Question 1

Which of the following is true of fixed-rate loans?

Accepted Answer

A) Fixed-rate loans are preferable when interest rates are expected to rise. 
B) The cost of fixed-rate loans increases with an increase in the market interest rate. 
C) The cost of fixed-rate loans decreases with a decrease in the market interest rate. 
D) Fixed-rate loans are preferable when interest rates are expected to fall. 
E) The interest rates on fixed-rate-loans have periodic adjustment dates,at which time monthly payments are adjusted. 
A) Fixed-rate loans are preferable when interest rates are expected to rise. 
B) The cost of fixed-rate loans increases with an increase in the market interest rate. 
C) The cost of fixed-rate loans decreases with a decrease in the market interest rate. 
D) Fixed-rate loans are preferable when interest rates are expected to fall. 
E) The interest rates on fixed-rate-loans have periodic adjustment dates,at which time monthly payments are adjusted.

Question 2

The most popular use of consumer loans is to:

Accepted Answer

A) purchase a car. 
B) finance college education. 
C) finance a vacation. 
D) buy a house. 
E) buy furniture. 
A) purchase a car. 
B) finance college education. 
C) finance a vacation. 
D) buy a house. 
E) buy furniture.

Question 3

____________ obtain funds from their stockholders and through open market borrowing. ​

Accepted Answer

A) Credit unions 
B) Consumer finance companies 
C) Commercial banks 
D) Life insurance companies 
A) Credit unions 
B) Consumer finance companies 
C) Commercial banks 
D) Life insurance companies

Question 4

You are borrowing $5,000 at a 9% interest rate.The total finance cost will be the highest in a ____________. ​

Accepted Answer

A) 24-month repayment plan 
B) 36-month repayment plan 
C) 12-month repayment plan 
D) 48-month repayment plan 
A) 24-month repayment plan 
B) 36-month repayment plan 
C) 12-month repayment plan 
D) 48-month repayment plan

Question 5

The Rule of 78s is used to calculate the ____________ when an installment loan is paid off early. ​

Accepted Answer

A) APR 
B) balance due 
C) prepayment penalty 
D) basic cost of money 
A) APR 
B) balance due 
C) prepayment penalty 
D) basic cost of money

Question 6

Most loans made by savings and loan associations are:

Accepted Answer

A) home improvement loans. 
B) auto loans. 
C) mortgage loans. 
D) education loans. 
E) consolidation loans. 
A) home improvement loans. 
B) auto loans. 
C) mortgage loans. 
D) education loans. 
E) consolidation loans.

Question 7

The rate of interest charged on ____________ loans changes periodically in keeping with prevailing market conditions. ​

Accepted Answer

A) nominal-rate 
B) standard-rate 
C) variable-rate 
D) fixed-rate 
A) nominal-rate 
B) standard-rate 
C) variable-rate 
D) fixed-rate

Question 8

When the interest rate on savings is half the interest rate on a loan,it is ____________. ​

Accepted Answer

A) less expensive to borrow to make a purchase 
B) more expensive to use your savings for half the amount required to purchase 
C) less expensive to use your savings to make a purchase 
D) less expensive to borrow to save 
A) less expensive to borrow to make a purchase 
B) more expensive to use your savings for half the amount required to purchase 
C) less expensive to use your savings to make a purchase 
D) less expensive to borrow to save

Question 9

A legal claim that allows creditors to liquidate loan collateral is a:

Accepted Answer

A) loan application. 
B) note. 
C) security claim. 
D) lien. 
E) loan rollover. 
A) loan application. 
B) note. 
C) security claim. 
D) lien. 
E) loan rollover.

Question 10

If you borrow money on a single-payment loan and discover that you cannot pay it back when it is due,you should:

Accepted Answer

A) purchase a credit card. 
B) unsecure the loan. 
C) pay a prepayment penalty. 
D) negotiate a rollover. 
E) file for bankruptcy. 
A) purchase a credit card. 
B) unsecure the loan. 
C) pay a prepayment penalty. 
D) negotiate a rollover. 
E) file for bankruptcy.

Question 11

Which of the following is a nondepository institution?

Accepted Answer

A) A commercial bank 
B) A credit union 
C) A consumer finance company 
D) A savings and loan association 
E) A savings bank 
A) A commercial bank 
B) A credit union 
C) A consumer finance company 
D) A savings and loan association 
E) A savings bank

Question 12

A single-payment loan is advantageous to a borrower only if:

Accepted Answer

A) the interest rate is more than that on an installment loan offered by commercial banks. 
B) funds are expected to be available in the future to repay the loan in a lump sum. 
C) the finance charges are calculated using the discount method. 
D) the finance charges are calculated using the simple interest method. 
E) it has a collateral note. 
A) the interest rate is more than that on an installment loan offered by commercial banks. 
B) funds are expected to be available in the future to repay the loan in a lump sum. 
C) the finance charges are calculated using the discount method. 
D) the finance charges are calculated using the simple interest method. 
E) it has a collateral note.

Question 13

The annual percentage rate (APR)is equivalent to the stated rate of interest when the _____ is used to calculate finance charges.

Accepted Answer

A) dollar cost of credit method 
B) discount method 
C) average loan balance method 
D) double declining balance method 
E) simple interest method 
A) dollar cost of credit method 
B) discount method 
C) average loan balance method 
D) double declining balance method 
E) simple interest method

Question 14

The repayment of the principal of installment loans is made in a lump sum,and the repayment period of installment loans is six to twelve months.

Accepted Answer

A) True 
 B)False

Question 15

In most cases,lenders liquidate the collateral until the loan is repaid in a lump sum.

Accepted Answer

A) True 
 B)False

Question 16

If the add-on method is used to calculate a finance charge of $150.80 on a $2,200 loan,the amount to be ____________. ​

Accepted Answer

A) repaid is $2,200 
B) disbursed to the borrower is $2,049.20 
C) repaid is $2,350.80 
D) disbursed to the borrower is $2,350.80 
A) repaid is $2,200 
B) disbursed to the borrower is $2,049.20 
C) repaid is $2,350.80 
D) disbursed to the borrower is $2,350.80

Question 17

Sales finance companies:

Accepted Answer

A) buy installment loans from consumers. 
B) buy installment loans from retailers. 
C) sell installment loans to retailers. 
D) buy installment loans from banks. 
E) sell installment loans to banks. 
A) buy installment loans from consumers. 
B) buy installment loans from retailers. 
C) sell installment loans to retailers. 
D) buy installment loans from banks. 
E) sell installment loans to banks.

Question 18

Which of the following sources of consumer loans often has the most favorable terms for borrowers?

Accepted Answer

A) Commercial banks 
B) Credit unions 
C) Consumer finance companies 
D) Savings and loan associations 
E) Asset management companies 
A) Commercial banks 
B) Credit unions 
C) Consumer finance companies 
D) Savings and loan associations 
E) Asset management companies

Question 19

You are borrowing $5,000 at a 9% interest rate.The monthly payments will be the highest in a ____________. ​

Accepted Answer

A) 24-month repayment plan 
B) 36-month repayment plan 
C) 12-month repayment plan 
D) 48-month repayment plan 
A) 24-month repayment plan 
B) 36-month repayment plan 
C) 12-month repayment plan 
D) 48-month repayment plan

Question 20

Borrowing from ____________ is seldom recommended by financial advisors. ​

Accepted Answer

A) relatives 
B) consumer finance companies 
C) asset management companies 
D) credit unions 
A) relatives 
B) consumer finance companies 
C) asset management companies 
D) credit unions

Which of the following is true of fixed-rate loans?

The most popular use of consumer loans is to:

____________ obtain funds from their stockholders and through open market borrowing.

You are borrowing $5,000 at a 9% interest rate.The total finance cost will be the highest in a ____________.

The Rule of 78s is used to calculate the ____________ when an installment loan is paid off early.

Most loans made by savings and loan associations are:

The rate of interest charged on ____________ loans changes periodically in keeping with prevailing market conditions.

When the interest rate on savings is half the interest rate on a loan,it is ____________.

A legal claim that allows creditors to liquidate loan collateral is a:

If you borrow money on a single-payment loan and discover that you cannot pay it back when it is due,you should:

Which of the following is a nondepository institution?

A single-payment loan is advantageous to a borrower only if:

The annual percentage rate (APR)is equivalent to the stated rate of interest when the _____ is used to calculate finance charges.

The repayment of the principal of installment loans is made in a lump sum,and the repayment period of installment loans is six to twelve months.

In most cases,lenders liquidate the collateral until the loan is repaid in a lump sum.

If the add-on method is used to calculate a finance charge of $150.80 on a $2,200 loan,the amount to be ____________.

Sales finance companies:

Which of the following sources of consumer loans often has the most favorable terms for borrowers?

You are borrowing $5,000 at a 9% interest rate.The monthly payments will be the highest in a ____________.

Borrowing from ____________ is seldom recommended by financial advisors.

Understanding the Financial Planning Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds, ETFS and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

Exam 7: Using Consumer Loans

Which of the following is true of fixed-rate loans?

The most popular use of consumer loans is to:

____________ obtain funds from their stockholders and through open market borrowing. ​

You are borrowing $5,000 at a 9% interest rate.The total finance cost will be the highest in a ____________. ​

The Rule of 78s is used to calculate the ____________ when an installment loan is paid off early. ​

Most loans made by savings and loan associations are:

The rate of interest charged on ____________ loans changes periodically in keeping with prevailing market conditions. ​

When the interest rate on savings is half the interest rate on a loan,it is ____________. ​

A legal claim that allows creditors to liquidate loan collateral is a:

If you borrow money on a single-payment loan and discover that you cannot pay it back when it is due,you should:

Which of the following is a nondepository institution?

A single-payment loan is advantageous to a borrower only if:

The annual percentage rate (APR)is equivalent to the stated rate of interest when the _____ is used to calculate finance charges.

The repayment of the principal of installment loans is made in a lump sum,and the repayment period of installment loans is six to twelve months.

In most cases,lenders liquidate the collateral until the loan is repaid in a lump sum.

If the add-on method is used to calculate a finance charge of $150.80 on a $2,200 loan,the amount to be ____________. ​

Sales finance companies:

Which of the following sources of consumer loans often has the most favorable terms for borrowers?

You are borrowing $5,000 at a 9% interest rate.The monthly payments will be the highest in a ____________. ​

Borrowing from ____________ is seldom recommended by financial advisors. ​

Understanding the Financial Planning Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Insuring Your Life

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds, ETFS and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

____________ obtain funds from their stockholders and through open market borrowing.

You are borrowing $5,000 at a 9% interest rate.The total finance cost will be the highest in a ____________.

The Rule of 78s is used to calculate the ____________ when an installment loan is paid off early.

The rate of interest charged on ____________ loans changes periodically in keeping with prevailing market conditions.

When the interest rate on savings is half the interest rate on a loan,it is ____________.

If the add-on method is used to calculate a finance charge of $150.80 on a $2,200 loan,the amount to be ____________.

You are borrowing $5,000 at a 9% interest rate.The monthly payments will be the highest in a ____________.

Borrowing from ____________ is seldom recommended by financial advisors.