Question 1

What strategy should you use to obtain the lowest possible APR on a loan?

Accepted Answer

A) Get a variable-rate loan. 
B) Keep the term (length)of the loan as short as possible. 
C) Make a large down payment. 
D) Provide collateral. 
E) All of the above 
A) Get a variable-rate loan. 
B) Keep the term (length)of the loan as short as possible. 
C) Make a large down payment. 
D) Provide collateral. 
E) All of the above

Question 2

You are headed to the mountains for some climbing this summer and you need some gear.The local mountaineering shop is offering 6% financing on all purchases before the end of the month.Your savings account is currently paying 5%,and you are in a marginal tax bracket of 28%.Which of the following is true?

Accepted Answer

A) Borrow from the mountain shop - it is cheaper. 
B) Take the money out of savings - it is cheaper. 
C) It does not matter where you get the money;it will cost the same. 
D) You should seek competent financial help. 
E) None of the above are true. 
A) Borrow from the mountain shop - it is cheaper. 
B) Take the money out of savings - it is cheaper. 
C) It does not matter where you get the money;it will cost the same. 
D) You should seek competent financial help. 
E) None of the above are true.

Question 3

Many lenders use the 28/36 rule in evaluating mortgage applications.If your mortgage payment itself is 28% of your gross income,that means that the remainder of your monthly debt must be ________% or less.

Accepted Answer

A) 6 
B) 7 
C) 8 
D) 28 
E) 36 
A) 6 
B) 7 
C) 8 
D) 28 
E) 36

Question 4

Frank ran up a large credit card bill as an undergraduate student,he also took out as much in student loans as possible.He is now unable to pay his credit card debt and his student loan debt.However,he has decided to declare bankruptcy to eliminate his debt.Frank will be able to eliminate his federally subsidized student loan debt by declaring bankruptcy.

Accepted Answer

A) True 
 B)False

Question 5

Which statement is true regarding direct unsubsidized loans?

Accepted Answer

A) The federal government pays the loan's interest while the student is still in school. 
B) Such loans are made to undergraduate,graduate,and professional students. 
C) Students have to demonstrate financial need in order to receive the loans. 
D) All of the above are true. 
A) The federal government pays the loan's interest while the student is still in school. 
B) Such loans are made to undergraduate,graduate,and professional students. 
C) Students have to demonstrate financial need in order to receive the loans. 
D) All of the above are true.

Question 6

Explain why add-on installment loans are more expensive than simple interest loans.

Accepted Answer

The add-on method generally results in a

Question 7

Describe in detail the characteristics of the direct subsidized and unsubsidized student loans from the Federal government.

Accepted Answer

Based on income limitations,you may qual

Question 8

What is the distinguishing feature of an automobile loan?

Accepted Answer

The automobile is used as collateral and

Question 9

A simple interest installment loan calculates interest on the unpaid balance.An add-on

Accepted Answer

A) calculates the same way with the addition of a factor. 
B) calculates interest on the original balance. 
C) is less costly. 
D) is more costly. 
E) both B and D. 
A) calculates the same way with the addition of a factor. 
B) calculates interest on the original balance. 
C) is less costly. 
D) is more costly. 
E) both B and D.

Question 10

If you own a home with a market value of $175,000 and you have an outstanding balance on your mortgage of $60,000,your home equity is

Accepted Answer

A) $57,500. 
B) $97,750. 
C) $115,000. 
D) $235,000. 
A) $57,500. 
B) $97,750. 
C) $115,000. 
D) $235,000.

Question 11

Ronald is borrowing $20,000 using the discount method.His bank is offering him an annual percentage rate of 8.5% and he is taking out the loan for 24 months.How large of a check will Ronald receive from this loan when he leaves the bank? How much will he repay?

Accepted Answer

A) $20,000;$23,400 
B) $16,600;$20,000 
A) $20,000;$23,400 
B) $16,600;$20,000

Question 12

According to the Keown book,how do you finance your college education without mortgaging your future?

Accepted Answer

The answer is to understand:
The consequ

Question 13

A rule to determine what proportion of each loan payment is principal and interest is

Accepted Answer

A) the law of 72. 
B) the N-ratio method. 
C) the rule of 78. 
D) the principal-interest mix. 
E) the add-on method. 
A) the law of 72. 
B) the N-ratio method. 
C) the rule of 78. 
D) the principal-interest mix. 
E) the add-on method.

Question 14

What is the name of the interest rate banks charge to their most creditworthy customers?

Accepted Answer

A) Main rate 
B) Blue chip rate 
C) Prime rate 
D) Premier rate 
E) None of the above 
A) Main rate 
B) Blue chip rate 
C) Prime rate 
D) Premier rate 
E) None of the above

Question 15

What is the type of loan where the entire interest charge is subtracted from the loan principal before you receive the money,and at maturity you repay the entire principal?

Accepted Answer

A) Simple interest method 
B) Partial amortization method 
C) Discount method 
D) Add-on method 
E) None of the above 
A) Simple interest method 
B) Partial amortization method 
C) Discount method 
D) Add-on method 
E) None of the above

Question 16

Which of the following is the correct formula to calculate the after-tax cost of a home equity loan?

Accepted Answer

A) After-tax cost of a home equity loan = before-tax cost (1 + marginal tax rate) 
B) After-tax cost of a home equity loan = before-tax cost (1 - marginal tax rate) 
A) After-tax cost of a home equity loan = before-tax cost (1 + marginal tax rate) 
B) After-tax cost of a home equity loan = before-tax cost (1 - marginal tax rate)

Question 17

Which of these are possible options for most people who cannot pay their bills?

Accepted Answer

A) Get help from a credit counselor. 
B) Obtain a debt consolidation loan. 
C) Declare Chapter 13 personal bankruptcy. 
D) Declare Chapter 7 personal bankruptcy. 
E) All of the above are possible options. 
A) Get help from a credit counselor. 
B) Obtain a debt consolidation loan. 
C) Declare Chapter 13 personal bankruptcy. 
D) Declare Chapter 7 personal bankruptcy. 
E) All of the above are possible options.

Question 18

Consumer loans are less formal than credit cards and/or other open credit.

Accepted Answer

A) True 
 B)False

Question 19

The finance charges for a loan may include

Accepted Answer

A) fees for a credit check. 
B) required insurance fees. 
C) interest payments. 
D) only choices A and B. 
E) All of the above choices. 
A) fees for a credit check. 
B) required insurance fees. 
C) interest payments. 
D) only choices A and B. 
E) All of the above choices.

Question 20

________ is when a borrower is allowed to temporarily stop making student loan payments for a qualified reason such as an illness,financial hardship,or serving in a medical or dental internship or residency.

Accepted Answer

A) Deferment 
B) Delinquency 
C) Forbearance 
D) Default 
A) Deferment 
B) Delinquency 
C) Forbearance 
D) Default

What strategy should you use to obtain the lowest possible APR on a loan?

Many lenders use the 28/36 rule in evaluating mortgage applications.If your mortgage payment itself is 28% of your gross income,that means that the remainder of your monthly debt must be ________% or less.

Which statement is true regarding direct unsubsidized loans?

Explain why add-on installment loans are more expensive than simple interest loans.

Describe in detail the characteristics of the direct subsidized and unsubsidized student loans from the Federal government.

What is the distinguishing feature of an automobile loan?

A simple interest installment loan calculates interest on the unpaid balance.An add-on

If you own a home with a market value of $175,000 and you have an outstanding balance on your mortgage of $60,000,your home equity is

Ronald is borrowing $20,000 using the discount method.His bank is offering him an annual percentage rate of 8.5% and he is taking out the loan for 24 months.How large of a check will Ronald receive from this loan when he leaves the bank? How much will he repay?

According to the Keown book,how do you finance your college education without mortgaging your future?

A rule to determine what proportion of each loan payment is principal and interest is

What is the name of the interest rate banks charge to their most creditworthy customers?

What is the type of loan where the entire interest charge is subtracted from the loan principal before you receive the money,and at maturity you repay the entire principal?

Which of the following is the correct formula to calculate the after-tax cost of a home equity loan?

Which of these are possible options for most people who cannot pay their bills?

Consumer loans are less formal than credit cards and/or other open credit.

The finance charges for a loan may include

________ is when a borrower is allowed to temporarily stop making student loan payments for a qualified reason such as an illness,financial hardship,or serving in a medical or dental internship or residency.

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 strategy should you use to obtain the lowest possible APR on a loan?

Many lenders use the 28/36 rule in evaluating mortgage applications.If your mortgage payment itself is 28% of your gross income,that means that the remainder of your monthly debt must be ________% or less.

Which statement is true regarding direct unsubsidized loans?

Explain why add-on installment loans are more expensive than simple interest loans.

Describe in detail the characteristics of the direct subsidized and unsubsidized student loans from the Federal government.

What is the distinguishing feature of an automobile loan?

A simple interest installment loan calculates interest on the unpaid balance.An add-on

If you own a home with a market value of $175,000 and you have an outstanding balance on your mortgage of $60,000,your home equity is

Ronald is borrowing $20,000 using the discount method.His bank is offering him an annual percentage rate of 8.5% and he is taking out the loan for 24 months.How large of a check will Ronald receive from this loan when he leaves the bank? How much will he repay?

According to the Keown book,how do you finance your college education without mortgaging your future?

A rule to determine what proportion of each loan payment is principal and interest is

What is the name of the interest rate banks charge to their most creditworthy customers?

What is the type of loan where the entire interest charge is subtracted from the loan principal before you receive the money,and at maturity you repay the entire principal?

Which of the following is the correct formula to calculate the after-tax cost of a home equity loan?

Which of these are possible options for most people who cannot pay their bills?

Consumer loans are less formal than credit cards and/or other open credit.

The finance charges for a loan may include

________ is when a borrower is allowed to temporarily stop making student loan payments for a qualified reason such as an illness,financial hardship,or serving in a medical or dental internship or residency.

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