personal finance- chapter 6 & 7 & 8

The single best indicator of the true cost of credit isa. annual percentage rateb. annual percentage yieldc. finance charged. interest a. annual percentage rate
The total amount a lender charges you to borrow money as measured in dollars is calleda. the finance chargeb. the annual percentage ratec. the prinicpald.interest a. the finance charge
A detailed account of one’s credit history complied by a credit bureau is contained in thema. credit scoreb. credit ratingc. credit reportd. credit opportunity file c. credit report
Using the debt payments-to-disposable income method for a person whose monthly debt payments exclude their mortgage, consider the following: What percentage of their disposable income would be considered seriously over-indebted?a. 10-14b. 15-18c. 19-28d. 29+ c. 19-28
Which of the following methods for determining your own maximum debt includes your level of mortgage payments?a. continuous debt methodb. debt payments-to-disposable income methodc. debt-to-income methodd. debt-to-equity method b. debt payments-to-disposable income method
Which of the following methods for determining your own maximum debt limit divides your debt repayments by your take-home pay?a. continuous debt methodb. debt payments-to-disposable income methodc. debt-to-income methodd. debt-to-equity method c. debt-to-income method
The process for creating a statistical measure to rate applicants for credit on the basis of various factors relevant to creditworthiness and the likeliness of repayment is calleda. a credit recommendationb. credit historyc. credit scoringd. a credit investigation c. credit scoring
Your only source for a truly free credit report isa. freecreditreport.comb. creditfree.comc. annualcreditreport.comd. freecreditcheck.com c. annualcreditreport.com
The amount of outstanding debt on a credit card as compared to the credit limit on that card is referred to as thea. credit utilization ratiob. debt-to-equity ratioc. debt maximum potentiald. credit opportunity ratio a. credit utilization ratio
A loan used to pay off other debts and reduce the total monthly payments by extending the payback period or by obtaining a lower APR is called a(n)a. add-on loanb. debt consolidation loanc. credit amalgamation loand. garnished loan b. debt consolidation loan
Which of the following provides individual credit counseling, assistance with financial problems, educational materials on credit and budgeting, and a debt management plan as an alternative to bankruptcy?a. nonprofit credit counseling agenciesb. credit repair companiesc. credit bureaus d. for-profit credit counselors a. nonprofit credit counseling agencies
The debt payment to disposable income ratio:a. Is a lame and unimportant ratio you don’t need to calculateb. Tell you if you have too much nonmortgage debtc. Should be greater than 14%d. Tells you what to spend money on b. Tell you if you have too much nonmortgage debt
The debt payment to disposable income ratio is calculated by:a. dividing monthly nonmortgage debt repayments by disposable incomeb. dividing monthly student loan repayment by disposable incomec. dividing monthly credit card debt by disposable incomed. dividing monthly utility bills by disposable income a. dividing monthly nonmortgage debt repayment by disposable income
Finance charges are:a. the interest that a borrower demandsb. the interest that a borrower has to payc. the interest a lender demandsd. the interest a lender has to pay b. the interest that a borrower has to pay
The fine print on credit cards could include any of the following EXCEPT:a. application feesb. overlimit feesc. mismatched sock feesd. late fees c. mismatched sock fees
Your credit score is:a. a numerical measurement of how much debt you haveb. a numerical measurement of how many credit lines you have open at any given timec. a numerical measurement of your ability to repay consumer debt as promisedd. a numerical measurement of your waistline c. a numerical measurement of your ability to repay consumer debt as promised
A low credit score means:a. you are one of the worst karaoke singersb. you are one of the best borrowersc. you are highly likely to repay your debtd. you are highly unlikely to repay your debt d. you are highly unlikely to repay your debt
Credit counselors are:a. people who will validate your feelingsb. nonprofit organizations that help young women dress professionally for workc. people you can talk to about your feelingsd. nonprofit organizations that help educate people on consumer credit d. nonprofit organizations that help educate people on consumer credit
Debt Management Plans are NOT:a. useless agreements that lock you into more debtb. formal agreement that make fixed payments to go each creditor until the debt is paidc. formal agreements often brokered by a credit counselord. a way to help fix credit problems a. useless agreements that lock you into more debt
The single best indicator of the true cost of credit isa. annual percentage rateb. annual percentage yieldc. finance charged. interest a. annual percentage rate
The total amount a lender charges you to borrow money as measures in dollars is calleda. the finance chargeb. the annual percentage ratec. the principald. interest a. the finance charge
A detailed account of one’s credit history compiled by a credit bureau is contained in thema. credit scoreb. credit ratingc. credit reportd. credit opportunity file c. credit report
Variable or adjustable rate loans:a. Are better because the interest rate is lowerb. Have an interest rate that doesn’t change over the life of the loanc. Have an interest rate that can change over the life of a loand. Are better because the payments will never change in amount c. Have an interest rate that can change over the life of a loan
Interest rate risks falls upon whom in a variable or adjustable rate loan:a. the lenderb. the borrowerc. the marketd. your father b. the borrower
Open-ended credit or revolving credit works like so:a. you pay in advance and then you get a monthly allowanceb. your borrow but don’t have to pay it backc. you borrow and then you pay it offd. you pay in advance and use it like a checking account c. you borrow and then you pay it off
One drawback of open-ended credit or revolving credit is:a. it can help when you don’t have cash on youb. it can lead to finance chargesc. it is very easy to used. it can help you build credit history b. it can lead to finance charges
Introductory rates are:a. low initial rate that only last temporarilyb. also known as teaser ratesc. very attractive but have major downsidesd. all of the above d. all of the above
The default rate means that if the borrower does not follow the rules of the loan agreement:a. no big dealb. the interest rate can skyrocketc. the interest rate can plummetd. the interest rate will not change b. the interest rate can skyrocket
Average daily balance is:a. the number of days in the period divided by the sum of the balance owed on each day of the periodb. the number of days in the period divided by the smallest balance of the monthc. the number of days in the period divided by the largest balance of the monthd. the sum of the balances owed on each day of the period divided by the number of days in the period d. the sum of the balances owed on each day of the period divided by the number of days in the period
Average daily balance multiplied by the interest rate gives you:a. the amount of interest that can be chargedb. the tax ratec. betad. the rate of return a. the amount of interest that can be charged
Secured loans differ from unsecured loans in that:a. they are tired down to a particular spot on the groundb. they are backed by some collateral that was pledgedc. they make you feel really safed. they are kept in a safe deposit box at a bank b. they are backed by some collateral that was pledged
Unsecured loans:a. can be auto loans with a lien on the automobileb. can be mortgages with a lien on the housec. are also known as cash advancesd. are also known as signature loans d. are also known as signature loans
Payments for installment loansa. include some interest and some principalb. include neitherc. include only interestd. include only principal a. include some interest and some principal
Installment loans differ from balloon payment loans in that:a. payments on installment loans are different each month for the life of the loanb. payments on balloon loans are same each month for the life of the loanc. payments on balloon loans are huge in the beginning and then decrease for the life of the loand. payments on installment loans are the same each month for the life of the loan d. payments on installment loans are the same each month for the life of the loan
Amortization is:a. the distribution of payments over seasb. the distribution of people over seasc. the distribution of people over timed. the distribution of payments over time d. the distribution of payments over time
An amortization schedule will show how each payment in an installment loan is:a. separated into people and interestb. separated into principal and incomec. separated into people and incomed. separated into principal and interest d. separated into principal and interest
A prepayment penalty is:a. a giant fee charged just because the lender is a jerkb. a giant fee charged if you pay too latec. a giant fee charge if you pay as promisedd. a giant fee charged if you pay too early d. a giant fee charged if you pay too early
A prepayment penalty benefits who:a. the lenderb. the peoplec. the governmentd. the borrower a. the lender
With ________ credit, the borrower must repay the amount owed plus interest in a specific number of equal payments, usually monthly.a. revolvingb. open-endedc. installmentd. periodic c. installment
You can continue to make use of an open-ended credit account as long as:a. the amount owed is below your credit limitb. you can afford the monthly repaymentsc. the amount owed is equal to or below your credit limitd. you payments are on time a. the amount owed is below your credit limit
VISA and MasterCard are examples ofa. installment creditb. travel and entertainment accountsc. thirty-day accountsd. bank credit card accounts d. bank credit card accounts
The APR for a charge account is divided by the number of billing periods per year is thea. monthly percentage rate (MPR)b. average daily balancec. monthly finance charged. periodic rate d. periodic rate
The ending balance on your credit card statement last month was $1200 and your average daily balance was $900. The APR on the card is 18 percent. What was the finance charge for the month?a. $13.50b. $18.00c. $16.20d. $21.60 a. $13.50
Being over 60 days past-due on a credit card can result in your lender raising the APR on that card and on other-credit cards you have with the lender. This new APR is referred to as a(n)a. error rateb. cumulative ratec. penalty rated. nominal rate c. penalty rate
Financial institutions that offer a variety of consumer loans from funds obtained primarily from depositors are calleda. consumer finance companiesb. depository institutionsc. commercial banksd. mutual funds b. depository institutions
A lender whose primary business is financing the sales of its parent company such as a vehicle manufacturer is called a a. sales finance companyb. credit unionc. consumer finance companyd. pawnshop a. sales finance company
A loan backed up by collateral is referred to as a(n)a. secured loanb. installment loanc. signature loand. line of credit a. secured loan
Which type of purchase loan calls for title of the property involved to be transferred to the buyer only when the final payment has been made?a. installment purchase agreementb. secured mortgagec. simple-interest loand. conditional sales contract d. conditional sales contract
Charging interest periodically over the course of a loan based upon the unpaid balance each period is referred to as the _________ _________ methoda. discount interestb. add-on interestc. declining balanced. simple interest c. declining balance
What is the monthly payment for a $200,000, three-year, 10-percent loans with the interest calculated using the add-on method?a. $167b. $556c. $611d. $722 d. $722
You wish to obtain a $1,000 single-payment loan and have four loan options to choose from. Loan A is a two-year loan with an 8 percent APR and finance charge of $160. Loan B is a one-year loan with a 9 percent APR and a finance charge of $90. Loan C is a two-year loan with an 11 percent APR and a finance charge of $220. Loan D is a discount method loan for one year with a finance charge of $85. Which loan is the best deal?a. Loan Ab. Loan Bc. Loan Cd. Loan D a. Loan A
When buying a vehicle, pre-shopping research would focus on all of the following excepta. cost of car insuranceb. trade-in valuec. gap insuranced. cost of financing c. gap insurance
Before interacting with a seller in any major way when making a major expenditure you should do all of the following excepta. prioritize your wantsb. do pre-shopping researchc. fit the expenditure into your budgetd. comparison shopping d. comparison shopping
Which of the following is the retail price set by a vehicle manufacturer and posted on the window sticker, and is higher than the price you should expect to pay?a. invoice priceb. manufacturer’s suggested retail pricec. dealer invoice priced. initial negotiation price b. manufacturer’s suggested retail price
If you finance a vehicle through the dealer to get a low APR and the dealer will keep the rebate, you shoulda. file a complaint in order to get the rebate, toob. ignore the fact that you lost the rebatec. add the rebate to your first monthly paymentd. add the rebate to the finance charge on the dealer loan and recalculate the APR to compare to financing you have arranged on your time d. add the rebate to the finance charge on the dealer loan and recalculate the APR to compare to financing you have arranged on your own
The term “best buy” refers to a product witha. lowest price without regard for qualityb. acceptable quality at a fair pricec. highest quality at a reasonable priced. lowest quality without regard for price b. acceptable quality at a fair price
Which of the following is a disadvantage of an open-end lease as compared to a closed-end lease?a. other things being equal, an open-end lease will cost more per monthb. with an open-end lease, you cannot purchase the vehicle at the end of the lease periodc. you may be required to come up with more money at the end of an open-end lease periodd. under an open-end lease the buyer takes title to the vehicle during the lease period c. you may be required to come up with more money at the end of an open-end lease period
All negotiation for buying a new car should start with getting a firm commitment from the dealer on thea. price of the carb. trade-in value of your old carc. price of the service contractd. interest rate on financing a. price of the car
Attempts by a vehicle seller to raise the price on a product that had previously been agreed upon when it is time to sign the final contract is referred to as a. lowballingb. highballingc. haggingd. negotiating a. lowballing
In which step of the buying process would you come to an agreement with a seller on the actual terms of the deal?a. comparison shoppingb. making the decisionc. comparison pricingd. negotiating d. negotiating
Which of the following related to the legal right to back out of a signed contract is not a myth?a. 3-day cooling off rule for sales occurring away from the seller’s usual place of businessb. 7-day recission period on vehicle salesc. 3-day cooling off rule for all purchases from established businessesd. buyer’s remorse a. 3-day cooling off rule for sales occurring away from the seller’s usual place of business
The term used for the process of righting the wrong when a product or service is not satisfactory isa. negotiationb. redressc. rebalancingd. plaintiff b. redress
Under which of the following dispute resolution procedures does a neutral third party make a judgement that is binding on at least one of the parties?a. arbitrationb. small claims courtc. civil courtd. mediation a. arbitration
A loan pre-approval:a. happens before you make a big purchaseb. happens after you eat a big mealc. happens before you eat a big meald. happens after you make a big purchase a. happens before you make a big purchase
A loan pre-approval has the effect of:a. showing a buyer you are seriousb. showing off your absc. showing off your assetsd. showing your family and friends that you are serious a. showing a buyer you are serious
Extended warranties are NOT available for:a. your refrigeratorb. your cell phonec. your computerd. your marriage d. your marriage
Extended warranties are:a. a good idea because they will certainly pay offb. not always worth itc. a good idea because they give you peace of mindd. always worth it b. not always worth it
The dealer invoice price tells you:a. what was the cost to Santa Clausb. what was the cost to the manufacturerc. what was the cost to the sellerd. what was the cost to the dealer d. what was the cost to the dealer
The dealer holdback is:a. a discount from the manufacturer to the dealerb. a discount from the dealer to the manufacturerc. a discount from the manufacturer directly to youd. when a dealer keeps huge secret from you a. a discount from the manufacturer to the dealer
rebate an inducement to purchase that takes the form of a partial refund of a car’s purchase price
impulse purchase the purchase of a good or service without fully considering your priorities and the availability of any alternatives
lease an arrangement in which a lessee receives the use of an item, such as a car or a house, in exchange for scheduled payments for a fixed period
dealer holdback this rebate, calculated as a percentage of the vehicle’s invoice price, that increases the dealer’s profit and allows a vehicle to be sold for less than either the vehicle’s sticker price or the dealer’s invoice price
sticker price the popular name given to the manufacturer’s suggested retail price (MSRP), which by federal regulation is posted on the vehicle’s window
residual value this item refers to the estimated value of a leased asset at the end of the lease period
low-balling the practice involving unethical car dealers who first quote a low sales price to induce a potential customer to make an offer and then attempt to add costly add-ons to the transaction prior to the signing of the contract
gross capitalized cost the price of a leased asset as specified in the lease agreement, which includes the negotiated cost of the vehicle and any applicable fees and taxes
gap insurance an insurance policy that pays the policyholder the difference between the actual cash value (AVC) that the insurance company pays when a vehicle is declared a total loss and the outstanding loan amount on the purchase of the vehicle

Leave a Reply

Your email address will not be published. Required fields are marked *