Question 1

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) D) and E)
G) None of the above

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 D)
G) B) and D)

Question 3

Which 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) D) and E)
G) C) and D)

Question 4

The most expensive loans are available from:

Accepted Answer

A)  parents.
B)  friends.
C)  federal savings banks.
D)  finance companies.
E)  credit unions.F) B) and E)
G) C) and D) D

Question 5

Explain the Rule of 78s.

Accepted Answer

The rule of 78s is a mathematical formul...

Question 6

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) A) and D)
G) A) and C)

Question 7

Explain the two choices available in declaring personal bankruptcy.

Accepted Answer

Answers will vary.Chapter 7 is a straigh...

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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) A) and B)
G) B) and E)

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

The Consumer Credit Counseling Service (CCCS) is supported by contributions from:

Accepted Answer

A)  banks.
B)  consumer finance companies.
C)  credit unions.
D)  merchants.
E)  All of theseF) A) and E)
G) All of the above

Question 12

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) All of the above
G) C) and E)

Question 13

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) None of the above
G) C) and E)

Question 14

Danger signals of potential debt problems include:

Accepted Answer

A)  paying early.
B)  borrowing money to pay old debts.
C)  talking to your spouse about money.
D)  paying extra payments.
E)  paying the balance in full each month.F) C) and E)
G) A) and E) B

Question 15

Anyone who is overburdened by credit obligations can phone,write,or visit a Consumer Credit Counseling Service (CCCS)office.

Accepted Answer

A) True 
 B)False

Question 16

Which one of the following financing methods usually 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 17

If a new-car loan costs 6%,then a used-car loan may cost:

Accepted Answer

A)  a lower percentage.
B)  the same percentage.
C)  slightly more.
D)  significantly more.
E)  a substantially higher percentage.F) A) and E)
G) A) and D)

Question 18

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

Accepted Answer

A)  Paying only the minimum balance on credit card bills 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) B) and D)
G) B) and E)

Question 19

If you borrow $150 at 10 percent interest,how much will you repay in one lump-sum at the end of one year using simple interest?

Accepted Answer

A)  $100.
B)  $150.
C)  $165.
D)  $115.
E)  $155.F) C) and E)
G) B) and E) C

Question 20

You can often obtain medium-priced loans from:

Accepted Answer

A)  parents or family members.
B)  American Express.
C)  Diners Club.
D)  finance companies.
E)  credit unions and federal savings banks.F) A) and B)
G) C) and D)

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

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which 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

The most expensive loans are available from:

Correct AnswerverifiedD

Explain the Rule of 78s.

Correct AnswerverifiedThe rule of 78s is a mathematical formul...View AnswerShow 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

Explain the two choices available in declaring personal bankruptcy.

Correct AnswerverifiedAnswers will vary.Chapter 7 is a straigh...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Consumer Credit Counseling Service (CCCS) is supported by contributions from:

Correct AnswerverifiedShow Answer

If you receive a phone call from a debt collector:

Correct AnswerverifiedShow Answer

All loans to or from family members should:

Correct AnswerverifiedShow Answer

Danger signals of potential debt problems include:

Correct AnswerverifiedB

Anyone who is overburdened by credit obligations can phone,write,or visit a Consumer Credit Counseling Service (CCCS)office.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a new-car loan costs 6%,then a used-car loan may cost:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If you borrow $150 at 10 percent interest,how much will you repay in one lump-sum at the end of one year using simple interest?

Correct AnswerverifiedC

You can often obtain medium-priced loans from:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
D

Correct Answer
verified
The rule of 78s is a mathematical formul...
View Answer

Correct Answer
verified

Correct Answer
verified
Answers will vary.Chapter 7 is a straigh...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified