Question 1

Bankruptcy courts treat gift cards

Accepted Answer

A)  As illegal loans. 
B)  As bribes. 
C)  The same way they handle unsecured debt. 
D)  As a smart choice. 
E)  The same as debit cards.

Question 2

Economists recognize consumer credit as a major force in the American economy.

Accepted Answer

A) True 
 B)False

Question 3

The least expensive loans (loans with low interest) are often provided by parents or other family members.

Accepted Answer

A) True 
 B)False

Question 4

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made it easier for consumers to file Chapter 7 bankruptcy.

Accepted Answer

A) True 
 B)False

Question 5

The use of property or savings to secure a loan relates to

Accepted Answer

A)  Character. 
B)  Capacity. 
C)  Capital. 
D)  Collateral. 
E)  Conditions.

Question 6

When calculating the debt-to-equity ratio, the following is NOT included:

Accepted Answer

A)  Credit card balances. 
B)  Net worth 
C)  Auto loan balances. 
D)  Mortgage balance. 
E)  Installment debt

Question 7

The question "What are your assets and net worth?" relates to

Accepted Answer

A)  Character. 
B)  Capacity. 
C)  Capital. 
D)  Collateral. 
E)  Conditions.

Question 8

Rachel Johnson has net monthly income of $2,500. She has a monthly auto loan payment of $275, a student loan payment of $150, and a credit card minimum payment of $50. What is her debt-payments-to-income ratio?

Accepted Answer

A)  8% 
B)  13% 
C)  17% 
D)  19% 
E)  20%

Question 9

The Fair Credit Reporting Act, enacted in 1971, places limits on who can obtain your credit report.

Accepted Answer

A) True 
 B)False

Question 10

You may not know that your identity has been stolen until you get bills for a credit card account that you never opened.

Accepted Answer

A) True 
 B)False

Question 11

The APR is the percentage cost of credit on a(n) ______________ basis.

Accepted Answer

A)  monthly 
B)  quarterly 
C)  semi-annual 
D)  Yearly 
E)  life-of-loan

Question 12

Fredrick received a $1,400 loan from the bank for a new appliance. The bank is using the simple interest formula for this two-year, 8% loan. What is his total interest?

Accepted Answer

A)  $16 
B)  $80 
C)  $112 
D)  $224 
E)  $1,416

Question 13

If you think your identity has been stolen, which of the following actions does the Federal Trade Commission recommend you take immediately?

Accepted Answer

A)  Report it to your neighbor. 
B)  Call 911. 
C)  Contact your local bank. 
D)  File a police report. 
E)  Contact your employer

Question 14

The Equal Credit Opportunity Act requires that a creditor not turn you down for credit based on your age as long as you are old enough to sign a legal contract, which is usually allowed at age 16.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is NOT correct?

Accepted Answer

A)  Using credit is appropriate to pay for medical emergencies. 
B)  Using credit can increase the amount of money that will be available to spend in the future. 
C)  Using credit occurs when you use water or electricity 
D)  Using credit cards usually makes returning merchandise without a receipt easier. 
E)  Using credit allows consumers to enjoy goods and services now and pay later.

Question 16

If you are a cosigner for a loan and the debt is not repaid, that fact will appear on your credit report.

Accepted Answer

A) True 
 B)False

Question 17

Credit files can include all of the following except

Accepted Answer

A)  Employer, position, and income. 
B)  Previous address. 
C)  Spouse's name, Social Security number, employer, and income. 
D)  Race or nationality. 
E)  Checks returned for insufficient funds.

Question 18

Timothy Carter went out to eat with his girlfriend at a fancy restaurant. When he tried to pay the bill with his Mastercard credit card, he was told that the restaurant accepted only cash or American Express. His waiter suggested that he use the ATM across the street to withdraw cash using his credit card. Tim did as suggested and didn't pay attention to any fees until he received his credit card statement one month later. He was shocked to see the total fees (3% cash advance), and his APR was increased to 21%. Given the cost of the meal ($125) plus the associated fees, how much did his meal cost him?

Accepted Answer

A)  $2.19. 
B)  $3.75. 
C)  $125. 
D)  $130.94. 
E)  $151.25.

Question 19

According to the Fair Credit Billing Act, if a creditor fails to follow the rules that apply to correcting any billing errors, you have the right to sue for

Accepted Answer

A)  Actual damages. 
B)  Actual damages plus twice the amount of any finance charges. 
C)  Punitive damages 
D)  Three times the actual damages. 
E)  Finance charges only

Question 20

Which of the following is often the first sign of a stolen identity?

Accepted Answer

A)  You receive bills for a credit card account you never opened. 
B)  You see charges to your account for things you purchased. 
C)  You receive a phone call from the thief. 
D)  You receive a duplicate credit card from your credit card company. 
E)  All of these are typical signs of a stolen identity.

Exam 5: Consumer Credit: Advantages, Disadvantages, Sources, and Costs

Bankruptcy courts treat gift cards

Economists recognize consumer credit as a major force in the American economy.

The least expensive loans (loans with low interest) are often provided by parents or other family members.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made it easier for consumers to file Chapter 7 bankruptcy.

The use of property or savings to secure a loan relates to

When calculating the debt-to-equity ratio, the following is NOT included:

The question "What are your assets and net worth?" relates to

Rachel Johnson has net monthly income of $2,500. She has a monthly auto loan payment of $275, a student loan payment of $150, and a credit card minimum payment of $50. What is her debt-payments-to-income ratio?

The Fair Credit Reporting Act, enacted in 1971, places limits on who can obtain your credit report.

You may not know that your identity has been stolen until you get bills for a credit card account that you never opened.

The APR is the percentage cost of credit on a(n) ______________ basis.

Fredrick received a $1,400 loan from the bank for a new appliance. The bank is using the simple interest formula for this two-year, 8% loan. What is his total interest?

If you think your identity has been stolen, which of the following actions does the Federal Trade Commission recommend you take immediately?

The Equal Credit Opportunity Act requires that a creditor not turn you down for credit based on your age as long as you are old enough to sign a legal contract, which is usually allowed at age 16.

Which of the following is NOT correct?

If you are a cosigner for a loan and the debt is not repaid, that fact will appear on your credit report.

Credit files can include all of the following except

According to the Fair Credit Billing Act, if a creditor fails to follow the rules that apply to correcting any billing errors, you have the right to sue for

Which of the following is often the first sign of a stolen identity?