Question 1

Which of the following can result from a failure to repay a loan?

Accepted Answer

A)   Bankruptcy.
B)   Loss of income or valuable property.
C)   Loss of a good reputation.
D)   Damage to family relationships.
E)   All of the above may result from the failure to repay a loan.F) A) and B)
G) A) and E)

Question 2

Closed-end credit is used for a specific purpose and involves a specific amount.

Accepted Answer

A) True 
 B)False

Question 3

The finance charge for credit includes all of the following except

Accepted Answer

A)   Interest costs.
B)   Services charges.
C)   Credit-related insurance premiums.
D)   Appraisal fees.
E)   The amount borrowed.F) A) and E)
G) A) and B)

Question 4

Suppose you borrow $300 for one year and pay a finance charge of $20. If you repay this loan all at once after one year, what is your average balance?

Accepted Answer

A)   $20
B)   $150
C)   $160
D)   $300
E)   $320F) A) and B)
G) B) and E)

Question 5

A typical grace period offered by many credit card issuers is

Accepted Answer

A)   0-10 days.
B)   10-20 days.
C)   20-25 days.
D)   30-40 days.
E)   45-60 days.F) B) and D)
G) A) and B)

Question 6

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 B)
G) B) and D)

Question 7

Peter borrowed $225. He paid $20 interest and a service charge of $3.00. What is his finance charge?

Accepted Answer

A)   $3.00
B)   $20.00
C)   $23.00
D)   $225.00
E)   $248.00F) None of the above
G) C) and D)

Question 8

Consumer credit refers to the use of debit cards for personal needs.

Accepted Answer

A) True 
 B)False

Question 9

Consumer credit may allow businesses to be more efficient or more productive.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is often considered to offer the least expensive loans (loans with low interest) ?

Accepted Answer

A)   Banks.
B)   Finance companies.
C)   Loan companies.
D)   Parents or family members.
E)   Savings and loan associations.F) A) and B)
G) D) and E)

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

Question 13

A disadvantage of using credit is the convenience it offers when making a hotel reservation or renting a car.

Accepted Answer

A) True 
 B)False

Question 14

In the five Cs of credit, capital refers to the borrower's ability to pay additional debts.

Accepted Answer

A) True 
 B)False

Question 15

The periodic charge for the use of credit is called

Accepted Answer

A)   A line of credit.
B)   A revolving check credit.
C)   Interest.
D)   A grace period.
E)   Principal.F) A) and B)
G) B) and D)

Question 16

The longer it takes for you to pay off a bill, the less interest you pay.

Accepted Answer

A) True 
 B)False

Question 17

In the five Cs of credit, capacity refers to the borrower's trustworthiness and stability.

Accepted Answer

A) True 
 B)False

Question 18

Credit bureaus get their information from all of the following sources except

Accepted Answer

A)   Banks.
B)   Credit card companies.
C)   Finance companies.
D)   References.
E)   Stores.F) B) and E)
G) A) and B)

Question 19

Which of the following questions is NOT needed before deciding how and when to make a major purchase?

Accepted Answer

A)   Do I have the cash I need for the down payment?
B)   Does the purchase fit my budget?
C)   Could I postpone the purchase?
D)   Could I use the credit I need for this purchase in some better way?
E)   All of these questions should be consideredF) B) and D)
G) C) and E)

Question 20

Which of the following electronically subtracts money from your savings or checking account to pay for goods and services?

Accepted Answer

A)   A credit card
B)   Closed-end credit
C)   A debit card
D)   A gift card
E)   A home equity loanF) A) and C)
G) B) and C)

Exam 5: Consumer Credit: Advantages, Disadvantages, Sources, and Costs

Which of the following can result from a failure to repay a loan?

Correct AnswerverifiedShow Answer

FICO scores generally range from

Correct AnswerverifiedShow Answer

A disadvantage of using credit is the convenience it offers when making a hotel reservation or renting a car.

Correct AnswerverifiedShow Answer

Suppose you borrow $300 for one year and pay a finance charge of $20. If you repay this loan all at once after one year, what is your average balance?

Correct AnswerverifiedShow Answer

In the five Cs of credit, capital refers to the borrower's ability to pay additional debts.

Correct AnswerverifiedShow Answer

Peter borrowed $225. He paid $20 interest and a service charge of $3.00. What is his finance charge?

Correct AnswerverifiedShow Answer

Which of the following questions is NOT needed before deciding how and when to make a major purchase?

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 longer it takes for you to pay off a bill, the less interest you pay.

Correct AnswerverifiedShow Answer

Credit bureaus get their information from all of the following sources except

Correct AnswerverifiedShow Answer

In the five Cs of credit, capacity refers to the borrower's trustworthiness and stability.

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

The finance charge for credit includes all of the following except

Correct AnswerverifiedShow Answer

The periodic charge for the use of credit is called

Correct AnswerverifiedShow Answer

Consumer credit refers to the use of debit cards for personal needs.

Correct AnswerverifiedShow Answer

Closed-end credit is used for a specific purpose and involves a specific amount.

Correct AnswerverifiedShow Answer

Which of the following is often considered to offer the least expensive loans (loans with low interest) ?

Correct AnswerverifiedShow Answer

A typical grace period offered by many credit card issuers is

Correct AnswerverifiedShow Answer

Consumer credit may allow businesses to be more efficient or more productive.

Correct AnswerverifiedShow Answer

Which of the following electronically subtracts money from your savings or checking account to pay for goods and services?

Correct AnswerverifiedShow Answer

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