Personal Finance Exam 2 (Ch.5-8)

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A limited warranty covers all aspects of the product and does not require the buyer to incur any of the costs for shipping and repairs.

False

A regular savings account usually offers a higher rate of return to savers than other savings plan.

False

An implied warranty is usually in written form.

False

CH7- Buying credit is almost always cheaper than paying cash.

False

Cooperative action is the settlement of a difference by a third party whose decision is legally binding.

False

Credit unions frequently offer higher loan rates than other financial institutions.

False

Higher returns on savings will usually result in greater liquidity.

False

If you declare a Chapter 7 bankruptcy, you do not have to pay alimony, child support, or educational loans.

False

Inflation increases the purchasing power of money.

False

Most of the information in your credit file may be reported for only 3 years.

False

Open dating information provides consumers with information about online dating.

False

Service contracts are usually included in the cost of appliances and other high-priced items.

False

The Consumer Credit Counseling Service will refinance all of your existing debts.

False

The borrower's attitude toward his or her credit obligations is called collateral.

False

The least expensive loans are available from finance companies and retailers.

False

The more frequent the compounding, the less a person will earn on a savings account.

False

When you cosign a loan, you do not have have to guarantee this debt.

False

You may be denied credit because you receive Social Security or public assistance. (No, but you may not have enough to qualify)

False

A "free" checking account with a minimum balance of $500 has an opportunity cost of lost interest.

True

A 32-ounce package selling for $1.60 would have a unit price of 5¢ an ounce.

True

A certificate of deposit usually has limited liquidity.

True

A checking account would be considered more liquid than most other bank accounts.

True

A class action suit allows many people with the same complaint to take action as a group.

True

A debit card takes money from your account at the moment you buy goods or services.

True

A government agency designed to provide consumer information and assist with consumer complaints is the Federal Trade Commission.

True

A rate of return is the percentage increase in the value of your account or investment from earned interest.

True

A restrictive endorsement will usually include the words "for deposit only."

True

A social factor that would influence a consumer's buying decision would be the hobbies and interests they have.

True

After receiving a phone call from a debt collector, they must send you a written notice within 5 days.

True

CH5-An asset management account combines several financial services for a single fee.

True

CH6- An asset management account combines several financial services for a single fee.

True

CH8- The first phase in the buying process involves information gathering.

True

College students and young adults are very likely to misuse credit.

True

Compounding refers to interest gained on your account or investment's previously earned interest.

True

Consumer credit is based on trust in people's ability and willingness to pay bills when due.

True

Debt payments-to-income ratio is calculated by dividing monthly debt payments (not including house payments) by net monthly income.

True

Experts suggest that you spend no more than 20 percent of your net income on credit purchases.

True

For some debtors, bankruptcy has become an acceptable tool of credit management.

True

If friends or family use your name for credit without your permission, they are committing a crime.

True

If someone has stolen your identity, the Federal Trade Commission recommends that you contact the fraud departments of each of the three major credit bureaus.

True

If you default on your car loan, no advance notice is required before repossession.

True

If you have declared personal bankruptcy, that fact may be reported to credit bureaus for 10 years.

True

If you want to reduce your borrowing costs, you may need to accept conditions that lower the risk of your lender.

True

If you want to take advantage of the interest-free period on your credit card, you must pay your bill in full every month.

True

In addition to the Consumer Credit Counseling Service, universities, credit unions, military bases, and state and federal housing authorities sometimes provide credit counseling services.

True

One way to gather information about a product is to use an independent testing organization like Consumers Union.

True

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

True

Several federal government agencies publish materials to assist consumers with buying decisions and financial planning.

True

The Consumer Credit Counseling Service counseling is usually free.

True

The Federal Deposit Insurance Corporation provides deposit insurance for your money in a bank.

True

The best way to maintain your credit rating is repay your debts on time.

True

The credit bureau cannot charge you a disclosure fee if you ask to see your file within 60 days of being notified of a denial based on a credit report.

True

The fairest method of calculating interest is the average daily balance method.

True

The finance charge is the total dollar amount you pay to use credit.

True

The major criticism of service contracts is high costs and a low chance of need.

True

The money market fund offered by investment companies is a relatively liquid financial service.

True

The process of resolving consumer complaints with the use of a third party who suggests a solution through discussion and negotiation is mediation.

True

Unit pricing uses a standard unit of measurement to compare prices of packages of different sizes.

True

When interest rates are rising, a person would be served by short-term savings instruments.

True

Your debt-to-equity ratio is calculated by dividing total liabilities by net worth.

True


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