Fin 223 Exam 2

What should a home-buyer consider when evaluating a house

All of them

Which of the following is a disadvantage of leasing a car

At the end of the lease you have no ownership in the vehicle

Many people make mistakes when managing current cash needs. Which of these is not a frequently made mistake

Budgeting spending

Which of the following offers a full range of financial services including checking, savings, lending and other services

Commercial Bank

Which of the following is a form of housing in which the owners pay a monthly fee for maintenance of the common areas

Condominiums

Which of the following primarily provides loans for home purchases

Mortgage Company

Trenton wants to buy a house but could only provide 10% down

Private Mortgage Insurance

These products are sold by one chain of stores and are low-cost alternative to famous name brands

Private label or store brands

Collateral

Something of value that is used to secure a loan and that the lender can claim in case of default.

Capacity

The ability of the Borrower to service the loan in a timely fashion

Capital

The amount of unencumbered assets owned by the borrower used as another indicator of the borrower's ability to repay the loan

Condition

The extent to which prevailing economic conditions could affect the borrower's ability to service a loan

The tenant is the what

The leasee

Which of the following is an advantage of a car lease

The monthly lease payments are usually lower than monthly finance payments

The information gathered from your loan application and the credit bureau are factors of your credit rating

True

The largest fixed expense associated with a new automobile is depreciation

True

When Ted needs more cash than he has available his choice include liquidating savings and borrowing.

True

Your lifestyle affects your housing decisions

True

This is a written guarantee from the manufacturer that specifies the conditions under which the product can be returned replaced or repaired

Warranty

Character

A key factor in defining the Borrower's willingness to live up to the terms of the loan

Which of the following is an example of close-ended credit

A mortgage loan

Ursula wants to have an interest rate that can increase or decrease during the life of her loan. She should look for what?

Adjustable Rate Mortgage

Rick Smith and PJ Sanchez spoke about the 5 c's of lending, i call them the 5 c's of credit. You must list the 5 c's and define them.

Character, capacity, Collateral, Capital, Condition

A demand deposit is also known as a

Checking account

A savings account is also known as a demand deposit account.

False

Consumer credit refers to the use of debit cards for consumer needs

False

Prices at the local convenience store will probably be lower than at the national retailer grocery store

False

Private Mortgage Insurance is usually required if the down-payment for a home is less than 30%

False

Rental Insurance isn't important since the landlords insurance on the building includes coverage on all tenants belongings

False

Service contracts on vehicles are usually a wise financial decision

False

The FDIC ensures a deposit or savings account for up to $200,000 per ensured financial institution

False

The appearance of a used car can be deceptive when purchasing a used vehicle it is a good idea to

Have a trained and trusted mechanic of your choice check out the vehicle

The periodic charge for the use of a credit card is called what?

Interest

A credit card is a type of

Loan and Borrowing

Perhaps the greatest disadvantage of using credit is

The temptation to overspend

A commercial bank is not the same thing as a credit union.

True

A credit card holder who pays the full balance during the grace period each month is actually getting a free loan from the credit card company

True

Advantages of a lease over purchase include that the buyer can usually obtain a more expensive vehicle and the monthly lease payments are usually lower

True

Angela wanted to rent an apartment so her landlord required her to sign a lease. The lease is a legal document that defines the conditions of her rental agreement.

True

Close-ended credit is used for a specific purpose and involves a specific amount

True

FICO scores are used by creditors to predict how likely it is that you will repay a loan

True

If you think that rates will fall in the future, you should buy a long-term CD to lock in your rate now

True

In determining the purchase price of a new car a trade-in vehicle should not be mentioned until the cost of a new car has been settled

True

Lenny the landlord has the right to take legal action against Tina the tenant for non-payment of rent or destruction of property

True

When misused credit can result in

all of the above

A line of credit is

the maximum amount of money a creditor will allow a credit user to borrow