question 13

All of the following are reasons to avoid payday loans, except

Accepted Answer

A)  the cost of financing with a payday loan is exorbitant. 
B)  you don't want to pay interest on your credit card that charges an annual rate of 18%. 
C)  you may still not have sufficient cash after covering the loan. 
D)  the use of payday loans can create a continual cycle of borrowing. 
A)  the cost of financing with a payday loan is exorbitant. 
B)  you don't want to pay interest on your credit card that charges an annual rate of 18%. 
C)  you may still not have sufficient cash after covering the loan. 
D)  the use of payday loans can create a continual cycle of borrowing.

Question 14

Personal loans include which of the following?

Accepted Answer

A)  Car loans 
B)  Credit card advance payments 
C)  Home equity loans 
D)  Both A and C are correct 
A)  Car loans 
B)  Credit card advance payments 
C)  Home equity loans 
D)  Both A and C are correct

Question 15

It is important to buy a car that is not over your budget and to finance the car properly. The more money needed to cover the car payments, the less you can add to your savings or other investments.

Accepted Answer

A) True 
 B)False

Question 16

What is the correct chronological order of the items listed below?

Accepted Answer

A)  Good credit history, loan contract, repayment schedule, loan application 
B)  Good credit history, loan application, loan contract, repayment schedule 
C)  Good credit history, repayment schedule, loan application, loan contract 
D)  Good credit history, repayment schedule, loan contract, loan application 
A)  Good credit history, loan contract, repayment schedule, loan application 
B)  Good credit history, loan application, loan contract, repayment schedule 
C)  Good credit history, repayment schedule, loan application, loan contract 
D)  Good credit history, repayment schedule, loan contract, loan application

Question 17

List the advantages and disadvantages of paying for your education with student loans.

Accepted Answer

Advantages-pay later with no interest in

Question 18

A payday loan is a short-term loan provided to you if you need funds in advance of receiving your paycheck.

Accepted Answer

A) True 
 B)False

Question 19

A loan based on the difference between the appraised value of your house and the balance due on your mortgage is called a(n) ________ loan.

Accepted Answer

The answer of A loan based on the difference between...

Question 20

If you double the principal repayment called for on your car loan each month without doubling the interest payment, you will

Accepted Answer

A)  reduce the term of the loan by half. 
B)  reduce the amount of interest you pay by about 30%. 
C)  not have much effect since you are not also doubling the interest paid monthly. 
D)  Both A and B are correct. 
A)  reduce the term of the loan by half. 
B)  reduce the amount of interest you pay by about 30%. 
C)  not have much effect since you are not also doubling the interest paid monthly. 
D)  Both A and B are correct.

Exam 9: Personal Loans

Which of the following methods of calculating interest is the most expensive?

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

If you agree to allow the lender to take your computer in the event you fail to make payments, the loan is which of the following?

Which of the following would probably not be required when applying for a personal loan?

When assessing the condition of a used car, you should carefully consider all of the following, except

When the borrower and the lender have agreed to the specific terms of a loan, these will be included in the ________.

Which kind of loan generally charges the lowest interest rate?

Collateral

Which of the following are important factors in determining the monthly lease price of a new car?

Personal loans from family members or friends

In making the purchase versus leasing decision, it is important to remember that

What does the Truth-in-Lending Act of 1969 require lenders to do? What is the APR, and how does it fulfill the purpose of the Act?

All of the following are reasons to avoid payday loans, except

Personal loans include which of the following?

It is important to buy a car that is not over your budget and to finance the car properly. The more money needed to cover the car payments, the less you can add to your savings or other investments.

What is the correct chronological order of the items listed below?

List the advantages and disadvantages of paying for your education with student loans.

A payday loan is a short-term loan provided to you if you need funds in advance of receiving your paycheck.

A loan based on the difference between the appraised value of your house and the balance due on your mortgage is called a(n) ________ loan.

If you double the principal repayment called for on your car loan each month without doubling the interest payment, you will

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

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