Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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

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 3

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 4

All of the following cash needs are appropriately sourced from a home equity loan versus credit card or short term personal loan,except for

Accepted Answer

A)  renovating your home. 
B)  buying a new car which you plan to keep for 10 years. 
C)  going to Disneyworld with your family. 
D)  A,B and C are all correct. 
A)  renovating your home. 
B)  buying a new car which you plan to keep for 10 years. 
C)  going to Disneyworld with your family. 
D)  A,B and C are all correct.

Question 5

When deciding whether to trade in a car or sell it privately,which of the following is not a consideration?

Accepted Answer

A)  "ACV" or actual cash value being offered by the dealer 
B)  Private sale price you think you can achieve if you sell the car yourself 
C)  Sales tax offset for the trade-in offered by many states 
D)  Year, make and model of the car 
A)  "ACV" or actual cash value being offered by the dealer 
B)  Private sale price you think you can achieve if you sell the car yourself 
C)  Sales tax offset for the trade-in offered by many states 
D)  Year, make and model of the car

Question 6

Rick needs an advance on his $600 bi-weekly paycheck.He goes to Cash King where he writes them a check for $690 and dates the check two weeks from today.The cost of financing Rick's payday loan is

Accepted Answer

A)  391%. 
B)  521%. 
C)  261%. 
D)  547%. 
A)  391%. 
B)  521%. 
C)  261%. 
D)  547%.

Question 7

List four components of a loan contract

Accepted Answer

Amount of loan,interest rate,l

Question 8

A few years ago Mary purchased a home for $100,000.Today the home is worth $150,000.The remaining balance on the mortgage is $50,000.If Mary can borrow up to 80% of the market value of the equity,the maximum amount she can borrow is

Accepted Answer

A)  $80,000. 
B)  $70,000. 
C)  $100,000. 
D)  $50,000. 
A)  $80,000. 
B)  $70,000. 
C)  $100,000. 
D)  $50,000.

Question 9

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 10

All of the following are reasons to avoid payday loans except

Accepted Answer

A)  the cost of financing with a payday loan is exorbitant. 
B)  you don't want to pay interest on your credit card that charges an annual rate of 18%. 
C)  you may still not have sufficient cash after covering the loan. 
D)  the use of payday loans can create a continual cycle of borrowing. 
A)  the cost of financing with a payday loan is exorbitant. 
B)  you don't want to pay interest on your credit card that charges an annual rate of 18%. 
C)  you may still not have sufficient cash after covering the loan. 
D)  the use of payday loans can create a continual cycle of borrowing.

Question 11

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

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

Question 12

The more expensive the car,the ________ the payments,and the ________ you can put toward other investments.

Accepted Answer

A)  higher; more 
B)  higher; less 
C)  lower; less 
D)  lower; more 
A)  higher; more 
B)  higher; less 
C)  lower; less 
D)  lower; more

Question 13

The decision to purchase versus lease a car is highly dependent on the estimated market value of the car at the end of the lease period.

Accepted Answer

A) True 
 B)False

Question 14

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)  requiring a large balloon payment that will necessitate 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)  requiring a large balloon payment that will necessitate additional financing to pay it off.

Question 15

Personal loans include all of 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 16

Having a longer term loan

Accepted Answer

A)  costs you more interest and therefore increases the cost of your loan. 
B)  makes your monthly payments larger. 
C)  is almost always the best alternative for credit users. 
D)  gives you access to additional sources of financing. 
A)  costs you more interest and therefore increases the cost of your loan. 
B)  makes your monthly payments larger. 
C)  is almost always the best alternative for credit users. 
D)  gives you access to additional sources of financing.

Question 17

Which of the following methods of calculating interest is the most expensive?

Accepted Answer

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

Question 18

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 of the loan. 
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 of the loan.

Question 19

Considerations in selecting a car should include all of the following except

Accepted Answer

A)  what kind of car you really want, regardless of what you need. 
B)  the size of the car. 
C)  the price of the car. 
D)  the size of the engine and fuel economy. 
A)  what kind of car you really want, regardless of what you need. 
B)  the size of the car. 
C)  the price of the car. 
D)  the size of the engine and fuel economy.

Question 20

In general,you will receive more favorable terms on a secured loan than on an unsecured loan.

Accepted Answer

A) True 
 B)False

Exam 9: Personal Loans

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

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

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

All of the following cash needs are appropriately sourced from a home equity loan versus credit card or short term personal loan,except for

When deciding whether to trade in a car or sell it privately,which of the following is not a consideration?

Rick needs an advance on his $600 bi-weekly paycheck.He goes to Cash King where he writes them a check for $690 and dates the check two weeks from today.The cost of financing Rick's payday loan is

List four components of a loan contract

A few years ago Mary purchased a home for $100,000.Today the home is worth $150,000.The remaining balance on the mortgage is $50,000.If Mary can borrow up to 80% of the market value of the equity,the maximum amount she can borrow is

Personal loans from family members or friends

All of the following are reasons to avoid payday loans except

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

The more expensive the car,the ________ the payments,and the ________ you can put toward other investments.

The decision to purchase versus lease a car is highly dependent on the estimated market value of the car at the end of the lease period.

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

Personal loans include all of the following,except

Having a longer term loan

Which of the following methods of calculating interest is the most expensive?

You could reduce the size of your monthly payments by

Considerations in selecting a car should include all of the following except

In general,you will receive more favorable terms on a secured loan than on an unsecured loan.

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 .

The more expensive the car,the the payments,and the you can put toward other investments.