Question 1

The expected rate of inflation should not be considered when determining the amount of interest a creditor should charge.

Accepted Answer

A) True 
 B)False

Question 2

The Truth in Lending Act requires that creditors explain how they calculate the finance charge.

Accepted Answer

A) True 
 B)False

Question 3

The use of property or savings to secure a loan relates to

Accepted Answer

A)   Character.
B)   Capacity.
C)   Capital.
D)   Collateral.
E)   Conditions.F) A) and B)
G) B) and E)

Question 4

Becka borrowed $100 from her cousin at the rate of 6% per year.If the inflation rate was 2% that year,what is her cousin's actual rate of return on the loan?

Accepted Answer

A)   2%
B)   4%
C)   6%
D)   8%
E)   10%F) A) and E)
G) None of the above

Question 5

Although credit allows immediate satisfaction of needs and desires,a greater advantage is that it increases total purchasing power.

Accepted Answer

A) True 
 B)False

Question 6

Timothy Carter has net monthly income of $3,800.He has a monthly auto loan payment of $350,a student loan payment of $150,a mortgage payment of $1,200,and a credit card minimum payment of $45.What is his debt-payments-to-income ratio?

Accepted Answer

A)   13.2%
B)   14.3%
C)   36.7%
D)   42.0%
E)   45.9%F) B) and E)
G) A) and E)

Question 7

A loan that must be repaid in total on a specified day,usually within 30 to 90 days,is

Accepted Answer

A)   A credit card.
B)   An installment cash credit.
C)   A bank line of credit.
D)   Open-end credit.
E)   Single lump-sum credit.F) A) and B)
G) A) and D)

Question 8

If you are denied credit,

Accepted Answer

A)   You have a legal right to sue the credit bureau.
B)   Your parent can purchase a copy of your credit report.
C)   You have a legal right to sue the company that denied you credit.
D)   The denial will remain in your credit file for 10 years.
E)   You are entitled to a free copy of your credit report.F) A) and D)
G) B) and D)

Question 9

Compare closed-end credit with open-end credit.

Accepted Answer

With closed-end credit,a consumer pays b...

Question 10

According to law,a creditor may threaten your credit rating while you are negotiating a billing dispute.

Accepted Answer

A) True 
 B)False

Question 11

According to the Fair Credit Billing Act of 1975,a creditor must adjust the disputed amount in your account or tell you why the bill is correct within 30 days.

Accepted Answer

A) True 
 B)False

Question 12

FICO scores generally range from

Accepted Answer

A)   100 to 1000.
B)   200 to 700.
C)   350 to 850.
D)   450 to 650.
E)   500 to 1000.F) C) and D)
G) B) and D)

Question 13

A credit file can include your spouse's name and Social Security number.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is NOT correct?

Accepted Answer

A)   Using credit can result in a greater chance of bankruptcy.
B)   Using credit can decrease the amount of money that will be available to spend in the future.
C)   Using credit offers convenience when shopping on the Internet.
D)   Using credit cards typically offer a "float" of up to 10 days.
E)   Using credit allows a consumer to shop without carrying a large amount of cash.F) B) and D)
G) A) and D)

Question 15

The annual percentage rate is lower than the stated rate for loans that are repaid in monthly payments.

Accepted Answer

A) True 
 B)False

Question 16

If you double the monthly payment for a credit card,the loan will be paid off in

Accepted Answer

A)   Half the time.
B)   Less than half the time.
C)   More than half the time.
D)   The additional payment will have no impact.
E)   Not enough information is available to answer.F) A) and D)
G) C) and D)

Question 17

Acme Home Lending offers home equity loans up to 80% of the home value for its customers.If Sally Johnson has a home valued at $200,000 and a current mortgage of $50,000,how much can she borrow in a home equity loan from Acme?

Accepted Answer

A)   $50,000
B)   $80,000
C)   $110,000
D)   $150,000
E)   $160,000F) All of the above
G) D) and E)

Question 18

You should keep a record of your credit card number separate from your card.

Accepted Answer

A) True 
 B)False

Question 19

Who is responsible for a loan repayment?

Accepted Answer

A)   The store granting credit
B)   The credit card company
C)   The government
D)   The cosigner
E)   The bankF) C) and D)
G) A) and E)

Question 20

Patrick Guitman has net annual income of $48,000.He has monthly payments as follows:

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> What is his debt-payments-to-income rat...

Exam 5: Consumer Credit: Advantages, Dis-Advantages, Sources, and Costs

A credit file can include your spouse's name and Social Security number.

Correct AnswerverifiedShow Answer

Timothy Carter has net monthly income of $3,800.He has a monthly auto loan payment of $350,a student loan payment of $150,a mortgage payment of $1,200,and a credit card minimum payment of $45.What is his debt-payments-to-income ratio?

Correct AnswerverifiedShow Answer

According to the Fair Credit Billing Act of 1975,a creditor must adjust the disputed amount in your account or tell you why the bill is correct within 30 days.

Correct AnswerverifiedShow Answer

The Truth in Lending Act requires that creditors explain how they calculate the finance charge.

Correct AnswerverifiedShow Answer

Who is responsible for a loan repayment?

Correct AnswerverifiedShow Answer

If you are denied credit,

Correct AnswerverifiedShow Answer

Becka borrowed $100 from her cousin at the rate of 6% per year.If the inflation rate was 2% that year,what is her cousin's actual rate of return on the loan?

Correct AnswerverifiedShow Answer

Although credit allows immediate satisfaction of needs and desires,a greater advantage is that it increases total purchasing power.

Correct AnswerverifiedShow Answer

If you double the monthly payment for a credit card,the loan will be paid off in

Correct AnswerverifiedShow Answer

You should keep a record of your credit card number separate from your card.

Correct AnswerverifiedShow Answer

A loan that must be repaid in total on a specified day,usually within 30 to 90 days,is

Correct AnswerverifiedShow Answer

The annual percentage rate is lower than the stated rate for loans that are repaid in monthly payments.

Correct AnswerverifiedShow Answer

FICO scores generally range from

Correct AnswerverifiedShow Answer

Patrick Guitman has net annual income of $48,000.He has monthly payments as follows:

Correct Answerverified What is his debt-payments-to-income rat...View AnswerShow Answer

Compare closed-end credit with open-end credit.

Correct AnswerverifiedWith closed-end credit,a consumer pays b...View AnswerShow Answer

The use of property or savings to secure a loan relates to

Correct AnswerverifiedShow Answer

Acme Home Lending offers home equity loans up to 80% of the home value for its customers.If Sally Johnson has a home valued at $200,000 and a current mortgage of $50,000,how much can she borrow in a home equity loan from Acme?

Correct AnswerverifiedShow Answer

Which of the following is NOT correct?

Correct AnswerverifiedShow Answer

The expected rate of inflation should not be considered when determining the amount of interest a creditor should charge.

Correct AnswerverifiedShow Answer

According to law,a creditor may threaten your credit rating while you are negotiating a billing dispute.

Correct AnswerverifiedShow Answer

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What is his debt-payments-to-income rat...
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With closed-end credit,a consumer pays b...
View Answer

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Correct Answer
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