Question 1

Why is the discount method more costly than the simple interest method on a single-payment loan?

Accepted Answer

Under the discount method, wit

Question 2

Alice has fallen behind on her signature loan. She recently received a notice from the lender that her wages were going to be garnished to pay off the debt. What is the loan clause that allows the lender to take this action against Alice because she was in default?

Accepted Answer

A)  recovery clause 
B)  default clause 
C)  recourse clause 
D)  deficiency payments clause 
E)  none of the above 
A)  recovery clause 
B)  default clause 
C)  recourse clause 
D)  deficiency payments clause 
E)  none of the above

Question 3

What is the name of the formal document that outlines the legal obligations of both the lender and the borrower?

Accepted Answer

A)  default 
B)  claim 
C)  debenture 
D)  note 
E)  tort 
A)  default 
B)  claim 
C)  debenture 
D)  note 
E)  tort

Question 4

Ronald is borrowing $20,000 using the discount method. His bank is offering him an annual percentage rate of 8.5% and he is taking out the loan for 24 months. How large of a check will Ronald receive from this loan when he leaves the bank? How much will he repay?

Accepted Answer

A)  $20,000; $23,400 
B)  $16,600; $20,000 
A)  $20,000; $23,400 
B)  $16,600; $20,000

Question 5

How do you know how much debt you can comfortably afford?

Accepted Answer

By applying the debt limit ratio you can

Question 6

Not having health insurance could lead to filing for bankruptcy if one has incurred large medical expenses and is unable to pay these bills off in a timely manner.

Accepted Answer

A) True 
 B)False

Question 7

The loan contract is a formal document called a(n) ________ and may contain a(n) ________ specifying who retains control over the item being purchased in the case of default.

Accepted Answer

A)  agreement, insurance clause 
B)  indenture, security agreement 
C)  note, security agreement 
D)  agreement, indenture 
E)  note, legal transaction 
A)  agreement, insurance clause 
B)  indenture, security agreement 
C)  note, security agreement 
D)  agreement, indenture 
E)  note, legal transaction

Question 8

Many lenders will hold Dave to the 28/36 rule in evaluating his application for a mortgage. What does the 36 mean?

Accepted Answer

A)  A down payment of 36 months is required. 
B)  A down payment of 36% is required. 
C)  Debt payments including mortgage must be less than 36% of his gross monthly income. 
D)  Debt payments must be less than 36% of his monthly take-home pay. 
E)  Mortgage insurance is required during the first 36 months of the loan. 
A)  A down payment of 36 months is required. 
B)  A down payment of 36% is required. 
C)  Debt payments including mortgage must be less than 36% of his gross monthly income. 
D)  Debt payments must be less than 36% of his monthly take-home pay. 
E)  Mortgage insurance is required during the first 36 months of the loan.

Question 9

The quoted rate on a home equity loan is 10% and you are in a 28% marginal tax bracket. What is the effective after-tax rate on this loan?

Accepted Answer

A)  7.2% 
B)  5.4% 
C)  4.1% 
D)  2.8% 
E)  none of the above 
A)  7.2% 
B)  5.4% 
C)  4.1% 
D)  2.8% 
E)  none of the above

Question 10

When do the payments on a Stafford Loan begin?

Accepted Answer

A)  When your school receives the money from the government. 
B)  When your loan balance gets over $5,000. 
C)  You can choose when your payments begin anytime within 24 months of your graduation date. 
D)  None of the above is correct. 
A)  When your school receives the money from the government. 
B)  When your loan balance gets over $5,000. 
C)  You can choose when your payments begin anytime within 24 months of your graduation date. 
D)  None of the above is correct.

Question 11

Sharry is interested in buying her first home. Currently her monthly gross income is $3,000. From this she makes a car payment of $240, a personal loan payment of $300 and a student loan payment of $85. Based on this information would a bank approve Sharry for a mortgage?

Accepted Answer

A)  Yes 
B)  No 
A)  Yes 
B)  No

Question 12

What will the courts do if you file Chapter 7 personal bankruptcy?

Accepted Answer

A)  Confiscate most of your assets. 
B)  Liquidate most of your assets to pay off creditors. 
C)  Eliminate most of your debts. 
D)  Allow you a chance to start again financially. 
E)  all of the above 
A)  Confiscate most of your assets. 
B)  Liquidate most of your assets to pay off creditors. 
C)  Eliminate most of your debts. 
D)  Allow you a chance to start again financially. 
E)  all of the above

Question 13

What are the opportunity costs associated with Student loans?

Accepted Answer

Depending on the amount you borrow and h

Question 14

Explain why add-on installment loans are more expensive than simple interest loans.

Accepted Answer

The add-on method generally results in a

Question 15

Frank ran up a large credit card bill as an undergraduate student, he also took out as much in student loans as possible. He is now unable to pay his credit card debt and his student loan debt. However, he has decided to declare bankruptcy to eliminate his debt. Frank will be able to eliminate his federally subsidized student loan debt by declaring bankruptcy.

Accepted Answer

A) True 
 B)False

Question 16

What can a couple seeking to get out of debt do?

Accepted Answer

A)  Avoid future use of credit card debt, except on a emergency basis. 
B)  Use savings to pay off current debt. 
C)  See if their creditors will restructure their loans. 
D)  Seek help from a reputable credit counselor. 
E)  All of the above are correct. 
A)  Avoid future use of credit card debt, except on a emergency basis. 
B)  Use savings to pay off current debt. 
C)  See if their creditors will restructure their loans. 
D)  Seek help from a reputable credit counselor. 
E)  All of the above are correct.

Question 17

Which of the following is not required by law to be on a loan disclosure statement?

Accepted Answer

A)  annual percentage rate 
B)  all finance charges 
C)  the total amount financed 
D)  the total amount of payments 
E)  All of the above are required. 
A)  annual percentage rate 
B)  all finance charges 
C)  the total amount financed 
D)  the total amount of payments 
E)  All of the above are required.

Question 18

What is the distinguishing feature of an automobile loan?

Accepted Answer

The automobile is used as collateral and

Question 19

Give five things you can do to obtain the most favorable rates on loans, which in essence will allow you to lower the lender's risk.

Accepted Answer

‑Develop a strong credit ratin

Question 20

Which of the following characterize secured loans?

Accepted Answer

A)  They are typically easier to get. 
B)  Interest rates tend to be lower than unsecured loans. 
C)  They reduce the lender's risk. 
D)  They are backed with either physical or investment assets. 
E)  All of the above 
A)  They are typically easier to get. 
B)  Interest rates tend to be lower than unsecured loans. 
C)  They reduce the lender's risk. 
D)  They are backed with either physical or investment assets. 
E)  All of the above

Why is the discount method more costly than the simple interest method on a single-payment loan?

Alice has fallen behind on her signature loan. She recently received a notice from the lender that her wages were going to be garnished to pay off the debt. What is the loan clause that allows the lender to take this action against Alice because she was in default?

What is the name of the formal document that outlines the legal obligations of both the lender and the borrower?

Ronald is borrowing $20,000 using the discount method. His bank is offering him an annual percentage rate of 8.5% and he is taking out the loan for 24 months. How large of a check will Ronald receive from this loan when he leaves the bank? How much will he repay?

How do you know how much debt you can comfortably afford?

Not having health insurance could lead to filing for bankruptcy if one has incurred large medical expenses and is unable to pay these bills off in a timely manner.

The loan contract is a formal document called a(n) and may contain a(n) specifying who retains control over the item being purchased in the case of default.

Many lenders will hold Dave to the 28/36 rule in evaluating his application for a mortgage. What does the 36 mean?

The quoted rate on a home equity loan is 10% and you are in a 28% marginal tax bracket. What is the effective after-tax rate on this loan?

When do the payments on a Stafford Loan begin?

Sharry is interested in buying her first home. Currently her monthly gross income is $3,000. From this she makes a car payment of $240, a personal loan payment of $300 and a student loan payment of $85. Based on this information would a bank approve Sharry for a mortgage?

What will the courts do if you file Chapter 7 personal bankruptcy?

What are the opportunity costs associated with Student loans?

Explain why add-on installment loans are more expensive than simple interest loans.

What can a couple seeking to get out of debt do?

Which of the following is not required by law to be on a loan disclosure statement?

What is the distinguishing feature of an automobile loan?

Give five things you can do to obtain the most favorable rates on loans, which in essence will allow you to lower the lender's risk.

Which of the following characterize secured loans?

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Securities Markets

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters

Exam 7: Using Consumer Loans: The Role of Planned Borrowing

Why is the discount method more costly than the simple interest method on a single-payment loan?

Alice has fallen behind on her signature loan. She recently received a notice from the lender that her wages were going to be garnished to pay off the debt. What is the loan clause that allows the lender to take this action against Alice because she was in default?

What is the name of the formal document that outlines the legal obligations of both the lender and the borrower?

Ronald is borrowing $20,000 using the discount method. His bank is offering him an annual percentage rate of 8.5% and he is taking out the loan for 24 months. How large of a check will Ronald receive from this loan when he leaves the bank? How much will he repay?

How do you know how much debt you can comfortably afford?

Not having health insurance could lead to filing for bankruptcy if one has incurred large medical expenses and is unable to pay these bills off in a timely manner.

The loan contract is a formal document called a(n) ________ and may contain a(n) ________ specifying who retains control over the item being purchased in the case of default.

Many lenders will hold Dave to the 28/36 rule in evaluating his application for a mortgage. What does the 36 mean?

The quoted rate on a home equity loan is 10% and you are in a 28% marginal tax bracket. What is the effective after-tax rate on this loan?

When do the payments on a Stafford Loan begin?

Sharry is interested in buying her first home. Currently her monthly gross income is $3,000. From this she makes a car payment of $240, a personal loan payment of $300 and a student loan payment of $85. Based on this information would a bank approve Sharry for a mortgage?

What will the courts do if you file Chapter 7 personal bankruptcy?

What are the opportunity costs associated with Student loans?

Explain why add-on installment loans are more expensive than simple interest loans.

What can a couple seeking to get out of debt do?

Which of the following is not required by law to be on a loan disclosure statement?

What is the distinguishing feature of an automobile loan?

Give five things you can do to obtain the most favorable rates on loans, which in essence will allow you to lower the lender's risk.

Which of the following characterize secured loans?

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Securities Markets

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters

The loan contract is a formal document called a(n) and may contain a(n) specifying who retains control over the item being purchased in the case of default.