Finance exam 3

c. Pretending to be an employee of a financial institution

Which of the following is an example of phishing?

b. Buying a short-lived good

Which of the following is an improper use of credit?

d. Political affiliations

Which of the following is not requested in a typical credit card application?

b. Total Monthly Consumer Credit Payments ÷ Monthly Take-Home Pay

Which of the following is the correct formula for calculating the debt safety ratio?

Credit unions

Which of the following sources of consumer loans often has the most favorable terms for borrowers?

They provide installment loans to their members

Which of the following statements regarding credit unions is true?

Collateral is an item of value used to secure the principal portion of a loan

Which of the following statements regarding loan collateral is true?

a. No annual fee and a grace period

William uses his bank credit card frequently; however, he always pays off the total outstanding balance on the card each month. What should William look for in a credit card given the way he uses one?

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

With a bank credit card, you can often avoid interest charges if:

a. 60 days

. Loan repayment under the Parent Loans for Undergraduate Students (PLUS) program normally begins within _____ of loan disbursement.

e. 7

. Most of your debts would be totally discharged under Chapter _____ of the federal bankruptcy law.

e. annual percentage rate (APR) method excluding new purchases.

. The most expensive method for determining finance charges on revolving credit would be the:

d. variable-rate

. The rate of interest charged on _____ loans changes periodically in keeping with prevailing market conditions.

d. inform the issuer in writing

. When canceling a credit card, you should cut up the card and _____ that you are canceling your account.

e. Bank debit cards

. Which of the following cards provides direct access to your checking account?

d. Pretexting

. Which of the following modes of identity theft involves thieves obtaining your personal information from financial institutions and other sources under false pretenses?

d. A consumer loan is used to finance the purchase of very expensive items.

. Which of the following statements regarding a consumer loan is true?

e. The interest rates on fixed-rate-loans have periodic adjustment dates, at which time monthly payments are adjusted.

. Which of the following statements regarding fixed-rate loans is true?

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

. Which of the following will lead to a poor credit rating?

e. pay off the entire balance on or before the due date.

Any credit card purchase will effectively be an interest-free loan if you have a zero balance when the grace period begins and you:

Affinity Cards

Are the credit cards issued in conjuntion with a sponsoring group most commonly some type of charitable, politcial, or professional organization

d. amounts owed.

The FICO credit scoring system assigns points according to:

Individual creditors

The decision about whether or not to grant you credit will be made by

Open savings and checking accounts

To establish credit you should first?

c. 20%

. Jenny's monthly take-home pay is $5,000, and her total monthly payments are $1,000. Which of the following is Jenny's debt safety ratio?

An expensive dinners

An expensive improper use of extended credit is buying

e. debit card

. A payment made using a(n) _____ is equivalent to paying by cash.

d. allows a debtor to retain some other personal assets as per federal regulations.

. A straight bankruptcy:

a. relatives

. Borrowing from _____ is not advisable.

b. they usually take only the best credit risks.

. Commercial banks are able to charge lower interest rates than other lending institutions because:

a. $675

. If Liza's debt safety ratio is 15% and her monthly take-home pay is $4,500, which of the following equals her total monthly payments?

installment

A ______ loan is repaid in a series of fixed l, scheduled payments rather then in a hump sum.

b. reward card.

A frequent flyer card can be aptly classified as a(n):

lien

A legal claim that allows creditors to liquidate loan collateral.

b. lien.

A legal claim that allows lenders to liquidate loan collateral, in case the borrower defaults, is called a:

e. the loan is paid off by taking out another loan.

A loan rollover means that:

low introductory rate

A person who pays off his credit balance every month should look for a credit card with a _________.

d. credit bureau

A(n) _____ is a type of reporting agency that collects and sells credit information about individual borrowers.

c. eliminates most of the financial obligations of the borrower.

Chapter 7 of the bankruptcy code:

e. retail charge cards

Credit offered in the form of _____ is most common in department and clothing stores and other high-volume outlets, where customers are likely to make several purchases each month.

Request a correction

If the information in an individual borrowers credit report contains an error, he or she is entitled to:

c. declare bankruptcy.

If you are expecting difficulties in making your payments, it is recommended that you: a. transfer your debt to another credito

debit card

James finds it difficult to manage credit but wants the convenience of using a credit card. He wants to get a card that will provide direct access to his checking account. He should get a?

no annual fee

Janey makes frequent small purchases and pays off the total outstanding balance on her credit card every month. What features is most attractive to her when searching for a credit card provider?

a. 20%

Lenders' guidelines say that you are likely to have financial difficulties if your personal credit obligations exceed _____ of your take-home pay.

c. they help build consumer loyalty.

Retail charge cards are advantageous to merchants because:

b. $12,000

Russ and Lois have a home valued at $96,000 with an outstanding mortgage of $60,000. If their lender is willing to provide a home equity loan of up to 75% of the market value of the home, how much can they borrow using a home equity loan?

Buy installment loans from consumers

Sales finance companies

c. The Wage Earner Plan

_____ involves some type of debt restructuring by establishing a debt repayment schedul

It is good to use credit for

buying a car