Question 1

In addition to the Consumer Credit Counseling Service,alternative counseling services (universities,credit unions,military bases,and state and federal housing authorities)sometimes provide debt counseling services.

Accepted Answer

A) True 
 B)False

Question 2

Which interest formula is used by creditors and involves tables based on a mathematical formula to determine how much interest you have paid at any point in a loan?

Accepted Answer

A)  Simple interest formula
B)  Compound interest formula
C)  Multiple compound interest formula
D)  The rule of 78s
E)  The rule of 72sF) All of the above
G) B) and E)

Question 3

Both Chapter 7 and Chapter 13 bankruptcy are considered an easy way out of debt.

Accepted Answer

A) True 
 B)False

Question 4

If you default on your automobile loan,most automobile financing agreements:

Accepted Answer

A)  require an advance notice be sent to you before your car is repossessed.
B)  permit your creditor to repossess your car at any time without notice.
C)  permit the federal consumer credit laws to protect your car from being repossessed.
D)  allow you to not pay the full balance due on your automobile loan.
E)  allow you to pay fifty percent of the balance due on your automobile loan.F) A) and B)
G) B) and D)

Question 5

The most commonly purchased type of credit insurance is credit life insurance.

Accepted Answer

A) True 
 B)False

Question 6

Which one of the following is a local,nonprofit organization that provides debt counseling services for families and individuals with serious financial problems?

Accepted Answer

A)  Credit bureau
B)  Chamber of Commerce
C)  Consumer Credit Counseling Service
D)  Internal Revenue Service
E)  Better Business BureauF) All of the above
G) None of the above

Question 7

When more than one payment is made on a simple interest loan,the method of computing interest is known as the:

Accepted Answer

A)  add-on interest method.
B)  average daily balance method.
C)  adjusted balance method.
D)  declining balance method.
E)  previous balance method.F) B) and C)
G) B) and E)

Question 8

An increasing number of personal bankruptcy filers are baby boomers,who now account for what percent of personal bankruptcies?

Accepted Answer

A)  10
B)  20
C)  35
D)  50
E)  60F) A) and B)
G) A) and C)

Question 9

The consumer credit laws require that an advance notice be given before repossessing a car.

Accepted Answer

A) True 
 B)False

Question 10

If you receive a phone call from a debt collector:

Accepted Answer

A)  hang up on him or her.
B)  expect follow-up written communication within five days.
C)  call the police.
D)  threaten the collector with a law suit.
E)  contact your attorney immediately.F) B) and D)
G) None of the above

Question 11

Two key concepts that you should remember when borrowing are the finance charge and the annual percentage rate.

Accepted Answer

A) True 
 B)False

Question 12

Your bankcard has an APR of 18% and there is a 2% fee for cash advances.The bank starts charging interest on cash advances immediately.You get a cash advance of $600 on the first day of the month.You get your credit card bill at the end of the month.What is the approximate total finance charge you will pay on this cash advance for the month? Assume each month has 30 days.

Accepted Answer

A)  $12
B)  $9
C)  $21
D)  $0
E)  $2F) B) and D)
G) A) and B)

Question 13

Chuck Spencer wants to borrow money for three years to purchase a new car.He has been offered a seven percent fixed rate loan and also a variable rate loan that has an initial rate of five percent.By choosing the variable rate loan,Chuck is reducing the lender's risk by:

Accepted Answer

A)  sharing the interest rate risk.
B)  increasing his monthly payments.
C)  taking a higher stake in the asset he is purchasing.
D)  repaying the loan over a faster period of time.
E)  pledging collateral.F) C) and D)
G) A) and C)

Question 14

All loans to or from family members should:

Accepted Answer

A)  be in writing.
B)  state the interest rate.
C)  state the repayment schedule.
D)  state the final payment date.
E)  All of theseF) C) and E)
G) C) and D)

Question 15

The annual percentage rate is the percentage cost (or relative cost)of credit on a yearly basis.

Accepted Answer

A) True 
 B)False

Question 16

Banks often encourage you to make the maximum payment,referred to as the "cardholder amount due."

Accepted Answer

A) True 
 B)False

Question 17

By evaluating your credit options,you may:

Accepted Answer

A)  reduce your finance charges.
B)  reconsider your decision to borrow money.
C)  discover a less expensive type of loan.
D)  find a lender that charges a lower rate.
E)  All of theseF) A) and B)
G) A) and C)

Question 18

You have two choices in declaring personal bankruptcy: Chapter 7 and Chapter 13 bankruptcy.

Accepted Answer

A) True 
 B)False

Question 19

If creditors add finance charges after subtracting payments made during the billing period,then this is called the:

Accepted Answer

A)  APR method.
B)  discount method.
C)  previous balance method.
D)  adjusted balance method.
E)  average daily balance method.F) C) and D)
G) A) and B)

Question 20

Overindulgence of children is a frequent reason for indebtedness.

Accepted Answer

A) True 
 B)False

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

By evaluating your credit options,you may:

Correct Answer
verified

The consumer credit laws require that an advance notice be given before repossessing a car.

Correct Answer
verified

Correct Answer
verified

Which interest formula is used by creditors and involves tables based on a mathematical formula to determine how much interest you have paid at any point in a loan?

Correct Answer
verified

If you receive a phone call from a debt collector:

Correct Answer
verified

Overindulgence of children is a frequent reason for indebtedness.

Correct Answer
verified

Banks often encourage you to make the maximum payment,referred to as the "cardholder amount due."

Correct Answer
verified

Which one of the following is a local,nonprofit organization that provides debt counseling services for families and individuals with serious financial problems?

Correct Answer
verified

Both Chapter 7 and Chapter 13 bankruptcy are considered an easy way out of debt.

Correct Answer
verified

An increasing number of personal bankruptcy filers are baby boomers,who now account for what percent of personal bankruptcies?

Correct Answer
verified

All loans to or from family members should:

Correct Answer
verified

If creditors add finance charges after subtracting payments made during the billing period,then this is called the:

Correct Answer
verified

You have two choices in declaring personal bankruptcy: Chapter 7 and Chapter 13 bankruptcy.

Correct Answer
verified

The most commonly purchased type of credit insurance is credit life insurance.

Correct Answer
verified

In addition to the Consumer Credit Counseling Service,alternative counseling services (universities,credit unions,military bases,and state and federal housing authorities)sometimes provide debt counseling services.

Correct Answer
verified

The annual percentage rate is the percentage cost (or relative cost)of credit on a yearly basis.

Correct Answer
verified

Chuck Spencer wants to borrow money for three years to purchase a new car.He has been offered a seven percent fixed rate loan and also a variable rate loan that has an initial rate of five percent.By choosing the variable rate loan,Chuck is reducing the lender's risk by:

Correct Answer
verified

Two key concepts that you should remember when borrowing are the finance charge and the annual percentage rate.

Correct Answer
verified

If you default on your automobile loan,most automobile financing agreements:

Correct Answer
verified

When more than one payment is made on a simple interest loan,the method of computing interest is known as the:

Correct Answer
verified

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

By evaluating your credit options,you may:

Correct AnswerverifiedShow Answer

The consumer credit laws require that an advance notice be given before repossessing a car.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which interest formula is used by creditors and involves tables based on a mathematical formula to determine how much interest you have paid at any point in a loan?

Correct AnswerverifiedShow Answer

If you receive a phone call from a debt collector:

Correct AnswerverifiedShow Answer

Overindulgence of children is a frequent reason for indebtedness.

Correct AnswerverifiedShow Answer

Banks often encourage you to make the maximum payment,referred to as the "cardholder amount due."

Correct AnswerverifiedShow Answer

Which one of the following is a local,nonprofit organization that provides debt counseling services for families and individuals with serious financial problems?

Correct AnswerverifiedShow Answer

Both Chapter 7 and Chapter 13 bankruptcy are considered an easy way out of debt.

Correct AnswerverifiedShow Answer

An increasing number of personal bankruptcy filers are baby boomers,who now account for what percent of personal bankruptcies?

Correct AnswerverifiedShow Answer

All loans to or from family members should:

Correct AnswerverifiedShow Answer

If creditors add finance charges after subtracting payments made during the billing period,then this is called the:

Correct AnswerverifiedShow Answer

You have two choices in declaring personal bankruptcy: Chapter 7 and Chapter 13 bankruptcy.

Correct AnswerverifiedShow Answer

The most commonly purchased type of credit insurance is credit life insurance.

Correct AnswerverifiedShow Answer

In addition to the Consumer Credit Counseling Service,alternative counseling services (universities,credit unions,military bases,and state and federal housing authorities)sometimes provide debt counseling services.

Correct AnswerverifiedShow Answer

The annual percentage rate is the percentage cost (or relative cost)of credit on a yearly basis.

Correct AnswerverifiedShow Answer

Chuck Spencer wants to borrow money for three years to purchase a new car.He has been offered a seven percent fixed rate loan and also a variable rate loan that has an initial rate of five percent.By choosing the variable rate loan,Chuck is reducing the lender's risk by:

Correct AnswerverifiedShow Answer

Two key concepts that you should remember when borrowing are the finance charge and the annual percentage rate.

Correct AnswerverifiedShow Answer

If you default on your automobile loan,most automobile financing agreements:

Correct AnswerverifiedShow Answer

When more than one payment is made on a simple interest loan,the method of computing interest is known as the:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
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verified

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verified

Correct Answer
verified

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Correct Answer
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