Question 1

FICO and VantageScore are two methods used to judge creditworthiness.

Accepted Answer

A) True 
 B)False

Question 2

If you want to file a complaint against a bank,you

Accepted Answer

A)   Must have an account at the bank.
B)   Must have at least $100,000 invested in the bank.
C)   Must have a checking or savings account with the bank.
D)   Do not need to have an account at the bank.
E)   Must have a loan outstanding at the bank.F) A) and D)
G) All of the above

Question 3

Contrast a credit card with a debit card.

Accepted Answer

A credit card essentially is a short-ter...

Question 4

A credit card holder who pays off his balances in full each month is known as

Accepted Answer

A)   An impulsive lender.
B)   A convenience user.
C)   A home equity holder.
D)   A convenience user AND a home equity holder.
E)   All of these are correct.F) B) and E)
G) C) and E)

Question 5

The add-on interest calculation uses this formula: Interest = Principal × Rate of interest × Time.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following items should be shredded to protect yourself from identity theft?

Accepted Answer

A)   Magazines
B)   Papers with personal information
C)   Envelopes
D)   Privacy notices that are received with credit card statements
E)   Newspaper adsF) A) and D)
G) B) and D)

Question 7

Rich received a $5,000 loan from the bank.The manager set up a 6% loan using the simple interest formula for one year,but with two payments.What is the interest for his second payment?

Accepted Answer

Since this loan is being paid ...

Question 8

Home equity loans

Accepted Answer

A)   Are based on the original purchase price of a home.
B)   Have interest that is tax-deductible.
C)   Do not have any security attached to the loan.
D)   Have a 60-day grace period.
E)   Are the most expensive loans available.F) A) and E)
G) A) and C)

Question 9

Cassie received an $8,000 loan from the bank.The manager set up a 10% loan using the simple interest formula for one-year,but two payments.What are her total payments for the loan?

Accepted Answer

Since this loan is being paid in two ins...

Question 10

All of the following are signs of financial trouble except

Accepted Answer

A)   You use savings to pay for necessities such as food and utilities.
B)   You receive second and third payment due notices from creditors.
C)   You exceed the credit limits on your credit cards.
D)   You pay your credit card bills in full each period.
E)   The total balance on your credit cards increases every month.F) D) and E)
G) All of the above

Question 11

Rachel Johnson went to the ATM to withdraw $200 cash with her debit card.She inadvertently pulled out her credit card instead,not realizing the expenses for cash advances.If her credit card company charges a cash advance fee of 4% and interest at 22% APR,what are the total fees she will pay for her mistake?

Accepted Answer

Cash advance fee = 4% × $200 =...

Question 12

Which of the following electronically subtracts money from your savings or checking account to pay for goods and services?

Accepted Answer

A)   A credit card
B)   Closed-end credit
C)   A debit card
D)   A gift card
E)   A home equity loanF) D) and E)
G) C) and D)

Question 13

Define three of the following:
a.Finance charge
b.Annual percentage rate
c.Simple interest
d.Minimum monthly payment
e.Add-on interest method

Accepted Answer

Definitions are given here:
a.Finance ch...

Question 14

Installment sales credit is a loan that allows a consumer to purchase high-priced items such as large appliances or furniture.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following can result from a failure to repay a loan?

Accepted Answer

A)   Bankruptcy.
B)   Loss of income.
C)   Loss of a good reputation.
D)   Damage to family relationships.
E)   All of these answers may be a result of the failure to repay a loan.F) B) and E)
G) C) and D)

Question 16

Which of the following is the only online source authorized to provide a free credit report each year at your request?

Accepted Answer

A)   www.annualcreditscore.com
B)   www.freecreditreport.com
C)   www.onlinecreditreport.com
D)   www.freecreditscore.com
E)   www.annualcreditreport.comF) A) and C)
G) A) and D)

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

A trade-off of credit is that it increases the amount of money that will be available to spend in the future.

Accepted Answer

A) True 
 B)False

Question 19

Credit reports can be obtained for all of the following reasons except

Accepted Answer

A)   In response to a court order.
B)   In connection with a credit transaction.
C)   For underwriting of insurance.
D)   Inquiry by a neighbor.
E)   For some legitimate business need.F) A) and B)
G) A) and C)

Question 20

Paul borrowed $200 to be repaid in one year.He paid 10% interest and a service charge of $3.00.What is his finance charge?

Accepted Answer

A)   $3.00
B)   $20.00
C)   $23.00
D)   $200.00
E)   $223.00F) A) and E)
G) A) and C)

Exam 5: Consumer Credit: Advantages, Dis-Advantages, Sources, and Costs

Home equity loans

Correct Answer
verified

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

Correct Answer
verified

All of the following are signs of financial trouble except

Correct Answer
verified

Which of the following can result from a failure to repay a loan?

Correct Answer
verified

A credit card holder who pays off his balances in full each month is known as

Correct Answer
verified

Cassie received an $8,000 loan from the bank.The manager set up a 10% loan using the simple interest formula for one-year,but two payments.What are her total payments for the loan?

Correct Answer
verified
Since this loan is being paid in two ins...
View Answer

Paul borrowed $200 to be repaid in one year.He paid 10% interest and a service charge of $3.00.What is his finance charge?

Correct Answer
verified

Installment sales credit is a loan that allows a consumer to purchase high-priced items such as large appliances or furniture.

Correct Answer
verified

Which of the following electronically subtracts money from your savings or checking account to pay for goods and services?

Correct Answer
verified

If you want to file a complaint against a bank,you

Correct Answer
verified

Correct Answer
verified
Cash advance fee = 4% × $200 =...
View Answer

Define three of the following: a.Finance charge b.Annual percentage rate c.Simple interest d.Minimum monthly payment e.Add-on interest method

Correct Answer
verified
Definitions are given here:
a.Finance ch...
View Answer

A trade-off of credit is that it increases the amount of money that will be available to spend in the future.

Correct Answer
verified

Credit reports can be obtained for all of the following reasons except

Correct Answer
verified

Which of the following is the only online source authorized to provide a free credit report each year at your request?

Correct Answer
verified

Contrast a credit card with a debit card.

Correct Answer
verified
A credit card essentially is a short-ter...
View Answer

Rich received a $5,000 loan from the bank.The manager set up a 6% loan using the simple interest formula for one year,but with two payments.What is the interest for his second payment?

Correct Answer
verified
Since this loan is being paid ...
View Answer

The add-on interest calculation uses this formula: Interest = Principal × Rate of interest × Time.

Correct Answer
verified

FICO and VantageScore are two methods used to judge creditworthiness.

Correct Answer
verified

Which of the following items should be shredded to protect yourself from identity theft?

Correct Answer
verified

Exam 5: Consumer Credit: Advantages, Dis-Advantages, Sources, and Costs

Home equity loans

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

All of the following are signs of financial trouble except

Correct AnswerverifiedShow Answer

Which of the following can result from a failure to repay a loan?

Correct AnswerverifiedShow Answer

A credit card holder who pays off his balances in full each month is known as

Correct AnswerverifiedShow Answer

Cassie received an $8,000 loan from the bank.The manager set up a 10% loan using the simple interest formula for one-year,but two payments.What are her total payments for the loan?

Correct AnswerverifiedSince this loan is being paid in two ins...View AnswerShow Answer

Paul borrowed $200 to be repaid in one year.He paid 10% interest and a service charge of $3.00.What is his finance charge?

Correct AnswerverifiedShow Answer

Installment sales credit is a loan that allows a consumer to purchase high-priced items such as large appliances or furniture.

Correct AnswerverifiedShow Answer

Which of the following electronically subtracts money from your savings or checking account to pay for goods and services?

Correct AnswerverifiedShow Answer

If you want to file a complaint against a bank,you

Correct AnswerverifiedShow Answer

Correct AnswerverifiedCash advance fee = 4% × $200 =...View AnswerShow Answer

Define three of the following: a.Finance charge b.Annual percentage rate c.Simple interest d.Minimum monthly payment e.Add-on interest method

Correct AnswerverifiedDefinitions are given here:a.Finance ch...View AnswerShow Answer

A trade-off of credit is that it increases the amount of money that will be available to spend in the future.

Correct AnswerverifiedShow Answer

Credit reports can be obtained for all of the following reasons except

Correct AnswerverifiedShow Answer

Which of the following is the only online source authorized to provide a free credit report each year at your request?

Correct AnswerverifiedShow Answer

Contrast a credit card with a debit card.

Correct AnswerverifiedA credit card essentially is a short-ter...View AnswerShow Answer

Rich received a $5,000 loan from the bank.The manager set up a 6% loan using the simple interest formula for one year,but with two payments.What is the interest for his second payment?

Correct AnswerverifiedSince this loan is being paid ...View AnswerShow Answer

The add-on interest calculation uses this formula: Interest = Principal × Rate of interest × Time.

Correct AnswerverifiedShow Answer

FICO and VantageScore are two methods used to judge creditworthiness.

Correct AnswerverifiedShow Answer

Which of the following items should be shredded to protect yourself from identity theft?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Since this loan is being paid in two ins...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Cash advance fee = 4% × $200 =...
View Answer

Correct Answer
verified
Definitions are given here:
a.Finance ch...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A credit card essentially is a short-ter...
View Answer

Correct Answer
verified
Since this loan is being paid ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified