Question 1

Which is NOT true about the Fair Credit Reporting Act?

Accepted Answer

A)  It regulates the use of credit reports. 
B)  It requires deletion of out-of-date information. 
C)  It gives consumers access to their files and the right to correct any misinformation. 
D)  It places limits on who can obtain a report. 
E)  It gives borrowers the right to know why they are denied credit. 
A)  It regulates the use of credit reports. 
B)  It requires deletion of out-of-date information. 
C)  It gives consumers access to their files and the right to correct any misinformation. 
D)  It places limits on who can obtain a report. 
E)  It gives borrowers the right to know why they are denied credit.

Question 2

The Equal Credit Opportunity Act requires that a lender not turn you down for credit based on your age as long as you are old enough to sign a legal contract,which is usually allowed at age 16.

Accepted Answer

A) True 
 B)False

Question 3

When evaluating your credit application,a lender may NOT

Accepted Answer

A)  Ask your date of birth. 
B)  Deny you credit if you receive public assistance. 
C)  Request a list of the ages of your dependents. 
D)  Inquire if you ever received credit before from that lender. 
E)  Ask the income of your spouse if you have a joint application. 
A)  Ask your date of birth. 
B)  Deny you credit if you receive public assistance. 
C)  Request a list of the ages of your dependents. 
D)  Inquire if you ever received credit before from that lender. 
E)  Ask the income of your spouse if you have a joint application.

Question 4

Why is the APR for a 10% loan that is repaid on a monthly basis higher than the APR for a loan that is repaid all at once?

Accepted Answer

The APR is higher because the interest i

Question 5

When used effectively,credit can result in

Accepted Answer

A)  Default. 
B)  Bankruptcy. 
C)  Loss of creditworthiness. 
D)  Financial loss. 
E)  Improved lifestyle. 
A)  Default. 
B)  Bankruptcy. 
C)  Loss of creditworthiness. 
D)  Financial loss. 
E)  Improved lifestyle.

Question 6

The APR is the percentage cost of credit on a(n)______________ basis.

Accepted Answer

A)  monthly 
B)  quarterly 
C)  semi-annual 
D)  annual 
E)  life-of-loan 
A)  monthly 
B)  quarterly 
C)  semi-annual 
D)  annual 
E)  life-of-loan

Question 7

In the five Cs of credit,conditions refer to what will happen if the borrower does not repay the loan.

Accepted Answer

A) True 
 B)False

Question 8

Most information in your credit file may be reported for only 7 years.

Accepted Answer

A) True 
 B)False

Question 9

Many people expect

Accepted Answer

A)  Their ability to make payments to get harder over time. 
B)  Their incomes to increase to make it easier to make payments. 
C)  Their interest rates to decrease as their credit balances decrease. 
D)  Their interest payments to increase as their credit balances decrease. 
E)  Their household expenses to be covered with their mortgage payment. 
A)  Their ability to make payments to get harder over time. 
B)  Their incomes to increase to make it easier to make payments. 
C)  Their interest rates to decrease as their credit balances decrease. 
D)  Their interest payments to increase as their credit balances decrease. 
E)  Their household expenses to be covered with their mortgage payment.

Question 10

A consumer applies for open-end credit to make a single purchase,such as a large appliance.

Accepted Answer

A) True 
 B)False

Question 11

Personal bankruptcy can be filed under which section(s)of the U.S.bankruptcy code?

Accepted Answer

A)  Chapter 7 
B)  Chapter 11 
C)  Chapter 13 
D)  Chapters 7 and 13 
E)  Chapters 11 and 13 
A)  Chapter 7 
B)  Chapter 11 
C)  Chapter 13 
D)  Chapters 7 and 13 
E)  Chapters 11 and 13

Question 12

Tanya received a $1,000 loan from the bank for a vacation.The bank is using the simple interest formula for this one-year,9% loan.What is her total interest?

Accepted Answer

A)  $9 
B)  $45 
C)  $90 
D)  $450 
E)  $1,009 
A)  $9 
B)  $45 
C)  $90 
D)  $450 
E)  $1,009

Question 13

Which of the following is NOT a valid reason for borrowing?

Accepted Answer

A)  Purchasing a new dishwasher. 
B)  Paying for everyday living expenses. 
C)  Buying a car to start a new job. 
D)  Paying for a medical emergency. 
E)  All of these are valid reasons for borrowing. 
A)  Purchasing a new dishwasher. 
B)  Paying for everyday living expenses. 
C)  Buying a car to start a new job. 
D)  Paying for a medical emergency. 
E)  All of these are valid reasons for borrowing.

Question 14

Consumer credit

Accepted Answer

A)  Is a privilege of the affluent. 
B)  Dates back to colonial times. 
C)  Carries no finance charge. 
D)  Is not a major force in our economy. 
E)  Use has been declining in recent years. 
A)  Is a privilege of the affluent. 
B)  Dates back to colonial times. 
C)  Carries no finance charge. 
D)  Is not a major force in our economy. 
E)  Use has been declining in recent years.

Question 15

Think about how you intend to use credit.Discuss the factors you would find most important in your choice of a credit card.Why?

Accepted Answer

Student answers will vary,but should add

Question 16

Jamie borrowed $1,000 from his uncle for one year.His uncle wanted Jamie to learn a thing or two about interest rates,so he told Jamie only that he wanted his actual interest rate to be 5%.In addition,he mentioned that he expected inflation to be 3% over the loan period.Jamie was puzzled.If he promised to pay his uncle in full at the end of the year,how much did Jamie need to pay him?

Accepted Answer

The total to be paid equals the principa

Question 17

Credit files can include all of the following except

Accepted Answer

A)  Employer, position, and income. 
B)  Previous address. 
C)  Spouse's name, Social Security number, employer, and income. 
D)  Race or nationality. 
E)  Checks returned for insufficient funds. 
A)  Employer, position, and income. 
B)  Previous address. 
C)  Spouse's name, Social Security number, employer, and income. 
D)  Race or nationality. 
E)  Checks returned for insufficient funds.

Question 18

Which of the following is NOT associated with credit cards?

Accepted Answer

A)  A grace period 
B)  A finance charge 
C)  An annual fee 
D)  Convenience users and borrowers 
E)  A down payment on a home 
A)  A grace period 
B)  A finance charge 
C)  An annual fee 
D)  Convenience users and borrowers 
E)  A down payment on a home

Question 19

The Consumer Credit Counseling Service

Accepted Answer

A)  Aids families with serious debt problems by helping them to manage their money better and set up a realistic budget. 
B)  Is a consolidation firm that will manage bills for a percentage of the total payment due. 
C)  Provides counseling, usually for a fee. 
D)  Is a program to wipe out your debts within two years. 
E)  All of these are correct. 
A)  Aids families with serious debt problems by helping them to manage their money better and set up a realistic budget. 
B)  Is a consolidation firm that will manage bills for a percentage of the total payment due. 
C)  Provides counseling, usually for a fee. 
D)  Is a program to wipe out your debts within two years. 
E)  All of these are correct.

Question 20

Which of the following is often considered to offer the least expensive loans?

Accepted Answer

A)  Banks. 
B)  Finance companies. 
C)  Loan companies. 
D)  Parents or family members. 
E)  Savings and loan associations. 
A)  Banks. 
B)  Finance companies. 
C)  Loan companies. 
D)  Parents or family members. 
E)  Savings and loan associations.

Which is NOT true about the Fair Credit Reporting Act?

The Equal Credit Opportunity Act requires that a lender not turn you down for credit based on your age as long as you are old enough to sign a legal contract,which is usually allowed at age 16.

When evaluating your credit application,a lender may NOT

Why is the APR for a 10% loan that is repaid on a monthly basis higher than the APR for a loan that is repaid all at once?

When used effectively,credit can result in

The APR is the percentage cost of credit on a(n)______________ basis.

In the five Cs of credit,conditions refer to what will happen if the borrower does not repay the loan.

Most information in your credit file may be reported for only 7 years.

Many people expect

A consumer applies for open-end credit to make a single purchase,such as a large appliance.

Personal bankruptcy can be filed under which section(s)of the U.S.bankruptcy code?

Tanya received a $1,000 loan from the bank for a vacation.The bank is using the simple interest formula for this one-year,9% loan.What is her total interest?

Which of the following is NOT a valid reason for borrowing?

Consumer credit

Think about how you intend to use credit.Discuss the factors you would find most important in your choice of a credit card.Why?

Credit files can include all of the following except

Which of the following is NOT associated with credit cards?

The Consumer Credit Counseling Service

Which of the following is often considered to offer the least expensive loans?

Personal Financial Planning in Action

Money Management Skills

Taxes in Your Financial Plan

Financial Services: Savings Plans and Payment Account

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Selecting and Financing Housing

Home and Automobile Insurance

Health and Disability Income Insurance

Financial Planning With Life Insurance

Investing Basics and Evaluating Bonds

Investing in Stocks

Investing in Mutual Funds

Starting Early: Retirement and Estate Planning

Filters

Exam 5: Consumer Credit: Advantages, Dis-Advantages, Sources, and Costs

Which is NOT true about the Fair Credit Reporting Act?

The Equal Credit Opportunity Act requires that a lender not turn you down for credit based on your age as long as you are old enough to sign a legal contract,which is usually allowed at age 16.

When evaluating your credit application,a lender may NOT

Why is the APR for a 10% loan that is repaid on a monthly basis higher than the APR for a loan that is repaid all at once?

When used effectively,credit can result in

The APR is the percentage cost of credit on a(n)______________ basis.

In the five Cs of credit,conditions refer to what will happen if the borrower does not repay the loan.

Most information in your credit file may be reported for only 7 years.

Many people expect

A consumer applies for open-end credit to make a single purchase,such as a large appliance.

Personal bankruptcy can be filed under which section(s)of the U.S.bankruptcy code?

Tanya received a $1,000 loan from the bank for a vacation.The bank is using the simple interest formula for this one-year,9% loan.What is her total interest?

Which of the following is NOT a valid reason for borrowing?

Consumer credit

Think about how you intend to use credit.Discuss the factors you would find most important in your choice of a credit card.Why?

Credit files can include all of the following except

Which of the following is NOT associated with credit cards?

The Consumer Credit Counseling Service

Which of the following is often considered to offer the least expensive loans?

Personal Financial Planning in Action

Money Management Skills

Taxes in Your Financial Plan

Financial Services: Savings Plans and Payment Account

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Selecting and Financing Housing

Home and Automobile Insurance

Health and Disability Income Insurance

Financial Planning With Life Insurance

Investing Basics and Evaluating Bonds

Investing in Stocks

Investing in Mutual Funds

Starting Early: Retirement and Estate Planning

Filters