Exam 18: Consumer Loans, Credit Cards, and Real Estate Lending

Households tend to be interest-inelastic borrowers.

Emily Barnes has gone to the First State Bank and gotten a loan of $5,000 so she can go on vacation.She plans on paying the loan back in one payment in three months.Which of the following categories will this loan fall into?

A(n)______________________ loan is a short-term or a medium-term loan repayable in two or more consecutive payments,usually monthly or quarterly.

A(n)____________________________________________ mortgage is an agreement drawn up by a bank that gives the bank control of the property if the loan cannot be repaid as planned.

In a revolving line of credit,where a customer is subject to high fees and interest costs and is required to make only a small portion of total debt owed,usually called "minimum payment",often results in:

A rule of thumb used to determine how much interest income a bank is allowed to accrue at any point in time from a consumer loan that is being paid off in monthly installments is known as the ____________.

According to the text,which of the following has been the fastest growing consumer loan category in the last few decades inside the United States?

The Equal Credit Opportunity Act authorizes individuals and families to review their credit file for accuracy and to demand an investigation and correction of any apparent inaccuracies.

The symbol "SN" assigned as a rating indicates that a bank has been judged to be an outstanding performer under the terms of the Community Reinvestment Act.

Loans to individuals and families to finance the purchase of new homes are known as:

FNMA does not purchase home mortgages in the secondary market if the borrower's monthly total debt repayments (including housing costs)exceed _________ percent of the borrower's monthly gross income.

The most important factor used in the FICO credit score appears to be the borrower's payment history.

The interest rate on most consumer loans is based on the cost of loanable funds to the bank,plus nonfunding cost,plus premiums for default and time to maturity,and also includes the desired profit margin on the loan.This method of pricing loans is known as _____________________.

Which of the following consumer loans has grown in popularity as a result of the passage of the Tax Reform Act of 1986?

Short-term loans drawn upon by individuals and families for immediate cash needs and repayable in a lump sum are known as:

The most profitable credit card customers for a bank are those that:

Points on a home mortgage loan results in a lender earning a higher effective interest rate on the loan than just the loan rate quoted to the borrower.

How did the Tax Reform Act of 1986 increase the appeal of home equity loans?

A majority of installment and lump-sum payment loans to families and individuals are made on floating interest rates.

Prepaid cards which carry balances that can be spent electronically in stores until the balance entered in such cards is fully used up are known as: