Question 1

A credit card that can only be used in establishments of the issuer is called a(n)________ credit card.

Accepted Answer

retail or proprietary

Question 2

New regulations that provide clearer and more favorable financing rules for individual credit card users do all of the following except

Accepted Answer

A)  prohibit interest rate increases if you miss a payment on another credit card. 
B)  cap the amount of any increase to 5%. 
C)  require a 45 day notice of any credit card interest rate increase. 
D)  prohibit the rate on existing credit card balances from being increased unless you are at least 60 days late on payments. 
A)  prohibit interest rate increases if you miss a payment on another credit card. 
B)  cap the amount of any increase to 5%. 
C)  require a 45 day notice of any credit card interest rate increase. 
D)  prohibit the rate on existing credit card balances from being increased unless you are at least 60 days late on payments. B

Question 3

The annual percentage rate (APR)is useful because it allows you to easily compare financing costs among various possible creditors.

Accepted Answer

A) True 
 B)False  True

Question 4

Which of the following is not a method for computing interest on credit cards?

Accepted Answer

A)  Previous balance method 
B)  Average daily balance method 
C)  Present value of future payment method 
D)  Adjusted balance method 
A)  Previous balance method 
B)  Average daily balance method 
C)  Present value of future payment method 
D)  Adjusted balance method

Question 5

You should invest in risky investments instead of paying off your credit card debt because the return might be higher than the cost of financing.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following may not be a feature of some credit cards?

Accepted Answer

A)  Credit limits 
B)  Annual fees 
C)  Grace periods 
D)  Cash advances 
A)  Credit limits 
B)  Annual fees 
C)  Grace periods 
D)  Cash advances

Question 7

Because credit card interest rates are usually quite high,you should pay off your credit card balances before you invest funds anywhere else.

Accepted Answer

A) True 
 B)False

Question 8

In comparing credit cards to other forms of credit,which of the following is false?

Accepted Answer

A)  Credit cards are generally the most expensive form of credit. 
B)  You should pay the most expensive debt off first. 
C)  Credit cards can be viewed as a source of funds. 
D)  A home equity loan is a way of combining credit card and other debt. 
A)  Credit cards are generally the most expensive form of credit. 
B)  You should pay the most expensive debt off first. 
C)  Credit cards can be viewed as a source of funds. 
D)  A home equity loan is a way of combining credit card and other debt.

Question 9

Finance charges apply only to balances that were not paid in full before their due date in the current billing period.

Accepted Answer

A) True 
 B)False

Question 10

Describe the availability of credit today for a person younger than 21 years of age.Do you get credit card offers in the mail and are discounts available when signing up for a proprietary credit card?

Accepted Answer

The Credit CARD Act of 2009 made it more

Question 11

One advantage of using a credit card is that you receive a list of your purchases,which enables you to keep track of your spending.

Accepted Answer

A) True 
 B)False

Question 12

If you have exhausted all efforts to resolve an excessive credit card balance,personal bankruptcy may be your only option.

Accepted Answer

A) True 
 B)False

Question 13

Jill just borrowed $6,000 and will be charged a simple interest rate of 12 percent.Jill will pay ________ interest for borrowing the money on September 1 and repaying the money on December 31.

Accepted Answer

A)  $240 
B)  $420 
C)  $720 
D)  $1,200 
A)  $240 
B)  $420 
C)  $720 
D)  $1,200

Question 14

Which of the following is not true regarding cash advances on credit cards?

Accepted Answer

A)  They are treated just like other charges on your credit card. 
B)  There is a charge for interest from the time you take the advance to the time you pay it off. 
C)  There is also a transaction fee on most cash advances. 
D)  The grace period does not apply to cash advances. 
A)  They are treated just like other charges on your credit card. 
B)  There is a charge for interest from the time you take the advance to the time you pay it off. 
C)  There is also a transaction fee on most cash advances. 
D)  The grace period does not apply to cash advances.

Question 15

One of the disadvantages of credit cards is that they allow you to spend beyond your means.

Accepted Answer

A) True 
 B)False

Question 16

Some credit card companies will waive the annual fee on a credit card if

Accepted Answer

A)  you use the card infrequently. 
B)  you carry a large balance from month to month. 
C)  you pay your bills in a timely manner. 
D)  Credit card companies never waive annual fees. 
A)  you use the card infrequently. 
B)  you carry a large balance from month to month. 
C)  you pay your bills in a timely manner. 
D)  Credit card companies never waive annual fees.

Question 17

APR means

Accepted Answer

A)  actual percentage rate. 
B)  applied percentage rate. 
C)  annual percentage rate. 
D)  all-banks percentage rate. 
A)  actual percentage rate. 
B)  applied percentage rate. 
C)  annual percentage rate. 
D)  all-banks percentage rate.

Question 18

A personal credit card statement does not contain which of the following?

Accepted Answer

A)  Previous balance 
B)  Current balance 
C)  Account number 
D)  Who purchased the item 
A)  Previous balance 
B)  Current balance 
C)  Account number 
D)  Who purchased the item

Question 19

A credit card issued by a financial institution and secured by funds deposited by the cardholder is a

Accepted Answer

A)  prepaid card. 
B)  protected card. 
C)  secured card. 
D)  proprietary card. 
A)  prepaid card. 
B)  protected card. 
C)  secured card. 
D)  proprietary card.

Question 20

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

Accepted Answer

A) statement that lists beginning balance, purchases and payments, and an ending balance 
B) the simple interest rate after including any fees imposed by the creditor 
C) the percentage of credit that must be paid as interest on an annual basis 
A) statement that lists beginning balance, purchases and payments, and an ending balance 
B) the simple interest rate after including any fees imposed by the creditor 
C) the percentage of credit that must be paid as interest on an annual basis

Exam 8: Managing Your Credit

A credit card that can only be used in establishments of the issuer is called a(n)________ credit card.

New regulations that provide clearer and more favorable financing rules for individual credit card users do all of the following except

The annual percentage rate (APR)is useful because it allows you to easily compare financing costs among various possible creditors.

Which of the following is not a method for computing interest on credit cards?

You should invest in risky investments instead of paying off your credit card debt because the return might be higher than the cost of financing.

Which of the following may not be a feature of some credit cards?

Because credit card interest rates are usually quite high,you should pay off your credit card balances before you invest funds anywhere else.

In comparing credit cards to other forms of credit,which of the following is false?

Finance charges apply only to balances that were not paid in full before their due date in the current billing period.

Describe the availability of credit today for a person younger than 21 years of age.Do you get credit card offers in the mail and are discounts available when signing up for a proprietary credit card?

One advantage of using a credit card is that you receive a list of your purchases,which enables you to keep track of your spending.

If you have exhausted all efforts to resolve an excessive credit card balance,personal bankruptcy may be your only option.

Jill just borrowed $6,000 and will be charged a simple interest rate of 12 percent.Jill will pay ________ interest for borrowing the money on September 1 and repaying the money on December 31.

Which of the following is not true regarding cash advances on credit cards?

One of the disadvantages of credit cards is that they allow you to spend beyond your means.

Some credit card companies will waive the annual fee on a credit card if

APR means

A personal credit card statement does not contain which of the following?

A credit card issued by a financial institution and secured by funds deposited by the cardholder is a

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

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

Personal Loans

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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