PF Review -Q6

Generally speaking, variable rate loans are desirable if interest rates are expected to increase over the course of the loan. T or F False
A characteristic of consumer loans is that they a. are arrived at through a formal process. b. include a repayment schedule. c. are used to purchase big-ticket durable goods and other items. d. include a negotiated contract. e. are all of these. e. are all of these.
Commercial banks generally charge lower interest rates than other lending institutions because a. they usually take only the best credit risks. b. depositors require lower rates. c. they get their funds in the open credit market. d. they make secured loans only. e. they make shorter term loans. a. they usually take only the best credit risks
A loan from the cash value of your life insurance policy would be characterized by a. increased premiums. b. unchanged death benefits available to beneficiaries. c. increased death benefits to beneficiaries. d. annual percentage rates higher than other sources. e. no specific repayment date. e. no specific repayment date
Besides the finance charge, you should also consider ____ when you shop for a consumer loan. a. collateral b. loan maturity c. repayment penalties d. total cost of the loan e. all of the above e. all of the above
Annual percentage rate is equivalent to a. add-on method. b. simple interest method. c. dollar cost of credit method. d. discount method. e. average loan balance method. b. simple interest method.
You want to borrow $1,000 at an interest rate of 10%. The most expensive method of calculating the dollar cost of the interest on this installment loan will be the a. discount method. b. double declining balance method. c. add-on method. d. past-due balance method. e. simple interest method. c. add-on method.
The monthly payment on an 8%, 36-month, add-on loan for $10,000 would be a. $344 b. $300 c. $314 d. $278 e. $380 a. $344
A legal claim that allows creditors to liquidate loan collateral is a a. loan. b. note. c. lien. d. security claim. e. none of these. c. lien.
Before taking out students loans, all the following should be considered except a. personal resources b. grants c. federal student aid d. scholarships e. all of the above e. all of the above

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