Question 1

You may be able to borrow at a lower interest rate if you accept a shorter-term loan.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is not true about the Credit CARD Act of 2009?

Accepted Answer

A)  States that teaser rates must stay in effect for at least 6 months
B)  Makes new disclosure statements clear and more timely
C)  Requires credit card issuers to post their standard card agreements on the Internet
D)  Allows card issuers to apply new higher interest rates to the existing card balances
E)  Requires issuers to mail monthly statements at least 21 days before payment is dueF) A) and B)
G) C) and D)

Question 3

Which lender is likely to ask you to write a check for $115 before granting you a $100 loan?

Accepted Answer

A)  Credit union
B)  Payday advance company
C)  Federal savings bank
D)  Department store
E)  Commercial bankF) None of the above
G) B) and D)

Question 4

What is the most common reason why consumers are unable to pay their bills on time?

Accepted Answer

A)  Medical expenses
B)  Defective goods and services
C)  Excessive use of credit
D)  Fraudulent use of credit
E)  Consumer fraudF) B) and E)
G) A) and C)

Question 5

Credit counselors are aware that most people who are in debt over their heads are:

Accepted Answer

A)  criminals who take advantage of creditors.
B)  living in poverty-stricken areas.
C)  expected to declare Chapter 11 bankruptcy.
D)  not college educated.
E)  basically honest people.F) C) and E)
G) None of the above

Question 6

Which of the following is not true of CCCS counseling?

Accepted Answer

A)  usually free.
B)  quite costly.
C)  often provides education regarding the pitfalls of unwise credit buying.
D)  suggests techniques for family budgeting.
E)  helps families manage their money better.F) A) and C)
G) All of the above

Question 7

There are no costs involved in filing for a bankruptcy.

Accepted Answer

A) True 
 B)False

Question 8

The Truth in Lending law does not set the interest rates or tell the creditor how to make interest calculations.

Accepted Answer

A) True 
 B)False

Question 9

Shelly Sanders gets a loan for $3,000 and repays the loan in 12 monthly payments of $258 per month.Under the rule of 78s,what is the amount of interest included in her first payment?

Accepted Answer

A)  $16.00
B)  $14.77
C)  $8.96
D)  $4.87
E)  $1.23F) B) and D)
G) B) and E)

Question 10

If Marjorie Wilcox borrows $200 for one year with an APR of 12% and an annual service fee of $10,what is her total cost of credit?

Accepted Answer

A)  $10
B)  $12
C)  $24
D)  $34
E)  $42F) B) and E)
G) A) and E)

Question 11

The total dollar amount you pay to use credit is called the:

Accepted Answer

A)  finance charge.
B)  annual percentage rate.
C)  price of the good/service purchased.
D)  amortized rebate.
E)  interest rate.F) A) and B)
G) A) and C)

Question 12

One of the drawbacks of borrowing from parents or family members is that such loans:

Accepted Answer

A)  tend to be more expensive than other types of loans.
B)  must be interest-free.
C)  can complicate family relationships.
D)  are limited to oral agreements.
E)  are legally prohibited from establishing repayment dates and terms.F) C) and D)
G) A) and B)

Question 13

The Consumer Credit Counseling Service will refinance all of your existing debts for you.

Accepted Answer

A) True 
 B)False

Question 14

Which type of credit insurance repays your debt in the event of a loss of income due to illness or injury?

Accepted Answer

A)  Credit life insurance
B)  Credit accident and health insurance
C)  Credit property insurance
D)  Credit casualty insurance
E)  Credit inability insuranceF) None of the above
G) A) and B)

Question 15

After you have selected a product,you should buy it immediately before the store runs out of it.

Accepted Answer

A) True 
 B)False

Question 16

According to consumer affairs experts,the nation's number one family financial problem is:

Accepted Answer

A)  poor money management.
B)  overindebtedness.
C)  medical costs.
D)  insurance costs.
E)  unemployment.F) B) and D)
G) C) and E)

Question 17

Randy Ice 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 average daily balance for the month including the new purchase is $883.The average daily balance for the month excluding the new purchase is $750.The bank charges 1.5 percent per month and uses the average daily balance excluding new purchases method.What would Randy's finance charges be for the month?

Accepted Answer

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

Question 18

If you receive a phone call from a debt collector,s/he must send you a written notice within ____________ days.

Accepted Answer

A)  5
B)  10
C)  15
D)  20
E)  30F) D) and E)
G) All of the above

Question 19

Anthony Newton wants to buy a new sail boat.He is planning on making a $10,000 cash down payment,which is a large portion of the cost of what he is financing.In which way is Anthony reducing his lender's risk?

Accepted Answer

A)  He is sharing the interest rate risk with his lender.
B)  He is pledging valuable assets that can be seized if the loan is not repaid.
C)  He is taking a higher stake in the asset he is purchasing.
D)  He is repaying the loan over a faster period of time.
E)  None of these.F) C) and D)
G) All of the above

Question 20

For some debtors,bankruptcy had become an acceptable tool of credit management based on the number of declared bankruptcies in 2005.

Accepted Answer

A) True 
 B)False

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

Shelly Sanders gets a loan for $3,000 and repays the loan in 12 monthly payments of $258 per month.Under the rule of 78s,what is the amount of interest included in her first payment?

Correct Answer
verified

You may be able to borrow at a lower interest rate if you accept a shorter-term loan.

Correct Answer
verified

Which of the following is not true about the Credit CARD Act of 2009?

Correct Answer
verified

The total dollar amount you pay to use credit is called the:

Correct Answer
verified

Correct Answer
verified

If you receive a phone call from a debt collector,s/he must send you a written notice within ____________ days.

Correct Answer
verified

One of the drawbacks of borrowing from parents or family members is that such loans:

Correct Answer
verified

There are no costs involved in filing for a bankruptcy.

Correct Answer
verified

The Truth in Lending law does not set the interest rates or tell the creditor how to make interest calculations.

Correct Answer
verified

After you have selected a product,you should buy it immediately before the store runs out of it.

Correct Answer
verified

According to consumer affairs experts,the nation's number one family financial problem is:

Correct Answer
verified

Credit counselors are aware that most people who are in debt over their heads are:

Correct Answer
verified

What is the most common reason why consumers are unable to pay their bills on time?

Correct Answer
verified

Which type of credit insurance repays your debt in the event of a loss of income due to illness or injury?

Correct Answer
verified

For some debtors,bankruptcy had become an acceptable tool of credit management based on the number of declared bankruptcies in 2005.

Correct Answer
verified

If Marjorie Wilcox borrows $200 for one year with an APR of 12% and an annual service fee of $10,what is her total cost of credit?

Correct Answer
verified

Which of the following is not true of CCCS counseling?

Correct Answer
verified

The Consumer Credit Counseling Service will refinance all of your existing debts for you.

Correct Answer
verified

Anthony Newton wants to buy a new sail boat.He is planning on making a $10,000 cash down payment,which is a large portion of the cost of what he is financing.In which way is Anthony reducing his lender's risk?

Correct Answer
verified

Which lender is likely to ask you to write a check for $115 before granting you a $100 loan?

Correct Answer
verified

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

Shelly Sanders gets a loan for $3,000 and repays the loan in 12 monthly payments of $258 per month.Under the rule of 78s,what is the amount of interest included in her first payment?

Correct AnswerverifiedShow Answer

You may be able to borrow at a lower interest rate if you accept a shorter-term loan.

Correct AnswerverifiedShow Answer

Which of the following is not true about the Credit CARD Act of 2009?

Correct AnswerverifiedShow Answer

The total dollar amount you pay to use credit is called the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If you receive a phone call from a debt collector,s/he must send you a written notice within ____________ days.

Correct AnswerverifiedShow Answer

One of the drawbacks of borrowing from parents or family members is that such loans:

Correct AnswerverifiedShow Answer

There are no costs involved in filing for a bankruptcy.

Correct AnswerverifiedShow Answer

The Truth in Lending law does not set the interest rates or tell the creditor how to make interest calculations.

Correct AnswerverifiedShow Answer

After you have selected a product,you should buy it immediately before the store runs out of it.

Correct AnswerverifiedShow Answer

According to consumer affairs experts,the nation's number one family financial problem is:

Correct AnswerverifiedShow Answer

Credit counselors are aware that most people who are in debt over their heads are:

Correct AnswerverifiedShow Answer

What is the most common reason why consumers are unable to pay their bills on time?

Correct AnswerverifiedShow Answer

Which type of credit insurance repays your debt in the event of a loss of income due to illness or injury?

Correct AnswerverifiedShow Answer

For some debtors,bankruptcy had become an acceptable tool of credit management based on the number of declared bankruptcies in 2005.

Correct AnswerverifiedShow Answer

If Marjorie Wilcox borrows $200 for one year with an APR of 12% and an annual service fee of $10,what is her total cost of credit?

Correct AnswerverifiedShow Answer

Which of the following is not true of CCCS counseling?

Correct AnswerverifiedShow Answer

The Consumer Credit Counseling Service will refinance all of your existing debts for you.

Correct AnswerverifiedShow Answer

Anthony Newton wants to buy a new sail boat.He is planning on making a $10,000 cash down payment,which is a large portion of the cost of what he is financing.In which way is Anthony reducing his lender's risk?

Correct AnswerverifiedShow Answer

Which lender is likely to ask you to write a check for $115 before granting you a $100 loan?

Correct AnswerverifiedShow Answer

Correct Answer
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