FINN Your Money and Credit

Which of the following is a nondepository institution? a. A credit union b. A savings and loan association c. A commercial bank d. A consumer finance company e. A savings bank

d. A consumer finance company

Cash management helps in personal financial planning. a. True b. False

a. True

You can hold an account with a mutual fund that allows you to write a limited number of checks. a. True b. False

a. True

If a loan has a prepayment penalty, there will be an additional cost to repay the loan early: a. if the lender wants to recover part of the full interest that would have been earned. b. if the borrower has defaulted on any monthly payment. c. if the loan is repaid before the first payment is due. d. if the loan is not repaid before the loan maturity date. e. if the loan is prepaid 3 months before the loan maturity.

a. if the lender wants to recover part of the full interest that would have been earned.

Credit unions lend money to qualified people who are their: a. members. b. suppliers. c. employees. d. stockholders. e. policyholders.

a. members.

Which of the following will lead to a poor credit rating? a. Opening and using a charge account b. Applying for a long-term loan and occasionally being late with a payment c. Making payments ahead of schedule d. Discussing with the lender if you foresee difficulty in making a payment e. Opening checking and savings accounts

b. Applying for a long-term loan and occasionally being late with a payment

Always paying cash helps in establishing a high level of creditworthiness. a. True b. False

b. False

Cash is the only kind of liquid asset. a. True b. False

b. False

Credit cards with very low minimum payment requirements are in the consumers' best interest. a. True b. False

b. False

Using credit is the ideal way to meet basic living expenses. a. True b. False

b. False

f your debt safety ratio works out to 10%, you are relying too heavily on credit. a. True b. False

b. False

Funds in commercial banks are protected by the: a. National Credit Union Administration (NCUA). b. Federal Depositors Assurance Corporation (FDAC). c. Federal Deposit Insurance Corporation (FDIC). d. Savings Association Insurance Fund (SAIF). e. National Credit Union Share Insurance Fund (NCUSIF).

c. Federal Deposit Insurance Corporation (FDIC).

Which of the following statements regarding loan maturity is true? a. The longer the loan maturity, the higher the monthly payments. b. The longer the loan maturity, the lower the total cost of borrowing. c. The longer the loan maturity, the higher the amount of interest paid. d. The shorter the loan maturity, the lower the monthly payments. e. The shorter the loan maturity, the higher the total cost of borrowing. Hide Feedback

c. The longer the loan maturity, the higher the amount of interest paid.

Compared to other depository financial institutions, credit unions: a. have a greater number of branches. b. have a greater number of account holders. c. charge lower rates on loans to their members. d. are more beneficial to all kinds of consumers. e. pay lower interest on savings to their members.

c. charge lower rates on loans to their members.

Cash and near-cash resources are known as: a. noncash assets. b. noncurrent assets. c. liquid assets. d. fixed assets. e. long-lived assets.

c. liquid assets.

Credit unions are: a. available to the general public. b. mortgage lenders. c. member-owned financial cooperatives. d. large institutions when compared with commercial banks. e. special commercial lenders.

c. member-owned financial cooperatives.

With a bank credit card, you can often avoid interest charges if: a. the account balance is below the credit limit. b. at least half the account balance is paid every month. c. the account balance is paid in full every month. d. the account is a revolving credit account. e. the minimum payment is made every month.

c. the account balance is paid in full every month.

Which of the following is an improper use of credit? a. Spreading payments within a budget b. Buying a home c. Meeting a financial emergency d. Buying a short-lived good e. Purchasing a big-ticket item

d. Buying a short-lived good

Convenience is a reason for the growth in popularity of: a. insurance companies. b. mutual savings banks. c. savings and loan associations. d. Internet banks. e. credit unions.

d. Internet banks.

To establish credit, you should first: a. arrange for a small loan. b. arrange for a large loan from close relatives. c. use credit extensively. d. open savings and checking accounts. e. pay cash for all purchases.

d. open savings and checking accounts.

As a percent of take-home pay, monthly consumer credit payments should not exceed: a. 25%. b. 5%. c. 10%. d. 15%. e. 20%.

e. 20%

_____ is a reason that people use credit. a. Being able to afford impulse purchases b. Being able to increase disposable income c. Greater affordability for a luxurious lifestyle d. Being able to provide payments for living beyond one's means e. Being able to meet a financial emergency

e. Being able to meet a financial emergency

Which of the following is a major reason to use credit? a. Monthly payment of utility bills b. Weekly purchase of food c. Regular payment of small cash outlays d. Frequent impulse purchases e. Occasionally for convenience

e. Occasionally for convenience

Money market deposit accounts: a. pay the lowest interest rates of any bank accounts with check-writing facility. b. are offered only by credit unions. c. have floating maturity dates. d. allow free unlimited check writing every month. e. are federally insured.

e. are federally insured.

Low interest rates that have persisted since the financial crisis of 2008-2009 have been beneficial to: a. share investors. b. savers. c. students. d. retirees. e. big banks

e. big banks