Question 1

Which type of debt would not be forgiven in a straight bankruptcy?

Accepted Answer

A)  Credit card debt
B)  Medical bills
C)  Personal loans
D)  Educational loans
E)  Utility billsF) A) and B)
G) B) and C)

Question 2

Jerry Allison starts the month with a balance on his credit card of $1,000.On the 10th day of the month,he purchases $200 in clothes with his credit card.On the 15th day of the month he makes a payment on his credit card of $500.The bank charges 1.5 percent interest per month using the previous balance method.What would Jerry's finance charges be for the month?

Accepted Answer

A)  $7.50
B)  $13.25
C)  $11.25
D)  $15.00
E)  $18.00F) A) and B)
G) D) and E)

Question 3

If creditors give you no credit for payments made during the billing period,it is called the adjusted balance method.

Accepted Answer

A) True 
 B)False

Question 4

Collection agencies are allowed to:

Accepted Answer

A)  contact you at your place of employment.
B)  contact you as early as 8 am.
C)  say that you will be arrested if you do not pay the debt.
D)  harass you.
E)  threaten harm to you or your family.F) A) and E)
G) A) and D)

Question 5

Henry Garrison starts the month with a balance on his credit card of $1,000.The average daily balance for the month including purchase is $883.The average daily balance for the month excluding new purchase is $750.The bank charges 1.5 percent per month and uses the average daily balance including new purchases method.What would Henry's finance charges be for the month?

Accepted Answer

A)  $7.50
B)  $13.25
C)  $11.25
D)  $15.00
E)  $18.00F) All of the above
G) None of the above

Question 6

Which federal law,passed in 1969,requires creditors to state the cost of borrowing as a dollar amount?

Accepted Answer

A)  Fair Credit Reporting Act
B)  Fair Credit Billing Act
C)  Equal Credit Opportunity Act
D)  Fair Debt Collection Practices Act
E)  Truth in Lending LawF) B) and D)
G) A) and C)

Question 7

Variations of simple interest do not include the:

Accepted Answer

A)  Add-on interest method
B)  Bank discount method
C)  Adjusted balance method
D)  Simple interest on the declining balance method
E)  Compound interest methodF) B) and C)
G) A) and E)

Question 8

A person filing for relief under the bankruptcy code is called a bankrupt,not a debtor.

Accepted Answer

A) True 
 B)False

Question 9

Borrowing from credit unions has several advantages but does not include:

Accepted Answer

A)  costly credit life insurance.
B)  sympathy toward borrowers with legitimate payment problems.
C)  personalized service.
D)  the same range of consumer loans that banks offer.
E)  None of theseF) B) and E)
G) A) and E)

Question 10

You just received a credit card application.Which of the following are included with this application?

Accepted Answer

A)  Annual fee
B)  Annual percentage rate for purchases
C)  Penalty fees
D)  Method used to calculate balance
E)  All of theseF) D) and E)
G) None of the above

Question 11

Before you sign a loan contract,make sure to:

Accepted Answer

A)  explore other financing options.
B)  contact several lenders and compare terms, rates, and other costs.
C)  know your rights under the law.
D)  All of these.
E)  None of these.F) All of the above
G) A) and E)

Question 12

The rule of 78s formula dictates that you pay less interest at the beginning of a loan.

Accepted Answer

A) True 
 B)False

Question 13

Float can be defined as:

Accepted Answer

A)  the interest charged during one billing period.
B)  the principal balance due on a loan.
C)  a home equity loan.
D)  a certain number of days during which no interest is charged.
E)  a lump-sum loan from a credit union.F) B) and D)
G) D) and E)

Question 14

Which formula dictates that you pay more interest at the beginning of a loan and pay less and less interest as the debt is reduced?

Accepted Answer

A)  Adjusted balance method
B)  Previous balance method
C)  The rule of 78s
D)  Average daily balance
E)  Accelerated balanceF) All of the above
G) A) and C)

Question 15

If you want to minimize your borrowing costs,you may need to accept conditions that reduce the risk for your lender.

Accepted Answer

A) True 
 B)False

Question 16

Credit life insurance provides for the repayment of the loan if the borrower dies.

Accepted Answer

A) True 
 B)False

Question 17

Which one of the following financing methods provides a float period?

Accepted Answer

A)  Installment loan
B)  Credit card
C)  Lump-sum loan
D)  Home equity line of credit
E)  Auto loanF) A) and B)
G) A) and C)

Question 18

Parents or family members are often the source of the least expensive loans.

Accepted Answer

A) True 
 B)False

Question 19

Mature consumers have certain information and:

Accepted Answer

A)  They demonstrate self-discipline.
B)  They control their impulses and use sound judgment.
C)  They accept responsibility for money management.
D)  They are able to postpone expenditures when needed.
E)  All of these.F) C) and E)
G) D) and E)

Question 20

Which of the following is/are a signal of potential debt problems?

Accepted Answer

A)  Paying only the minimum balance each month
B)  Missing payments or paying late
C)  Using savings to pay routine bills
D)  Depending on overtime to meet everyday expenses
E)  All of these are danger signalsF) A) and B)
G) A) and C)

Exam 7: Choosing a Source of Credit: The Costs of Credit Alternatives

Which type of debt would not be forgiven in a straight bankruptcy?

Correct Answer
verified

Before you sign a loan contract,make sure to:

Correct Answer
verified

A person filing for relief under the bankruptcy code is called a bankrupt,not a debtor.

Correct Answer
verified

Credit life insurance provides for the repayment of the loan if the borrower dies.

Correct Answer
verified

Correct Answer
verified

Which federal law,passed in 1969,requires creditors to state the cost of borrowing as a dollar amount?

Correct Answer
verified

Which formula dictates that you pay more interest at the beginning of a loan and pay less and less interest as the debt is reduced?

Correct Answer
verified

Borrowing from credit unions has several advantages but does not include:

Correct Answer
verified

If you want to minimize your borrowing costs,you may need to accept conditions that reduce the risk for your lender.

Correct Answer
verified

Which one of the following financing methods provides a float period?

Correct Answer
verified

You just received a credit card application.Which of the following are included with this application?

Correct Answer
verified

Mature consumers have certain information and:

Correct Answer
verified

Variations of simple interest do not include the:

Correct Answer
verified

Which of the following is/are a signal of potential debt problems?

Correct Answer
verified

The rule of 78s formula dictates that you pay less interest at the beginning of a loan.

Correct Answer
verified

Float can be defined as:

Correct Answer
verified

Correct Answer
verified

Parents or family members are often the source of the least expensive loans.

Correct Answer
verified

If creditors give you no credit for payments made during the billing period,it is called the adjusted balance method.

Correct Answer
verified

Collection agencies are allowed to:

Correct Answer
verified

Exam 7: Choosing a Source of Credit: The Costs of Credit Alternatives

Which type of debt would not be forgiven in a straight bankruptcy?

Correct AnswerverifiedShow Answer

Before you sign a loan contract,make sure to:

Correct AnswerverifiedShow Answer

A person filing for relief under the bankruptcy code is called a bankrupt,not a debtor.

Correct AnswerverifiedShow Answer

Credit life insurance provides for the repayment of the loan if the borrower dies.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which federal law,passed in 1969,requires creditors to state the cost of borrowing as a dollar amount?

Correct AnswerverifiedShow Answer

Which formula dictates that you pay more interest at the beginning of a loan and pay less and less interest as the debt is reduced?

Correct AnswerverifiedShow Answer

Borrowing from credit unions has several advantages but does not include:

Correct AnswerverifiedShow Answer

If you want to minimize your borrowing costs,you may need to accept conditions that reduce the risk for your lender.

Correct AnswerverifiedShow Answer

Which one of the following financing methods provides a float period?

Correct AnswerverifiedShow Answer

You just received a credit card application.Which of the following are included with this application?

Correct AnswerverifiedShow Answer

Mature consumers have certain information and:

Correct AnswerverifiedShow Answer

Variations of simple interest do not include the:

Correct AnswerverifiedShow Answer

Which of the following is/are a signal of potential debt problems?

Correct AnswerverifiedShow Answer

The rule of 78s formula dictates that you pay less interest at the beginning of a loan.

Correct AnswerverifiedShow Answer

Float can be defined as:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Parents or family members are often the source of the least expensive loans.

Correct AnswerverifiedShow Answer

If creditors give you no credit for payments made during the billing period,it is called the adjusted balance method.

Correct AnswerverifiedShow Answer

Collection agencies are allowed to:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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