Question 1

Personal loans from family members or friends

Accepted Answer

A) are not good sources of financing. 
B) are more expensive than loans from other sources. 
C) should have a loan agreement in writing to avoid problems later on. 
D) are not desirable from the lender's point of view. 
A) are not good sources of financing. 
B) are more expensive than loans from other sources. 
C) should have a loan agreement in writing to avoid problems later on. 
D) are not desirable from the lender's point of view.

Question 2

You obtain a loan of $3,000 based on simple interest with an annual interest rate of 12 percent,or 1 percent a month.If the first payment is $300,how much is the principal portion of the payment?
(a)$27
(b)$270
(c)$280
(d)$295

Accepted Answer

(b)$300 -

Question 3

Common practices used by dishonest lenders include all of the following except the lender

Accepted Answer

A) prohibiting the borrower from purchasing insurance or other financial services as a condition of the loan. 
B) charging high loan fees which cause financing costs to be much higher than the quoted rates. 
C) requiring that the borrower purchase insurance or other financial services. 
D) having a large balloon payment that will require additional financing to pay it off. 
A) prohibiting the borrower from purchasing insurance or other financial services as a condition of the loan. 
B) charging high loan fees which cause financing costs to be much higher than the quoted rates. 
C) requiring that the borrower purchase insurance or other financial services. 
D) having a large balloon payment that will require additional financing to pay it off.

Question 4

Regarding automobile insurance,

Accepted Answer

A) the best time to shop for rates is while you are at the car dealership. 
B) most cars cost the same to insure if the driver is the same. 
C) it is better to compare costs before you commit to buying a particular car. 
D) you can lower your costs by buying a more expensive car that is less likely to have accidents. 
A) the best time to shop for rates is while you are at the car dealership. 
B) most cars cost the same to insure if the driver is the same. 
C) it is better to compare costs before you commit to buying a particular car. 
D) you can lower your costs by buying a more expensive car that is less likely to have accidents.

Question 5

Personal loans include the following except

Accepted Answer

A) car loans. 
B) mortgage loans. 
C) student loans. 
D) home equity loans. 
A) car loans. 
B) mortgage loans. 
C) student loans. 
D) home equity loans.

Question 6

If you were to apply for and obtain a student loan,list the advantages and disadvantages of paying for your education on credit.

Accepted Answer

Advantages-pay later with no interest in

Question 7

Which of the following is not usually used as collateral for a loan?

Accepted Answer

A) A boat 
B) Clothing 
C) A car 
D) A house 
A) A boat 
B) Clothing 
C) A car 
D) A house

Question 8

Which of the following would probably not be required when applying for a personal loan?

Accepted Answer

A) A personal résumé 
B) A personal balance sheet 
C) A personal cash flow statement 
D) A loan application 
A) A personal résumé 
B) A personal balance sheet 
C) A personal cash flow statement 
D) A loan application

Question 9

If a loan is cosigned and the borrower defaults,the lender has the right to sue the cosigner or try to seize his assets just as if he were the borrower.

Accepted Answer

A) True 
 B)False

Question 10

Longer maturities for loans result in lower monthly payments and therefore make it easier to cover payments each month.

Accepted Answer

A) True 
 B)False

Question 11

The size of the monthly payment on a loan is dependent on all of the following except

Accepted Answer

A) principal borrowed. 
B) interest rate. 
C) your age. 
D) maturity. 
A) principal borrowed. 
B) interest rate. 
C) your age. 
D) maturity.

Question 12

Automobile insurance rates are likely to differ for all of the following reasons except some cars

Accepted Answer

A) are more popular than others. 
B) cost more to repair after accidents. 
C) are more common theft targets. 
D) are higher priced. 
A) are more popular than others. 
B) cost more to repair after accidents. 
C) are more common theft targets. 
D) are higher priced.

Question 13

It is important to buy a car that is not over your budget and to finance the car properly.The more money needed to cover the car payments,the less you can add to your savings or other investments.

Accepted Answer

A) True 
 B)False

Question 14

The personal loan process with a financial institution requires all of the following except

Accepted Answer

A) filling out an application. 
B) sitting through an interview. 
C) negotiating the loan contract. 
D) negotiating the interest rate. 
A) filling out an application. 
B) sitting through an interview. 
C) negotiating the loan contract. 
D) negotiating the interest rate.

Question 15

Frank purchased his home in 1997 for $130,000.He added an addition costing $35,000.The current tax assessed value is $80,000 while the current market value is $185,000.If Frank's current mortgage balance is $95,000,his equity in his home is
(a)$130,000.
(b)$165,000.
(c)$90,000.
(d)$70,000.

Accepted Answer

(c)$185,00

Question 16

Buying a new car online is just about as efficient as buying an airline ticket or a book.

Accepted Answer

A) True 
 B)False

Question 17

In securing personal loans from family members or friends,the loan agreement should be verbal or just consist of a "gentleman's understanding."

Accepted Answer

A) True 
 B)False

Question 18

A personal loan is different from a credit card in all of the following except it

Accepted Answer

A) is normally used to finance one large purchase. 
B) has a specific repayment schedule. 
C) can be used only once. 
D) contains a longer grace period. 
A) is normally used to finance one large purchase. 
B) has a specific repayment schedule. 
C) can be used only once. 
D) contains a longer grace period.

Question 19

In which of the following scenarios would you favor leasing over purchasing a car?

Accepted Answer

A) The miles that you drive each year varies significantly and is hard to predict 
B) Repair expenses on the car are very low 
C) The car in question is one whose value depreciates rapidly 
D) All of the above 
A) The miles that you drive each year varies significantly and is hard to predict 
B) Repair expenses on the car are very low 
C) The car in question is one whose value depreciates rapidly 
D) All of the above

Question 20

If you agree to allow the lender to take your computer in the event you fail to make payments,the loan is which of the following?

Accepted Answer

A) Amortized 
B) Unsecured 
C) Secured 
D) Interest free 
A) Amortized 
B) Unsecured 
C) Secured 
D) Interest free

Exam 9: Personal Loans

Personal loans from family members or friends

You obtain a loan of $3,000 based on simple interest with an annual interest rate of 12 percent,or 1 percent a month.If the first payment is $300,how much is the principal portion of the payment? (a)$27 (b)$270 (c)$280 (d)$295

Common practices used by dishonest lenders include all of the following except the lender

Regarding automobile insurance,

Personal loans include the following except

If you were to apply for and obtain a student loan,list the advantages and disadvantages of paying for your education on credit.

Which of the following is not usually used as collateral for a loan?

Which of the following would probably not be required when applying for a personal loan?

If a loan is cosigned and the borrower defaults,the lender has the right to sue the cosigner or try to seize his assets just as if he were the borrower.

Longer maturities for loans result in lower monthly payments and therefore make it easier to cover payments each month.

The size of the monthly payment on a loan is dependent on all of the following except

Automobile insurance rates are likely to differ for all of the following reasons except some cars

It is important to buy a car that is not over your budget and to finance the car properly.The more money needed to cover the car payments,the less you can add to your savings or other investments.

The personal loan process with a financial institution requires all of the following except

Frank purchased his home in 1997 for $130,000.He added an addition costing $35,000.The current tax assessed value is $80,000 while the current market value is $185,000.If Frank's current mortgage balance is $95,000,his equity in his home is (a)$130,000. (b)$165,000. (c)$90,000. (d)$70,000.

Buying a new car online is just about as efficient as buying an airline ticket or a book.

In securing personal loans from family members or friends,the loan agreement should be verbal or just consist of a "gentleman's understanding."

A personal loan is different from a credit card in all of the following except it

In which of the following scenarios would you favor leasing over purchasing a car?

If you agree to allow the lender to take your computer in the event you fail to make payments,the loan is which of the following?

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

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