Question 1

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 C)
G) B) and E)

Question 2

Frank West wants to borrow money for three years to purchase a new boat.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 larger stake in the asset he is purchasing.
D)  repaying the loan over a faster period of time.
E)  pledging collateral.F) A) and E)
G) C) and E)

Question 3

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.
C)  dispute the fact that you owe the money.
D)  threaten the collector with a law suit.
E)  contact your attorney immediately.F) C) and E)
G) All of the above

Question 4

The fairest method of calculating interest is the adjusted balance method.

Accepted Answer

A) True 
 B)False

Question 5

You have the right to file your own bankruptcy case and represent yourself at all court hearings.

Accepted Answer

A) True 
 B)False

Question 6

Which one of the following is not a danger signal of potential debt problems?

Accepted Answer

A)  paying the minimum balance due each month
B)  receiving notice of prompt payment from creditors
C)  using savings to pay for major purchases
D)  repaying loans faster than required
E)  depending on overtime and moonlighting to meet expensesF) A) and D)
G) B) and E)

Question 7

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

Accepted Answer

A)  5
B)  10
C)  15
D)  20
E)  30F) A) and E)
G) A) and B)

Question 8

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 disability insuranceF) None of the above
G) A) and E)

Question 9

Which one of the following is often the source of the least expensive loan?

Accepted Answer

A)  parents or family members
B)  banks
C)  savings and loan associations
D)  finance companies
E)  loan sharksF) C) and E)
G) A) and E)

Question 10

Banks often encourage you to make the maximum payment.

Accepted Answer

A) True 
 B)False

Question 11

The most expensive loans are available from:

Accepted Answer

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

Question 12

Membership in credit unions has been:

Accepted Answer

A)  growing steadily.
B)  declining gradually.
C)  statiC.
D)  restricted by the Tax Reform Act of 1986.
E)  restricted by state laws.F) C) and D)
G) B) and E)

Question 13

Which interest formula may be used by creditors 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) A) and D)
G) A) and E)

Question 14

Buying on credit is almost always cheaper than paying cash.

Accepted Answer

A) True 
 B)False

Question 15

The CCCS aids families by:

Accepted Answer

A)  setting up a budget for them.
B)  paying off their loans.
C)  providing free basic necessities.
D)  providing one month free shelter.
E)  relocating them in less expensive areas.F) A) and D)
G) B) and E)

Question 16

Chapter 7 bankruptcy is also known as straight bankruptcy.

Accepted Answer

A) True 
 B)False

Question 17

As a result of the recently passed Health Care and Education Reconciliation Act,federal student loans come directly from:

Accepted Answer

A)  commercial banks.
B)  finance companies.
C)  the U.S.Department of Education.
D)  the U.S.Department of Family Services.
E)  credit unions.F) A) and B)
G) A) and C)

Question 18

Which federal law,passed in 1969,requires creditors to state the cost of borrowing in common language?

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 ActF) B) and C)
G) B) and D)

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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 period of time during which no interest is chargeD.
E)  a lump-sum loan from a credit union.F) None of the above
G) C) and E)

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

The CCCS aids families by:

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Membership in credit unions has been:

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

The most expensive loans are available from:

Correct Answer
verified

Frank West wants to borrow money for three years to purchase a new boat.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

Which one of the following is not a danger signal of potential debt problems?

Correct Answer
verified

Chapter 7 bankruptcy is also known as straight bankruptcy.

Correct Answer
verified

Which federal law,passed in 1969,requires creditors to state the cost of borrowing in common language?

Correct Answer
verified

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

Correct Answer
verified

Banks often encourage you to make the maximum payment.

Correct Answer
verified

Buying on credit is almost always cheaper than paying cash.

Correct Answer
verified

Float can be defined as:

Correct Answer
verified

You have the right to file your own bankruptcy case and represent yourself at all court hearings.

Correct Answer
verified

Which interest formula may be used by creditors to determine how much interest you have paid at any point in a loan?

Correct Answer
verified

As a result of the recently passed Health Care and Education Reconciliation Act,federal student loans come directly from:

Correct Answer
verified

Which one of the following is often the source of the least expensive loan?

Correct Answer
verified

If you receive a phone call from a debt collector:

Correct Answer
verified

The fairest method of calculating interest is the adjusted balance method.

Correct Answer
verified

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

The CCCS aids families by:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Membership in credit unions has been:

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

The most expensive loans are available from:

Correct AnswerverifiedShow Answer

Frank West wants to borrow money for three years to purchase a new boat.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

Which one of the following is not a danger signal of potential debt problems?

Correct AnswerverifiedShow Answer

Chapter 7 bankruptcy is also known as straight bankruptcy.

Correct AnswerverifiedShow Answer

Which federal law,passed in 1969,requires creditors to state the cost of borrowing in common language?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Banks often encourage you to make the maximum payment.

Correct AnswerverifiedShow Answer

Buying on credit is almost always cheaper than paying cash.

Correct AnswerverifiedShow Answer

Float can be defined as:

Correct AnswerverifiedShow Answer

You have the right to file your own bankruptcy case and represent yourself at all court hearings.

Correct AnswerverifiedShow Answer

Which interest formula may be used by creditors to determine how much interest you have paid at any point in a loan?

Correct AnswerverifiedShow Answer

As a result of the recently passed Health Care and Education Reconciliation Act,federal student loans come directly from:

Correct AnswerverifiedShow Answer

Which one of the following is often the source of the least expensive loan?

Correct AnswerverifiedShow Answer

If you receive a phone call from a debt collector:

Correct AnswerverifiedShow Answer

The fairest method of calculating interest is the adjusted balance method.

Correct AnswerverifiedShow Answer

Correct Answer
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