Question 1

If you receive a phone call from a debt collector, s/he 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 C)

Question 2

By evaluating your credit options, you may:

Accepted Answer

A)   reduce your finance charges.
B)   reconsider your decision to borrow money.
C)   discover a less expensive type of loan.
D)   find a lender that charges a lower rate.
E)   All of theseF) C) and D)
G) B) and C)

Question 3

Patricia Newton is going to buy a new car, and she needs to apply for a loan to cover the purchase. She knows she can get a loan for up to 6 years, but she would prefer a shorter-term loan. She selects a 4-year loan. Patricia reducing her lender's risk by:

Accepted Answer

A)   sharing the interest rate risk.
B)   pledging collateral.
C)   paying a larger cash deposit.
D)   repaying the loan faster.
E)   sharing inflation risk with her lender.F) B) and D)
G) C) and D)

Question 4

If creditors add finance charges after subtracting payments made during the billing period, this is called the:

Accepted Answer

A)   APR method.
B)   discount method.
C)   previous balance method.
D)   adjusted balance method.
E)   average daily balance method.F) A) and E)
G) A) and B)

Question 5

Shelly Sanders gets a loan for $3,000 and repays the loan in 12 monthly payments of $258 per month. Under the rule of 78s, what is the amount of interest included in her first payment?

Accepted Answer

A)   $16.00
B)   $14.77
C)   $8.96
D)   $4.87
E)   $1.23F) D) and E)
G) B) and E)

Question 6

Both Chapter 7 and Chapter 13 bankruptcy are considered an easy way out of debt.

Accepted Answer

A) True 
 B)False

Question 7

You can often obtain medium-priced loans from:

Accepted Answer

A)   parents or family members.
B)   American Express.
C)   Diners Club.
D)   finance companies.
E)   commercial banks and credit unions.F) B) and E)
G) A) and B)

Question 8

The most commonly purchased type of credit insurance is:

Accepted Answer

A)   credit life insurance.
B)   credit accident insurance.
C)   credit health insurance.
D)   credit property insurance.
E)   credit disability insurance.F) All of the above
G) B) and C)

Question 9

Henry Garrison starts the month with a balance on his credit card of $1,000. The average daily balance for the month including purchase is $883. The average daily balance for the month excluding new purchase is $750. The bank charges 1.5 percent per month and uses the average daily balance including new purchases method. What would Henry'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 B)
G) A) and E)

Question 10

The Truth in Lending law does not set the interest rates or tell the creditor how to make interest calculations.

Accepted Answer

A) True 
 B)False

Question 11

The Fair Debt Collection Practices Act regulates the ways debt collection agencies do business.

Accepted Answer

A) True 
 B)False

Question 12

According to consumer affairs experts, the nation's number one family financial problem is:

Accepted Answer

A)   poor money management.
B)   over-indebtedness.
C)   medical costs.
D)   insurance costs.
E)   unemployment.F) D) and E)
G) C) and D)

Question 13

Who financially supports the Consumer Credit Counseling Service?

Accepted Answer

A)   National Foundation for Consumer Credit
B)   Community-minded firms and individuals
C)   Federal Reserve Banks
D)   The Federal Home Loan Bank
E)   TaxpayersF) A) and D)
G) A) and C)

Question 14

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) C) and D)
G) C) and E)

Question 15

Credit unions will provide loans to non-members in some situations.

Accepted Answer

A) True 
 B)False

Question 16

The Consumer Credit Counseling Service counseling is usually free.

Accepted Answer

A) True 
 B)False

Question 17

There are no costs involved in filing for a bankruptcy.

Accepted Answer

A) True 
 B)False

Question 18

Which method of payment is likely to be the least expensive in the long run?

Accepted Answer

A)   Bank credit card
B)   Check written on a home equity line of credit
C)   Cash
D)   Store credit card
E)   Cash advance on a Visa credit cardF) All of the above
G) A) and B)

Question 19

The two most common methods of calculating interest are compound and simple interest formulas.

Accepted Answer

A) True 
 B)False

Question 20

Parents or family members are often the source of the least expensive loans.

Accepted Answer

A) True 
 B)False

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

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

Correct Answer
verified

The Consumer Credit Counseling Service counseling is usually free.

Correct Answer
verified

According to consumer affairs experts, the nation's number one family financial problem is:

Correct Answer
verified

You can often obtain medium-priced loans from:

Correct Answer
verified

Parents or family members are often the source of the least expensive loans.

Correct Answer
verified

The Fair Debt Collection Practices Act regulates the ways debt collection agencies do business.

Correct Answer
verified

Patricia Newton is going to buy a new car, and she needs to apply for a loan to cover the purchase. She knows she can get a loan for up to 6 years, but she would prefer a shorter-term loan. She selects a 4-year loan. Patricia reducing her lender's risk by:

Correct Answer
verified

There are no costs involved in filing for a bankruptcy.

Correct Answer
verified

Who financially supports the Consumer Credit Counseling Service?

Correct Answer
verified

Correct Answer
verified

The Truth in Lending law does not set the interest rates or tell the creditor how to make interest calculations.

Correct Answer
verified

By evaluating your credit options, you may:

Correct Answer
verified

Which method of payment is likely to be the least expensive in the long run?

Correct Answer
verified

The most commonly purchased type of credit insurance is:

Correct Answer
verified

Credit unions will provide loans to non-members in some situations.

Correct Answer
verified

The two most common methods of calculating interest are compound and simple interest formulas.

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

Both Chapter 7 and Chapter 13 bankruptcy are considered an easy way out of debt.

Correct Answer
verified

If creditors add finance charges after subtracting payments made during the billing period, this is called the:

Correct Answer
verified

Shelly Sanders gets a loan for $3,000 and repays the loan in 12 monthly payments of $258 per month. Under the rule of 78s, what is the amount of interest included in her first payment?

Correct Answer
verified

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

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

Correct AnswerverifiedShow Answer

The Consumer Credit Counseling Service counseling is usually free.

Correct AnswerverifiedShow Answer

According to consumer affairs experts, the nation's number one family financial problem is:

Correct AnswerverifiedShow Answer

You can often obtain medium-priced loans from:

Correct AnswerverifiedShow Answer

Parents or family members are often the source of the least expensive loans.

Correct AnswerverifiedShow Answer

The Fair Debt Collection Practices Act regulates the ways debt collection agencies do business.

Correct AnswerverifiedShow Answer

Patricia Newton is going to buy a new car, and she needs to apply for a loan to cover the purchase. She knows she can get a loan for up to 6 years, but she would prefer a shorter-term loan. She selects a 4-year loan. Patricia reducing her lender's risk by:

Correct AnswerverifiedShow Answer

There are no costs involved in filing for a bankruptcy.

Correct AnswerverifiedShow Answer

Who financially supports the Consumer Credit Counseling Service?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Truth in Lending law does not set the interest rates or tell the creditor how to make interest calculations.

Correct AnswerverifiedShow Answer

By evaluating your credit options, you may:

Correct AnswerverifiedShow Answer

Which method of payment is likely to be the least expensive in the long run?

Correct AnswerverifiedShow Answer

The most commonly purchased type of credit insurance is:

Correct AnswerverifiedShow Answer

Credit unions will provide loans to non-members in some situations.

Correct AnswerverifiedShow Answer

The two most common methods of calculating interest are compound and simple interest formulas.

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

Both Chapter 7 and Chapter 13 bankruptcy are considered an easy way out of debt.

Correct AnswerverifiedShow Answer

If creditors add finance charges after subtracting payments made during the billing period, this is called the:

Correct AnswerverifiedShow Answer

Shelly Sanders gets a loan for $3,000 and repays the loan in 12 monthly payments of $258 per month. Under the rule of 78s, what is the amount of interest included in her first payment?

Correct AnswerverifiedShow Answer

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