Question 1

Open account credit is characterized by

Accepted Answer

A)  no credit limit. 
B)  a monthly credit statement. 
C)  annual billing. 
D)  minimum balance requirements. 
E)  none of the above.

Question 2

Saving is the preferred way to provide for financial emergencies.

Accepted Answer

A) True 
 B)False

Question 3

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-Interest paid on a [home equity line of credit | credit card] would be deductible if you itemize your deductions on your federal tax return.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 4

An overdraft protection line of credit allows one to routinely bounce checks with little or no adverse consequences.

Accepted Answer

A) True 
 B)False

Question 5

As well as being among the cheapest forms of consumer credit,these offer shelters from taxes:

Accepted Answer

A)  Automobile loans 
B)  Home Equity loans 
C)  Credit cards 
D)  Unsecured personal credit

Question 6

A woman's income can legally be discounted when she applies for credit.

Accepted Answer

A) True 
 B)False

Question 7

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-The most expensive method of determining finance charges on revolving credit would be [two cycle ADB w/purchases | ADB excluding purchases].

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 8

When canceling a credit card,you should cut up the card and ____ that you are canceling your account.

Accepted Answer

A)  inform the issuer in writing 
B)  call the issuer and tell them 
C)  inform the credit bureau in writing 
D)  call the credit bureau and tell them 
E)  all of the above

Question 9

____ is a benefit of borrowing.

Accepted Answer

A)  The ability to buy expensive goods while spreading the payments over time 
B)  Providing payments that fit into a budget 
C)  Having a permanent record of transactions 
D)  Being able to purchase goods and services when checks are not acceptable 
E)  All of these are benefits.

Question 10

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. 
-In terms of overall household liabilities,[auto | home] loans comprise the largest share.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 11

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-You are likely to have financial difficulty if your personal credit obligations exceed [15% | 20%] of your take home pay.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 12

The amount of finance charges one pays on a credit card depends only on APR and the amount one charges.

Accepted Answer

A) True 
 B)False

Question 13

A credit card can provide an interest-free loan if you

Accepted Answer

A)  pay for purchases within six months. 
B)  pay the minimum payment. 
C)  pay the entire balance on or before the due date. 
D)  pay the previous balance by the due date. 
E)  receive a cash advance.

Question 14

Using credit is the ideal way to provide for financial emergencies.

Accepted Answer

A) True 
 B)False

Question 15

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-A person who pays his credit balance off every month should look for a credit card with a [long | short] grace period.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 16

Credit reports on individual borrowers are issued by credit card issuers.

Accepted Answer

A) True 
 B)False

Question 17

Russ and Lois have a home valued at $96,000 and an outstanding mortgage of $60,000.If their lender is willing to provide a home equity loan of up to 75% of market value,how much could they borrow using a home equity loan?

Accepted Answer

A)  $ 0 
B)  $12,000 
C)  $27,000 
D)  $28,000 
E)  $36,000

Question 18

A type of bankruptcy that allows one to wipe out his unsecured debt and restructure his secured debt is called

Accepted Answer

A)  the wage earner plan. 
B)  Chapter 11 bankruptcy. 
C)  Chapter 20 bankruptcy. 
D)  Chapter 7 bankruptcy. 
E)  Chapter 13 bankruptcy.

Question 19

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select
-An example of open account credit would be a bank [debit | credit] card.

Accepted Answer

A) for the first item 
B) for the second item 
C) if neither item will correctly complete the statement.

Question 20

The ____ is really a second mortgage on your home.

Accepted Answer

A)  affinity card 
B)  unsecured personal credit line 
C)  home equity line of credit 
D)  preferred Visa card 
E)  platinum American Express card

Exam 6: Using Credit

Open account credit is characterized by

Saving is the preferred way to provide for financial emergencies.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -Interest paid on a [home equity line of credit | credit card] would be deductible if you itemize your deductions on your federal tax return.

An overdraft protection line of credit allows one to routinely bounce checks with little or no adverse consequences.

As well as being among the cheapest forms of consumer credit,these offer shelters from taxes:

A woman's income can legally be discounted when she applies for credit.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -The most expensive method of determining finance charges on revolving credit would be [two cycle ADB w/purchases | ADB excluding purchases].

When canceling a credit card,you should cut up the card and ____ that you are canceling your account.

____ is a benefit of borrowing.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -In terms of overall household liabilities,[auto | home] loans comprise the largest share.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -You are likely to have financial difficulty if your personal credit obligations exceed [15% | 20%] of your take home pay.

The amount of finance charges one pays on a credit card depends only on APR and the amount one charges.

A credit card can provide an interest-free loan if you

Using credit is the ideal way to provide for financial emergencies.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -A person who pays his credit balance off every month should look for a credit card with a [long | short] grace period.

Credit reports on individual borrowers are issued by credit card issuers.

Russ and Lois have a home valued at $96,000 and an outstanding mortgage of $60,000.If their lender is willing to provide a home equity loan of up to 75% of market value,how much could they borrow using a home equity loan?

A type of bankruptcy that allows one to wipe out his unsecured debt and restructure his secured debt is called

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select -An example of open account credit would be a bank [debit | credit] card.

The ____ is really a second mortgage on your home.