Question 1

Describe the four major parts of a typical loan contract.

Accepted Answer

The loan contract will contain an insura

Question 2

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 3

A recourse clause defines whatever actions a lender can take to recover money from you in case you default on the loan.

Accepted Answer

A) True 
 B)False

Question 4

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 5

With a discount method single-payment loan,the entire interest charge is subtracted from the principal before you receive the money,and at maturity you repay the principal.

Accepted Answer

A) True 
 B)False

Question 6

Bridge loans provide short-term funding until longer-term or additional financing is found.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Student loans are loans with federally subsidized interest rates given,based on financial need,to students making satisfactory progress in their degree programs.

Accepted Answer

A) True 
 B)False

Question 9

You have just obtained a personal loan for a new home movie system under the simple interest method.You have borrowed $12,000 for 9 months at an annual rate of 10%.Your marginal tax rate is 28%.What are the total interest charges you would pay if the loan is paid off on time?

Accepted Answer

A)  $1,200 
B)  $1,080 
C)  $900 
D)  $648 
E)  None of the above 
A)  $1,200 
B)  $1,080 
C)  $900 
D)  $648 
E)  None of the above

Question 10

The simple interest method is the most common method of calculating payments on an installment loan.

Accepted Answer

A) True 
 B)False

Question 11

Which of these are possible options for most people who cannot pay their bills?

Accepted Answer

A)  Get help from a credit counselor. 
B)  Obtain a debt consolidation loan. 
C)  Declare Chapter 13 personal bankruptcy. 
D)  Declare Chapter 7 personal bankruptcy. 
E)  All of the above are possible options. 
A)  Get help from a credit counselor. 
B)  Obtain a debt consolidation loan. 
C)  Declare Chapter 13 personal bankruptcy. 
D)  Declare Chapter 7 personal bankruptcy. 
E)  All of the above are possible options.

Question 12

List three reasons why a student-loan borrower may be granted a deferment.

Accepted Answer

The borrower might receive a d

Question 13

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 14

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

Question 15

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 16

A 529 plan is a tax-advantaged savings plan designed to encourage parents to save for future college costs for their children.The plan comes in two forms: pre-paid tuition plans and college savings plans.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Student who are awarded grants must pay back a percentage of the amount after graduation.

Accepted Answer

A) True 
 B)False

Question 19

You just bought a car and borrowed $15,000 for 5 years at 8% APR.Using the simple interest method;by the time you pay off this loan your total finance costs will be closest to which of the following?

Accepted Answer

A)  $6,000 
B)  $3,249 
C)  $3,784 
D)  $1,200 
A)  $6,000 
B)  $3,249 
C)  $3,784 
D)  $1,200

Question 20

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

Describe the four major parts of a typical loan contract.

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?

A recourse clause defines whatever actions a lender can take to recover money from you in case you default on the loan.

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

With a discount method single-payment loan,the entire interest charge is subtracted from the principal before you receive the money,and at maturity you repay the principal.

Bridge loans provide short-term funding until longer-term or additional financing is found.

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.

Student loans are loans with federally subsidized interest rates given,based on financial need,to students making satisfactory progress in their degree programs.

You have just obtained a personal loan for a new home movie system under the simple interest method.You have borrowed $12,000 for 9 months at an annual rate of 10%.Your marginal tax rate is 28%.What are the total interest charges you would pay if the loan is paid off on time?

The simple interest method is the most common method of calculating payments on an installment loan.

Which of these are possible options for most people who cannot pay their bills?

List three reasons why a student-loan borrower may be granted a deferment.

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?

Which of the following characterize secured loans?

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.

A 529 plan is a tax-advantaged savings plan designed to encourage parents to save for future college costs for their children.The plan comes in two forms: pre-paid tuition plans and college savings plans.

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.

Student who are awarded grants must pay back a percentage of the amount after graduation.

You just bought a car and borrowed $15,000 for 5 years at 8% APR.Using the simple interest method;by the time you pay off this loan your total finance costs will be closest to which of the following?

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.

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

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: Student and Consumer Loans: The Role of Planned Borrowing

Describe the four major parts of a typical loan contract.

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?

A recourse clause defines whatever actions a lender can take to recover money from you in case you default on the loan.

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

With a discount method single-payment loan,the entire interest charge is subtracted from the principal before you receive the money,and at maturity you repay the principal.

Bridge loans provide short-term funding until longer-term or additional financing is found.

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.

Student loans are loans with federally subsidized interest rates given,based on financial need,to students making satisfactory progress in their degree programs.

You have just obtained a personal loan for a new home movie system under the simple interest method.You have borrowed $12,000 for 9 months at an annual rate of 10%.Your marginal tax rate is 28%.What are the total interest charges you would pay if the loan is paid off on time?

The simple interest method is the most common method of calculating payments on an installment loan.

Which of these are possible options for most people who cannot pay their bills?

List three reasons why a student-loan borrower may be granted a deferment.

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?

Which of the following characterize secured loans?

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.

A 529 plan is a tax-advantaged savings plan designed to encourage parents to save for future college costs for their children.The plan comes in two forms: pre-paid tuition plans and college savings plans.

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.

Student who are awarded grants must pay back a percentage of the amount after graduation.

You just bought a car and borrowed $15,000 for 5 years at 8% APR.Using the simple interest method;by the time you pay off this loan your total finance costs will be closest to which of the following?

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.

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

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.