Question 1

What happens when you default on a car loan where your Title is held as collateral?

Accepted Answer

A)  You damage your credit history but you keep the car. 
B)  You lose the car and damage your credit history. 
C)  You face liability under the deficiency payments clause. 
D)  Only choices B and C are correct. 
E)  All of the above choices are correct. 
A)  You damage your credit history but you keep the car. 
B)  You lose the car and damage your credit history. 
C)  You face liability under the deficiency payments clause. 
D)  Only choices B and C are correct. 
E)  All of the above choices are correct.

Question 2

Samuel is having financial troubles. He owes a significant amount of money to his ex-wife for child support payments, he is also behind on his student loans and has not paid his taxes for the last five years. Sam is considering filing for personal bankruptcy. Why might this not be a wise financial decision for him?

Accepted Answer

This would not be wise decisio

Question 3

What is the name of the interest rate banks charge to their most creditworthy customers?

Accepted Answer

A)  main rate 
B)  blue chip rate 
C)  prime rate 
D)  premier rate 
E)  none of the above 
A)  main rate 
B)  blue chip rate 
C)  prime rate 
D)  premier rate 
E)  none of the above

Question 4

Loans using the add-on method are a relative bargain, and should be sought out.

Accepted Answer

A) True 
 B)False

Question 5

A(n) ________ loan calls for the repayment of both the interest and the principal at regular intervals and is commonly referred to as loan amortization.

Accepted Answer

A)  term 
B)  simple interest 
C)  installment 
D)  personal 
E)  none of the above 
A)  term 
B)  simple interest 
C)  installment 
D)  personal 
E)  none of the above

Question 6

What is the type of loan where the entire interest charge is subtracted from the loan principal before you receive the money, and at maturity you repay the entire principal?

Accepted Answer

A)  simple interest method 
B)  partial amortization method 
C)  discount method 
D)  add-on method 
E)  none of the above 
A)  simple interest method 
B)  partial amortization method 
C)  discount method 
D)  add-on method 
E)  none of the above

Question 7

Describe the four major parts of a typical loan contract.

Accepted Answer

The loan contract will contain an insura

Question 8

Fred ran short on cash and borrowed $300 through a Payday Loan company. The company charged him a fee of $60 to borrow the $300 for 14 days. Using the simple interest method calculate what interest rate was Fred charged for the aforementioned loan.

Accepted Answer

A)  5.21% 
B)  52.13% 
C)  521.29% 
D)  None of the above. 
A)  5.21% 
B)  52.13% 
C)  521.29% 
D)  None of the above.

Question 9

What is the loan clause stating that if you default on a secured loan, the lender can repossess whatever is secured, as well as bill you for the difference if that repossession does not cover what you owe?

Accepted Answer

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

Question 10

The APR is larger when money is lent under the discount method than when it is lent under the simple interest method.

Accepted Answer

A) True 
 B)False

Question 11

Congratulations! You have just graduated from college and are determining what your monthly student loan payments will be. After consolidating all of your loans, you have a balance of $18,000. At 8% APR for 10 years, what will your monthly payments be?

Accepted Answer

A)  $1,866.66 
B)  $161.50 
C)  $218.39 
D)  $1,440.14 
A)  $1,866.66 
B)  $161.50 
C)  $218.39 
D)  $1,440.14

Question 12

List examples of loans or loan sources that fit into the categories of inexpensive, more expensive, and most expensive.

Accepted Answer

‑Inexpensive:family, home equity loans,

Question 13

If your before-tax cost of a home equity loan is twelve percent and you are in the thirty percent marginal tax bracket, your after-tax cost of the home equity loan is nine percent.

Accepted Answer

A) True 
 B)False

Question 14

You are headed to the mountains for some climbing this summer and you need some gear. The local mountaineering shop is offering 6% financing on all purchases before the end of the month. Your savings account is currently paying 5%, and you are in a marginal tax bracket of 28%. Which of the following is true?

Accepted Answer

A)  Borrow from the mountain shop - it is cheaper. 
B)  Take the money out of savings - it is cheaper. 
C)  It does not matter where you get the money; it will cost the same. 
D)  You should seek competent financial help. 
E)  None of the above are true. 
A)  Borrow from the mountain shop - it is cheaper. 
B)  Take the money out of savings - it is cheaper. 
C)  It does not matter where you get the money; it will cost the same. 
D)  You should seek competent financial help. 
E)  None of the above are true.

Question 15

Unsecured loans are generally less risky to lenders than secured loans. Therefore secured loans typically charge a higher APR than unsecured loans.

Accepted Answer

A) True 
 B)False

Question 16

Joshua recently purchased a new home. His lender required him to purchase credit life insurance on the loan in the event that he died before the mortgage is paid off. What is the loan clause that allows his lender to require him to purchase this additional insurance.

Accepted Answer

A)  insurance agreement clause 
B)  default contingency clause 
C)  early payment clause 
D)  recourse clause 
E)  none of the above 
A)  insurance agreement clause 
B)  default contingency clause 
C)  early payment clause 
D)  recourse clause 
E)  none of the above

Question 17

Payday loans are a dangerous way to borrow money, and charge an annual interest rate of almost 400%.

Accepted Answer

A) True 
 B)False

Question 18

Steven is beginning a new job but has not yet been paid. He needs $400 to pay his rent this month. Steven is going to borrow the money through a Payday Loan establishment. They are charging him an $80 fee to borrow the money for 10 days until he receives his first paycheck. What is the actual interest rate that Steven is being charged?

Accepted Answer

A)  7.3% 
B)  73.0% 
C)  730.0%. 
D)  .073% 
E)  none of the above 
A)  7.3% 
B)  73.0% 
C)  730.0%. 
D)  .073% 
E)  none of the above

Question 19

Under a Stafford Loan, parents borrow money for their child's education.

Accepted Answer

A) True 
 B)False

Question 20

Debt consolidation loans can be a very good thing for some people but they can also be dangerous to some. Explain the benefits and dangers of a debt consolidation loan.

Accepted Answer

If you are fortunate enough to have suff

What happens when you default on a car loan where your Title is held as collateral?

What is the name of the interest rate banks charge to their most creditworthy customers?

Loans using the add-on method are a relative bargain, and should be sought out.

A(n) ________ loan calls for the repayment of both the interest and the principal at regular intervals and is commonly referred to as loan amortization.

What is the type of loan where the entire interest charge is subtracted from the loan principal before you receive the money, and at maturity you repay the entire principal?

Describe the four major parts of a typical loan contract.

Fred ran short on cash and borrowed $300 through a Payday Loan company. The company charged him a fee of $60 to borrow the $300 for 14 days. Using the simple interest method calculate what interest rate was Fred charged for the aforementioned loan.

What is the loan clause stating that if you default on a secured loan, the lender can repossess whatever is secured, as well as bill you for the difference if that repossession does not cover what you owe?

The APR is larger when money is lent under the discount method than when it is lent under the simple interest method.

Congratulations! You have just graduated from college and are determining what your monthly student loan payments will be. After consolidating all of your loans, you have a balance of $18,000. At 8% APR for 10 years, what will your monthly payments be?

List examples of loans or loan sources that fit into the categories of inexpensive, more expensive, and most expensive.

If your before-tax cost of a home equity loan is twelve percent and you are in the thirty percent marginal tax bracket, your after-tax cost of the home equity loan is nine percent.

Unsecured loans are generally less risky to lenders than secured loans. Therefore secured loans typically charge a higher APR than unsecured loans.

Joshua recently purchased a new home. His lender required him to purchase credit life insurance on the loan in the event that he died before the mortgage is paid off. What is the loan clause that allows his lender to require him to purchase this additional insurance.

Payday loans are a dangerous way to borrow money, and charge an annual interest rate of almost 400%.

Under a Stafford Loan, parents borrow money for their child's education.

Debt consolidation loans can be a very good thing for some people but they can also be dangerous to some. Explain the benefits and dangers of a debt consolidation loan.

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

What happens when you default on a car loan where your Title is held as collateral?

What is the name of the interest rate banks charge to their most creditworthy customers?

Loans using the add-on method are a relative bargain, and should be sought out.

A(n) ________ loan calls for the repayment of both the interest and the principal at regular intervals and is commonly referred to as loan amortization.

What is the type of loan where the entire interest charge is subtracted from the loan principal before you receive the money, and at maturity you repay the entire principal?

Describe the four major parts of a typical loan contract.

Fred ran short on cash and borrowed $300 through a Payday Loan company. The company charged him a fee of $60 to borrow the $300 for 14 days. Using the simple interest method calculate what interest rate was Fred charged for the aforementioned loan.

What is the loan clause stating that if you default on a secured loan, the lender can repossess whatever is secured, as well as bill you for the difference if that repossession does not cover what you owe?

The APR is larger when money is lent under the discount method than when it is lent under the simple interest method.

Congratulations! You have just graduated from college and are determining what your monthly student loan payments will be. After consolidating all of your loans, you have a balance of $18,000. At 8% APR for 10 years, what will your monthly payments be?

List examples of loans or loan sources that fit into the categories of inexpensive, more expensive, and most expensive.

If your before-tax cost of a home equity loan is twelve percent and you are in the thirty percent marginal tax bracket, your after-tax cost of the home equity loan is nine percent.

Unsecured loans are generally less risky to lenders than secured loans. Therefore secured loans typically charge a higher APR than unsecured loans.

Joshua recently purchased a new home. His lender required him to purchase credit life insurance on the loan in the event that he died before the mortgage is paid off. What is the loan clause that allows his lender to require him to purchase this additional insurance.

Payday loans are a dangerous way to borrow money, and charge an annual interest rate of almost 400%.

Under a Stafford Loan, parents borrow money for their child's education.

Debt consolidation loans can be a very good thing for some people but they can also be dangerous to some. Explain the benefits and dangers of a debt consolidation loan.

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