Question 1

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

Accepted Answer

A) True 
 B)False  False

Question 2

Because interest is usually 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  False

Question 3

Determining the amount of money you can afford to borrow on a personal loan is a decision that should be included in your personal financial plan.

Accepted Answer

A) True 
 B)False  True

Question 4

A payday loan is a short-term loan provided to you if you need funds in advance of receiving your paycheck.

Accepted Answer

A) True 
 B)False

Question 5

Use the following two columns of items to answer the matching questions below:
-unsecured loan

Accepted Answer

A) a contract that specifies the terms of the loan agreed to by the borrower and lender 
B) disclosure of information including a balance sheet and cash flow statement 
C) life or duration of a loan 
D) loan that is not backed by collateral 
A) a contract that specifies the terms of the loan agreed to by the borrower and lender 
B) disclosure of information including a balance sheet and cash flow statement 
C) life or duration of a loan 
D) loan that is not backed by collateral

Question 6

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 7

In making the purchase versus leasing decision,it is important to remember that

Accepted Answer

A)  dealers may impose an additional mileage cost. 
B)  leasing is less risky than a purchase. 
C)  leasing is less expensive that a purchase. 
D)  you won't be required to pay maintenance costs on the leased car. 
A)  dealers may impose an additional mileage cost. 
B)  leasing is less risky than a purchase. 
C)  leasing is less expensive that a purchase. 
D)  you won't be required to pay maintenance costs on the leased car.

Question 8

Which of the following is not an interest rate calculation method discussed in the text?

Accepted Answer

A)  Annual percentage rate or APR 
B)  Sum of the digits interest 
C)  Simple interest 
D)  Add-on interest 
A)  Annual percentage rate or APR 
B)  Sum of the digits interest 
C)  Simple interest 
D)  Add-on interest

Question 9

The monthly payment for a loan is dependent only on the size of the loan and the interest rate.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not included in the loan contract?

Accepted Answer

A)  Credit score 
B)  Amount of the loan 
C)  Interest rate 
D)  Loan repayment schedule 
A)  Credit score 
B)  Amount of the loan 
C)  Interest rate 
D)  Loan repayment schedule

Question 11

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)  has 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)  has a longer grace period.

Question 12

The cost of financing with a payday loan is more reasonable than the cost of obtaining credit through a credit card.

Accepted Answer

A) True 
 B)False

Question 13

Buying a car from a dealer with a set price (a no haggle dealer)is usually more stress-free and less time consuming.

Accepted Answer

A) True 
 B)False

Question 14

You could reduce the interest rate you are paying on loans by

Accepted Answer

A)  refinancing to a secured loan. 
B)  paying off credit card debt with a home equity loan. 
C)  refinancing to a shorter term loan. 
D)  A, B, and C are all viable possibilities 
A)  refinancing to a secured loan. 
B)  paying off credit card debt with a home equity loan. 
C)  refinancing to a shorter term loan. 
D)  A, B, and C are all viable possibilities

Question 15

Collateral

Accepted Answer

A)  gives the lender additional recourse if the payments are not made. 
B)  is used on unsecured loans. 
C)  increases the interest rate on loans. 
D)  is required on all loans. 
A)  gives the lender additional recourse if the payments are not made. 
B)  is used on unsecured loans. 
C)  increases the interest rate on loans. 
D)  is required on all loans.

Question 16

Which of the following is a true statement about student loans?

Accepted Answer

A)  All student loans are provided by the U.S. government. 
B)  All student loans have fixed interest rates. 
C)  Interest payments on some loans are deferred until the students graduate and enter the workforce. 
D)  Interest is tax deductible for those at all income levels. 
A)  All student loans are provided by the U.S. government. 
B)  All student loans have fixed interest rates. 
C)  Interest payments on some loans are deferred until the students graduate and enter the workforce. 
D)  Interest is tax deductible for those at all income levels.

Question 17

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)  the borrower's age. 
D)  maturity. 
A)  principal borrowed. 
B)  interest rate. 
C)  the borrower's age. 
D)  maturity.

Question 18

The proceeds from a home equity loan can be used for any purpose including a vacation,tuition payments,or health care expenses.

Accepted Answer

A) True 
 B)False

Question 19

For which of the following items would a personal loan be a better option than a credit card for a college student?

Accepted Answer

A)  Car maintenance expense 
B)  Tuition and dorm fees 
C)  Trips home for the holidays 
D)  Tickets to sporting events 
A)  Car maintenance expense 
B)  Tuition and dorm fees 
C)  Trips home for the holidays 
D)  Tickets to sporting events

Question 20

Use the following two columns of items to answer the matching questions below:
-APR

Accepted Answer

A) assets of a borrower that back a secured loan 
B) interest rate multiplied by the principal 
C) rate that measures the finance expenses 
A) assets of a borrower that back a secured loan 
B) interest rate multiplied by the principal 
C) rate that measures the finance expenses

Exam 9: Personal Loans

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

Because interest is usually 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.

Determining the amount of money you can afford to borrow on a personal loan is a decision that should be included in your personal financial plan.

A payday loan is a short-term loan provided to you if you need funds in advance of receiving your paycheck.

Use the following two columns of items to answer the matching questions below: -unsecured loan

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 making the purchase versus leasing decision,it is important to remember that

Which of the following is not an interest rate calculation method discussed in the text?

The monthly payment for a loan is dependent only on the size of the loan and the interest rate.

Which of the following is not included in the loan contract?

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

The cost of financing with a payday loan is more reasonable than the cost of obtaining credit through a credit card.

Buying a car from a dealer with a set price (a no haggle dealer)is usually more stress-free and less time consuming.

You could reduce the interest rate you are paying on loans by

Collateral

Which of the following is a true statement about student loans?

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

The proceeds from a home equity loan can be used for any purpose including a vacation,tuition payments,or health care expenses.

For which of the following items would a personal loan be a better option than a credit card for a college student?

Use the following two columns of items to answer the matching questions below: -APR

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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