Question 1

The APR is

Accepted Answer

A)  the average rate paid for credit 
B)  the average rate paid on deposits 
C)  the average annual percentage cost paid for credit 
D)  the average annual percentage cost paid on deposits 
A)  the average rate paid for credit 
B)  the average rate paid on deposits 
C)  the average annual percentage cost paid for credit 
D)  the average annual percentage cost paid on deposits C

Question 2

Which of the following methods of computing finance charges results in the highest APR cost to borrowers?

Accepted Answer

A)  discount rate 
B)  add-on rate 
C)  monthly amortization 
D)  single-payment 
A)  discount rate 
B)  add-on rate 
C)  monthly amortization 
D)  single-payment A

Question 3

Credit card loan applications cannot ask questions about the applicants

Accepted Answer

A)  sex 
B)  income 
C)  retirement plans 
D)  age 
A)  sex 
B)  income 
C)  retirement plans 
D)  age A

Question 4

Given a $15,000, 3 year loan at 12.5 percent, which of the following methods will produce in the largest finance charge?

Accepted Answer

A)  discount-rate 
B)  add-on rate 
C)  single-payment loan rate 
D)  all of the above 
A)  discount-rate 
B)  add-on rate 
C)  single-payment loan rate 
D)  all of the above

Question 5

A typical loan-to-price ratio for conventionally financed mortgage loans on new homes is about 75-80 percent.

Accepted Answer

A) True 
 B)False

Question 6

Home buyers can reduce their monthly payments, but increase their total cost of the loan by increasing the maturity of their mortgage loans.

Accepted Answer

A) True 
 B)False

Question 7

The principal distinction between a credit card and a debit card is that

Accepted Answer

A)  credit cards are made of plastic and have customer information imbedded on a magnetic strip 
B)  debit cards do not extend credit 
C)  credit cards may be used to buy goods and services 
D)  debit cards are used in lieu of check overdrafts 
A)  credit cards are made of plastic and have customer information imbedded on a magnetic strip 
B)  debit cards do not extend credit 
C)  credit cards may be used to buy goods and services 
D)  debit cards are used in lieu of check overdrafts

Question 8

Convenience use of credit cards refers to

Accepted Answer

A)  the open-end use of the card 
B)  amounts owed being paid in full when billed 
C)  the line of credit may be raised as needed 
D)  none of the above 
A)  the open-end use of the card 
B)  amounts owed being paid in full when billed 
C)  the line of credit may be raised as needed 
D)  none of the above

Question 9

Many banks use credit scoring systems to assist in their evaluation of prospective borrowers.

Accepted Answer

A) True 
 B)False

Question 10

During the early years of repaying mortgage loans, most of the monthly payment is applied to

Accepted Answer

A)  principal 
B)  interest 
C)  points 
D)  escrows 
A)  principal 
B)  interest 
C)  points 
D)  escrows

Question 11

REITs are government backed agencies that specialize in real estate finance.

Accepted Answer

A) True 
 B)False

Question 12

Indirect lending by banks to automobile dealers to finance car loans are sometimes called "dealer paper."

Accepted Answer

A) True 
 B)False

Question 13

Borrower's risk of using adjustable rate consumer loans is limited by

Accepted Answer

A)  reserve requirements 
B)  caps and floors 
C)  interest rate swaps 
D)  internal audits 
A)  reserve requirements 
B)  caps and floors 
C)  interest rate swaps 
D)  internal audits

Question 14

Home equity loans are a form of second mortgage.

Accepted Answer

A) True 
 B)False

Question 15

The merchant's credit card discount is based on

Accepted Answer

A)  volume of credit card trade 
B)  average size of credit card sales 
C)  compensating balances 
D)  all of the above 
A)  volume of credit card trade 
B)  average size of credit card sales 
C)  compensating balances 
D)  all of the above

Question 16

Federal Reserve Regulation Z is mandated under the Equal Credit Opportunity Act to ensure fair interest rates are paid on deposits.

Accepted Answer

A) True 
 B)False

Question 17

The "Adjusted Balance" method of computing finance charges results in the lowest finance charge.

Accepted Answer

A) True 
 B)False

Question 18

As a rule of thumb, one point corresponds to ______in the interest charge.

Accepted Answer

A)  0.1 percent 
B)  1.0 percent 
C)  10.0 percent 
D)  0.001 percent 
A)  0.1 percent 
B)  1.0 percent 
C)  10.0 percent 
D)  0.001 percent

Question 19

A conventional mortgage is one that is not backed by an agency of the federal government.

Accepted Answer

A) True 
 B)False

Question 20

The three major participants in the secondary mortgage market are Bank America, FNMA, and Citicorp.

Accepted Answer

A) True 
 B)False

The APR is

Which of the following methods of computing finance charges results in the highest APR cost to borrowers?

Credit card loan applications cannot ask questions about the applicants

Given a $15,000, 3 year loan at 12.5 percent, which of the following methods will produce in the largest finance charge?

A typical loan-to-price ratio for conventionally financed mortgage loans on new homes is about 75-80 percent.

Home buyers can reduce their monthly payments, but increase their total cost of the loan by increasing the maturity of their mortgage loans.

The principal distinction between a credit card and a debit card is that

Convenience use of credit cards refers to

Many banks use credit scoring systems to assist in their evaluation of prospective borrowers.

During the early years of repaying mortgage loans, most of the monthly payment is applied to

REITs are government backed agencies that specialize in real estate finance.

Indirect lending by banks to automobile dealers to finance car loans are sometimes called "dealer paper."

Borrower's risk of using adjustable rate consumer loans is limited by

Home equity loans are a form of second mortgage.

The merchant's credit card discount is based on

Federal Reserve Regulation Z is mandated under the Equal Credit Opportunity Act to ensure fair interest rates are paid on deposits.

The "Adjusted Balance" method of computing finance charges results in the lowest finance charge.

As a rule of thumb, one point corresponds to ______in the interest charge.

A conventional mortgage is one that is not backed by an agency of the federal government.

The three major participants in the secondary mortgage market are Bank America, FNMA, and Citicorp.

Functions and Forms of Banking

The Bank Regulatory Environment

Evaluating Bank Performance

Bank Valuation

An Overview of Assetliability Management Alm

Techniques of Assetliability Management: Futures, Options, and Swaps

Investment Management

Credit Evaluation Process

Commercial and Industrial Lending

Liquidity Management

Capital Management

Managing Liabilities

Off-Balance Sheet Activities

Securities, Investment Insurance Products

Other Financial Services

Electronic Banking

Global Financial Services

Filters

Exam 10: Real Estate and Consumer Lending

The APR is

Which of the following methods of computing finance charges results in the highest APR cost to borrowers?

Credit card loan applications cannot ask questions about the applicants

Given a $15,000, 3 year loan at 12.5 percent, which of the following methods will produce in the largest finance charge?

A typical loan-to-price ratio for conventionally financed mortgage loans on new homes is about 75-80 percent.

Home buyers can reduce their monthly payments, but increase their total cost of the loan by increasing the maturity of their mortgage loans.

The principal distinction between a credit card and a debit card is that

Convenience use of credit cards refers to

Many banks use credit scoring systems to assist in their evaluation of prospective borrowers.

During the early years of repaying mortgage loans, most of the monthly payment is applied to

REITs are government backed agencies that specialize in real estate finance.

Indirect lending by banks to automobile dealers to finance car loans are sometimes called "dealer paper."

Borrower's risk of using adjustable rate consumer loans is limited by

Home equity loans are a form of second mortgage.

The merchant's credit card discount is based on

Federal Reserve Regulation Z is mandated under the Equal Credit Opportunity Act to ensure fair interest rates are paid on deposits.

The "Adjusted Balance" method of computing finance charges results in the lowest finance charge.

As a rule of thumb, one point corresponds to ______in the interest charge.

A conventional mortgage is one that is not backed by an agency of the federal government.

The three major participants in the secondary mortgage market are Bank America, FNMA, and Citicorp.

Functions and Forms of Banking

The Bank Regulatory Environment

Evaluating Bank Performance

Bank Valuation

An Overview of Assetliability Management Alm

Techniques of Assetliability Management: Futures, Options, and Swaps

Investment Management

Credit Evaluation Process

Commercial and Industrial Lending

Liquidity Management

Capital Management

Managing Liabilities

Off-Balance Sheet Activities

Securities, Investment Insurance Products

Other Financial Services

Electronic Banking

Global Financial Services

Filters