Question 1

What is the name of the formal document that outlines the legal obligations of both the lender and the borrower?

Accepted Answer

A) Default 
B) Claim 
C) Debenture 
D) Note 
E) Tort 
A) Default 
B) Claim 
C) Debenture 
D) Note 
E) Tort D

Question 2

The quoted rate on a home equity loan is 10% and you are in a 28% marginal tax bracket.What is the effective after-tax rate on this loan?

Accepted Answer

A) 7.2% 
B) 5.4% 
C) 4.1% 
D) 2.8% 
E) None of the above 
A) 7.2% 
B) 5.4% 
C) 4.1% 
D) 2.8% 
E) None of the above A

Question 3

A balloon loan calls for repayment of both interest and principal at regular intervals,with the payment levels set so that the loan expires at a preset date.

Accepted Answer

A) True 
 B)False  False

Question 4

List three reasons why a student-loan borrower may be granted a deferment.

Accepted Answer

The borrower might receive a d

Question 5

Under a Stafford Loan,parents borrow money for their child's education.

Accepted Answer

A) True 
 B)False

Question 6

List examples of loans or loan sources that fit into the categories of inexpensive,more expensive,and most expensive.

Accepted Answer

- Inexpensive: family,home equity loans,

Question 7

Why is the debt limit ratio and 28/36 rule more important to conservative lenders like Banks and Credit Unions and not so important for lenders like small Finance companies and Payday lenders?

Accepted Answer

Principle 8 states that risk and return

Question 8

Calculate the interest on $6,000 borrowed at an annual rate of 9% under the simple interest loan method for 9 months.

Accepted Answer

A) $270 
B) $360 
C) $405 
D) $450 
E) $540 
A) $270 
B) $360 
C) $405 
D) $450 
E) $540

Question 9

Which of the following is not required by law to be on a loan disclosure statement?

Accepted Answer

A) Annual percentage rate 
B) All finance charges 
C) The total amount financed 
D) The total amount of payments 
E) All of the above are required. 
A) Annual percentage rate 
B) All finance charges 
C) The total amount financed 
D) The total amount of payments 
E) All of the above are required.

Question 10

Which of the following does not require you to have a good credit rating to issue you a loan?

Accepted Answer

A) Your family 
B) Savings and loan 
C) Commercial bank 
D) All of the above require a good credit rating to issue a loan. 
A) Your family 
B) Savings and loan 
C) Commercial bank 
D) All of the above require a good credit rating to issue a loan.

Question 11

Which of the following statements regarding the risk-return relationship is most accurate?

Accepted Answer

A) Lower credit scores are associated with lower APRs. 
B) Higher credit scores are associated with lower APRs. 
C) Longer loan length is associated with lower APRs. 
D) Shorter loan length is associated with higher APRs. 
E) Both B and D are correct. 
A) Lower credit scores are associated with lower APRs. 
B) Higher credit scores are associated with lower APRs. 
C) Longer loan length is associated with lower APRs. 
D) Shorter loan length is associated with higher APRs. 
E) Both B and D are correct.

Question 12

A(n)________ loan calls for the repayment of both the interest and the principal at regular intervals and is commonly referred to as loan amortization.

Accepted Answer

A) term 
B) simple interest 
C) installment 
D) personal 
E) none of the above 
A) term 
B) simple interest 
C) installment 
D) personal 
E) none of the above

Question 13

Unsecured loans are generally less risky to lenders than secured loans.Therefore secured loans typically charge a higher APR than unsecured loans.

Accepted Answer

A) True 
 B)False

Question 14

Debt consolidation loans are very appealing because

Accepted Answer

A) they offer liquidation to those who are in good standing with their creditors. 
B) they offer hope to those who can't keep up with their current payment schedules. 
C) they offer relinquishment of all debts and financial obligations to those who can't keep up with their current payment schedules. 
D) all of the above 
A) they offer liquidation to those who are in good standing with their creditors. 
B) they offer hope to those who can't keep up with their current payment schedules. 
C) they offer relinquishment of all debts and financial obligations to those who can't keep up with their current payment schedules. 
D) all of the above

Question 15

Of the following possible sources of credit,which typically has the lowest borrowing rates?

Accepted Answer

A) Savings and loans 
B) Personal finance company 
C) Credit union 
D) Commercial bank 
A) Savings and loans 
B) Personal finance company 
C) Credit union 
D) Commercial bank

Question 16

What are the advantages of a home equity line,and what,if any,are the disadvantages?

Accepted Answer

It is usually easier and less expensive

Question 17

Which of the following characterize secured loans?

Accepted Answer

A) They are typically easier to get. 
B) Interest rates tend to be lower than unsecured loans. 
C) They reduce the lender's risk. 
D) They are backed with either physical or investment assets. 
E) All of the above 
A) They are typically easier to get. 
B) Interest rates tend to be lower than unsecured loans. 
C) They reduce the lender's risk. 
D) They are backed with either physical or investment assets. 
E) All of the above

Question 18

Alice has fallen behind on her signature loan.She recently received a notice from the lender that her wages were going to be garnished to pay off the debt.What is the loan clause that allows the lender to take this action against Alice because she was in default?

Accepted Answer

A) Recovery clause 
B) Default clause 
C) Recourse clause 
D) Deficiency payments clause 
E) None of the above 
A) Recovery clause 
B) Default clause 
C) Recourse clause 
D) Deficiency payments clause 
E) None of the above

Question 19

Variable-rate loans tied to long-term rates expose you to more risk of rate changes than variable-rate loans tied to short-term rates.

Accepted Answer

A) True 
 B)False

Question 20

Under a Federal Direct Loan,you don't begin making payments until six months after graduation.

Accepted Answer

A) True 
 B)False

What is the name of the formal document that outlines the legal obligations of both the lender and the borrower?

The quoted rate on a home equity loan is 10% and you are in a 28% marginal tax bracket.What is the effective after-tax rate on this loan?

A balloon loan calls for repayment of both interest and principal at regular intervals,with the payment levels set so that the loan expires at a preset date.

List three reasons why a student-loan borrower may be granted a deferment.

Under a Stafford Loan,parents borrow money for their child's education.

List examples of loans or loan sources that fit into the categories of inexpensive,more expensive,and most expensive.

Why is the debt limit ratio and 28/36 rule more important to conservative lenders like Banks and Credit Unions and not so important for lenders like small Finance companies and Payday lenders?

Calculate the interest on $6,000 borrowed at an annual rate of 9% under the simple interest loan method for 9 months.

Which of the following is not required by law to be on a loan disclosure statement?

Which of the following does not require you to have a good credit rating to issue you a loan?

Which of the following statements regarding the risk-return relationship is most accurate?

A(n)________ loan calls for the repayment of both the interest and the principal at regular intervals and is commonly referred to as loan amortization.

Unsecured loans are generally less risky to lenders than secured loans.Therefore secured loans typically charge a higher APR than unsecured loans.

Debt consolidation loans are very appealing because

Of the following possible sources of credit,which typically has the lowest borrowing rates?

What are the advantages of a home equity line,and what,if any,are the disadvantages?

Which of the following characterize secured loans?

Alice has fallen behind on her signature loan.She recently received a notice from the lender that her wages were going to be garnished to pay off the debt.What is the loan clause that allows the lender to take this action against Alice because she was in default?

Variable-rate loans tied to long-term rates expose you to more risk of rate changes than variable-rate loans tied to short-term rates.

Under a Federal Direct Loan,you don't begin making payments until six months after graduation.

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: the Role of Open Credit

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: an Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Eventsfitting the Pieces Together

Filters

Exam 7: Student and Consumer Loans: the Role of Planned Borrowing

What is the name of the formal document that outlines the legal obligations of both the lender and the borrower?

The quoted rate on a home equity loan is 10% and you are in a 28% marginal tax bracket.What is the effective after-tax rate on this loan?

A balloon loan calls for repayment of both interest and principal at regular intervals,with the payment levels set so that the loan expires at a preset date.

List three reasons why a student-loan borrower may be granted a deferment.

Under a Stafford Loan,parents borrow money for their child's education.

List examples of loans or loan sources that fit into the categories of inexpensive,more expensive,and most expensive.

Why is the debt limit ratio and 28/36 rule more important to conservative lenders like Banks and Credit Unions and not so important for lenders like small Finance companies and Payday lenders?

Calculate the interest on $6,000 borrowed at an annual rate of 9% under the simple interest loan method for 9 months.

Which of the following is not required by law to be on a loan disclosure statement?

Which of the following does not require you to have a good credit rating to issue you a loan?

Which of the following statements regarding the risk-return relationship is most accurate?

A(n)________ loan calls for the repayment of both the interest and the principal at regular intervals and is commonly referred to as loan amortization.

Unsecured loans are generally less risky to lenders than secured loans.Therefore secured loans typically charge a higher APR than unsecured loans.

Debt consolidation loans are very appealing because

Of the following possible sources of credit,which typically has the lowest borrowing rates?

What are the advantages of a home equity line,and what,if any,are the disadvantages?

Which of the following characterize secured loans?

Alice has fallen behind on her signature loan.She recently received a notice from the lender that her wages were going to be garnished to pay off the debt.What is the loan clause that allows the lender to take this action against Alice because she was in default?

Variable-rate loans tied to long-term rates expose you to more risk of rate changes than variable-rate loans tied to short-term rates.

Under a Federal Direct Loan,you don't begin making payments until six months after graduation.

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: the Role of Open Credit

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: an Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Eventsfitting the Pieces Together

Filters