Chapter 5

If Vince charged $200 on his credit card with 18% APR and he paid his balance in full within the grace period, how much was he required to pay?

$200.00

Experts suggest that the debt payments-to-income ratio should be a maximum of

20%

What are the interest cost and the total amount due on a six-month loan of $2,100 at 12 percent simple annual interest?

Interest Cost: $126 Total amount Due: $2,226

Which is NOT true about the Fair Credit Reporting Act?

It gives borrowers the right to know why they are denied credit.

When calculating the debt-to-equity ratio, the following is NOT included:

Mortgage balance.

Credit files can include all of the following except

Race or nationality.

A cash advance

Requires you to pay interest every day until you repay the cash advance

A loan that must be repaid in total on a specified day, usually within 30 to 90 days, is

Single lump-sum credit.

Madeline Rollins is trying to decide whether she can afford a loan she needs in order to go to chiropractic school. Right now, Madeline is living at home and works in a shoe store, earning a gross income of $1,180 per month. Her employer deducts a total of $280 for taxes from her monthly pay. Madeline also pays $170 on several credit card debts each month. The loan she needs for chiropractic school will cost an additional $250 per month. Calculate her debt payments-to-income ratio with and without the college loan. (Remember the 20 percent rule.)

With College Loan: 46.67% Without College Loan: 18.89% No she cannot currently afford the school loan.

Which of the following is an example of closed-end credit?

A mortgage loan.

Joshua borrowed $500 on January 1, 2017, and paid $30 in interest. The bank charged him a service charge of $15. He paid it all back at once on December 31, 2017. What was the APR?

APR= 9.0%

Which of the following is NOT one of the three major credit bureaus?

FICO.

The Equal Credit Opportunity Act (ECOA) prohibits a lender from discriminating based on

All of these are prohibited.

A few years ago, Simon Powell purchased a home for $235,000. Today, the home is worth $420,000. His remaining mortgage balance is $185,000. Assuming that Simon can borrow up to 80 percent of the market value, what is the maximum amount he can currently borrow against his home?

Amount available for borrowing: $151,000

The question "What are your assets and net worth?" relates to

Capital.

Molly purchased a $1,500 dishwasher from Best Appliances. She will make 12 equal payments over the next year to pay for it. She is using

Closed-end credit.

Robert Sampson owns a townhouse valued at $182,000 and still has an unpaid mortgage of $147,000. In addition to his mortgage, he has the following liabilities: Visa$740 MasterCard $350 Discover card $540 Education loan $2,400 Personal bank loan $350 Auto loan $5,700 Total$10,080 Robert's net worth (not including his home) is about $36,000. This equity is in mutual funds, an automobile, a coin collection, furniture, and other personal property.

Debt-to-equity Ratio: 0.28 No he has not reached the upper limit of debt obligations.

Sam is comparing the costs of two loans. The principal amount of each loan is $5,000. One is due in one year and the other is due in four years. Both have the same stated rate of annual interest. Which of the following is true?

The interest charges for the one-year loan will be lower than the interest charges for the four-year loan.