Question 1

Regarding the amount of money borrowed on a loan,all of the following are true except

Accepted Answer

A) the amount is based on how much the lender believes you can pay back in the future. 
B) you should borrow slightly more than you need to cover future inflation. 
C) you should only borrow the amount you need. 
D) you will have to pay interest on the entire amount. 
A) the amount is based on how much the lender believes you can pay back in the future. 
B) you should borrow slightly more than you need to cover future inflation. 
C) you should only borrow the amount you need. 
D) you will have to pay interest on the entire amount. B

Question 2

When the borrower and the lender have agreed to the specific terms of the loan these will be included in the ________.

Accepted Answer

loan contract

Question 3

Financial institutions provide home equity loans up to a maximum of 70 percent of the value of the equity in a home.

Accepted Answer

A) True 
 B)False  False

Question 4

On an amortization schedule,more interest and less principle is paid each month as the loan matures.

Accepted Answer

A) True 
 B)False

Question 5

Leasing a car is a good option if you drive many miles a year.

Accepted Answer

A) True 
 B)False

Question 6

Each of the following provide personal loans except

Accepted Answer

A) commercial banks. 
B) insurance companies. 
C) finance companies. 
D) credit unions. 
A) commercial banks. 
B) insurance companies. 
C) finance companies. 
D) credit unions.

Question 7

Which of the following statements about student loans is not true?

Accepted Answer

A) If you don't complete your education,you will not have to pay back your student loan. 
B) A school's financial aid office is one of the best sources of information on student loans. 
C) Both the federal government and financial institutions participate in the student loan program. 
D) Interest is often deferred and there are some tax savings on the interest paid on student loans. 
A) If you don't complete your education,you will not have to pay back your student loan. 
B) A school's financial aid office is one of the best sources of information on student loans. 
C) Both the federal government and financial institutions participate in the student loan program. 
D) Interest is often deferred and there are some tax savings on the interest paid on student loans.

Question 8

The APR measures the finance expenses (including interest and all other expenses)on a loan on a(n)

Accepted Answer

A) quarterly basis. 
B) annualized basis. 
C) monthly basis. 
D) daily basis. 
A) quarterly basis. 
B) annualized basis. 
C) monthly basis. 
D) daily basis.

Question 9

Advantages of leasing a vehicle include all of the following except

Accepted Answer

A) no substantial down payment. 
B) don't have to worry about resale of the car when you are finished with it. 
C) less hassle than purchasing a vehicle. 
D) no maintenance costs. 
A) no substantial down payment. 
B) don't have to worry about resale of the car when you are finished with it. 
C) less hassle than purchasing a vehicle. 
D) no maintenance costs.

Question 10

Collateral is defined as assets of the lender that back a secured loan in the event of default.

Accepted Answer

A) True 
 B)False

Question 11

What is the correct chronological order of the items listed below?

Accepted Answer

A) Good credit history,loan contract,repayment schedule,loan application 
B) Good credit history,loan application,loan contract,repayment schedule 
C) Good credit history,repayment schedule,loan application,loan contract 
D) Good credit history,repayment schedule,loan contract,loan application 
A) Good credit history,loan contract,repayment schedule,loan application 
B) Good credit history,loan application,loan contract,repayment schedule 
C) Good credit history,repayment schedule,loan application,loan contract 
D) Good credit history,repayment schedule,loan contract,loan application

Question 12

Which of the following is the most common source of financing for personal loans?

Accepted Answer

A) Family and friends 
B) Financial institutions 
C) Credit cards 
D) Sales finance companies 
A) Family and friends 
B) Financial institutions 
C) Credit cards 
D) Sales finance companies

Question 13

If the interest rates are the same,a loan using add-on interest will have higher payments and charges than a loan using simple interest.

Accepted Answer

A) True 
 B)False

Question 14

In a loan repayment schedule,the term amortized refers to

Accepted Answer

A) the method by which interest is calculated. 
B) the repayment of the principal through a series of equal payments. 
C) the life of the loan. 
D) assets used to back the loan. 
A) the method by which interest is calculated. 
B) the repayment of the principal through a series of equal payments. 
C) the life of the loan. 
D) assets used to back the loan.

Question 15

You could reduce the size of your monthly payments by

Accepted Answer

A) agreeing to a higher interest rate. 
B) borrowing the same amount of money but for a shorter period of time. 
C) borrowing more money initially for the same period of time. 
D) lengthening the maturity. 
A) agreeing to a higher interest rate. 
B) borrowing the same amount of money but for a shorter period of time. 
C) borrowing more money initially for the same period of time. 
D) lengthening the maturity.

Question 16

Financial institutions provide home equity loans up to ________ of the value of the equity in a home.

Accepted Answer

A) 75 percent 
B) 80 percent 
C) 70 percent 
D) 85 percent 
A) 75 percent 
B) 80 percent 
C) 70 percent 
D) 85 percent

Question 17

Over the life of a loan,the payment to principal ________ and the portion to interest expense ________.

Accepted Answer

A) increases; increases 
B) decreases; increases 
C) increases; decreases 
D) decreases; decreases 
A) increases; increases 
B) decreases; increases 
C) increases; decreases 
D) decreases; decreases

Question 18

The loan contract identifies all of the following except

Accepted Answer

A) loan officer. 
B) maturity. 
C) loan repayment schedule. 
D) collateral. 
A) loan officer. 
B) maturity. 
C) loan repayment schedule. 
D) collateral.

Question 19

When borrowing money from a family member or a friend,the loan agreement should be in writing and signed by all parties to avoid any possible misinterpretations.

Accepted Answer

A) True 
 B)False

Question 20

Because interest is tax deductible and payments are deferred until you graduate,it is good advice to take out the maximum student loan for which you can qualify.

Accepted Answer

A) True 
 B)False

Exam 9: Personal Loans

Regarding the amount of money borrowed on a loan,all of the following are true except

When the borrower and the lender have agreed to the specific terms of the loan these will be included in the ________.

Financial institutions provide home equity loans up to a maximum of 70 percent of the value of the equity in a home.

On an amortization schedule,more interest and less principle is paid each month as the loan matures.

Leasing a car is a good option if you drive many miles a year.

Each of the following provide personal loans except

Which of the following statements about student loans is not true?

The APR measures the finance expenses (including interest and all other expenses)on a loan on a(n)

Advantages of leasing a vehicle include all of the following except

Collateral is defined as assets of the lender that back a secured loan in the event of default.

What is the correct chronological order of the items listed below?

Which of the following is the most common source of financing for personal loans?

If the interest rates are the same,a loan using add-on interest will have higher payments and charges than a loan using simple interest.

In a loan repayment schedule,the term amortized refers to

You could reduce the size of your monthly payments by

Financial institutions provide home equity loans up to ________ of the value of the equity in a home.

Over the life of a loan,the payment to principal ________ and the portion to interest expense ________.

The loan contract identifies all of the following except

When borrowing money from a family member or a friend,the loan agreement should be in writing and signed by all parties to avoid any possible misinterpretations.

Because interest is tax deductible and payments are deferred until you graduate,it is good advice to take out the maximum student loan for which you can qualify.

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters

Over the life of a loan,the payment to principal and the portion to interest expense .