FIN 300 CH 5-7 Quiz Questions

The average used car costs about _______ less than the average new car. Multiple Choice $0 $25,000 $1,000 $10,000 $50,000

d

The primary benefit of a home equity loan is: Multiple Choice All of these are primary benefits. The required monthly payments. Its limited availability. The deductibility of the loan interest on federal taxes. Tax-free income in the form of a loan.

d

When Sam applied for a loan, he was assured that his rate would not change if he closed within 30 to 90 days. Sam had a(n) ______ on the interest rate. Multiple Choice points PMI amortization lock escrow account

d

A partial refund of the price of a product is called a(n): Multiple Choice Coupon. Warranty. Unit price. Open date. Rebate.

e

As a result of being an armed services veteran, Dan should be eligible for a(n): Multiple Choice ARM. FHA loan. Payment cap. Negative amortization. VA loan.

e

Kelly selected a home and submitted an offer to the seller. Which of the following is correct? Multiple Choice The seller must accept her offer. The seller's price is affected by Kelly's need to buy. Her offer must have been for the asking price. Kelly will receive earnest money when she presents the offer. The seller may reject the offer and choose to provide a counteroffer.

e

Negotiation activities are part of the ____ phase of the research-based buying process. Multiple Choice pre-shopping activities evaluating alternatives postpurchase activities All of these choices are correct. selection and purchase

e

Perhaps the greatest disadvantage of using credit is: Multiple Choice The convenience offered instead of using cash. The increase in total purchasing power. The increased satisfaction during present and future income periods. The float from using credit. The temptation to overspend.

e

Private mortgage insurance: Multiple Choice Cannot be avoided. Is usually required if the down payment is less than 25%. Is part of all mortgages. Protects the buyer from financial loss if the value of the home increases. Must be terminated automatically when the homeowner's equity reaches 22% of the property value at the time the mortgage was executed.

e

The price of a leased vehicle is known as the: Multiple Choice Set price. Invoice price. Sticker price. Residual value. Capitalized cost.

e

The unit price of a 64-ounce carton of orange juice that costs $3.20 is: Multiple Choice $1.00 per ounce. $0.10 per ounce. $0.20 per ounce. $3.20 per ounce. $0.05 per ounce.

e

Trenton wants to buy a house but can provide only a 10 percent down payment. He probably will be required to have: Multiple Choice Points. Amortization. A lock. An escrow account. PMI.

e

What should a home buyer consider when evaluating a house? Multiple Choice Property values of the community Zoning laws Location of businesses and future construction projects School system All of these should be evaluated.

e

FICO scores generally range from: Multiple Choice 300 to 850. 100 to 1000. 500 to 1000. 200 to 700. 450 to 650.

a

Before buying goods and services on credit, a consumer should consider all of the following except: Multiple Choice Whether the good or service will be worth more because it was purchased with credit instead of cash. Whether purchasing now will increase efficiency. Whether purchasing now will result in a more satisfying life. Whether purchasing now will increase productivity. Whether the benefits of purchasing now will outweigh the costs.

a

Information gathering is part of the ____ phase of the research-based buying process. Multiple Choice pre-shopping activities evaluating alternatives ordering activities postpurchase activities selection and purchase

a

Lonnie wanted to sell his house but didn't know what price to ask. He should consider all of the following except: Multiple Choice His original cost. The appraised value of his home. Current mortgage rates. Demand in the housing market. Recent selling prices of comparable homes in the area.

a

Madeline wants to purchase a larger house. However, she has not yet sold her current home. She may want to include a(n) ________ in her offer. Multiple Choice contingency clause counteroffer dual agent purchase agreement appraisal

a

Most customer complaints result from the all of the following except: Multiple Choice Long product lives. Defective products. Low-quality products. Deceptive pricing. Unexpected costs.

a

Most products come with some guarantee of quality. This type of warranty states that a defective product can be fixed or replaced during a reasonable amount of time. Multiple Choice Full warranty "As-is" warranty Express warranty Implied warranty Limited warranty

a

Opal is a real estate agent who represents the buyer as well as the seller. In some states, the buyers are required to sign a disclosure acknowledging that they are aware that Opal is working as: Multiple Choice A dual agent. A purchase agreement. An appraiser. A contingency clause. An earnest money analyzer.

a

The periodic charge for the use of credit is called: Multiple Choice Interest. A revolving check credit. Principal. A grace period. A line of credit.

a

While Paul was shopping for a new chainsaw, he found a great deal on a new drill and bought it. This is an example of: Multiple Choice Impulse shopping. Warranty shopping. Trade-off shopping. Compulsive shopping. Comparison shopping.

a

Rachel Johnson has net monthly income of $2,500. She has a monthly auto loan payment of $275, a student loan payment of $150, and a credit card minimum payment of $50. What is her debt payments-to-income ratio? Multiple Choice 8% 20% 19% 13% 17%

c

According to the Fair Credit Billing Act, if a creditor fails to follow the rules that apply to correcting any billing errors, you have the right to sue for: Multiple Choice Actual damages. Actual damages plus twice the amount of any finance charges. Three times the actual damages. Finance charges only. Punitive damages.

b

Adolph has a low income and cannot afford his own attorney. He needs legal assistance and should make use of a: Multiple Choice Class-action lawsuit. Legal aid society. Lawyer. Mediator. Small claims court.

b

Credit bureaus get their information from all of the following sources except: Multiple Choice Stores. References. Credit card companies. Finance companies. Banks.

b

Georgina and Henry have a family and are looking at houses. Which of the following is correct? Multiple Choice The amount they can afford for housing will be primarily determined by the down payment. They should assess the school system in the area they want to live. They should complete all repair work themselves to increase costs. Their first home should contain all the features desired. They should avoid buying a home that needs any repairs.

b

If you want to file a complaint against a bank in connection with any of the consumer credit protection laws, you: Multiple Choice Must have at least $100,000 invested in the bank. Do not need to have an account at the bank. Must get advice from the Federal Government. Must have an account at the bank. Must have a loan outstanding at the bank.

b

Installment credit, in which the debt is repaid in equal installments over a specified period of time, exploded on the American scene with the advent of the: Multiple Choice Cell phone.Automobile.Airplane.Train.Computer.

b

Many people expect which of the following? Multiple Choice Their ability to make payments to get harder over time Their incomes to increase to make it easier to make payments on past credit purchases Using credit will increase the amount of money available to spend in the future Their interest payments to increase as their credit balances decrease All the choices are correct.

b

Paul bought some bad gasoline that damaged the gas tank of his vehicle. Multiple Choice He never should have expected any problems with buying any product, especially gas for his car. He should provide the gas station with documentation of his purchase and all repair costs. He should sue the gas station where he bought his gas. He should assume that the gas station should be able to track his purchase based on video cameras. He should do nothing.

b

The opportunity to have another person take over rent payments and live in the rental unit is called (a): Multiple Choice Lease. Subletting. Lessee. Rental agreement. Lessor.

b

What step can you take if your credit application is denied? Multiple Choice File a complaint against the merchant. Ask the reasons why you were denied credit. Borrowers do not have any rights provided by law. Reapply for credit once 30 days have passed. Sue the credit rating agency.

b

A legal document that includes information about the due date of monthly rent is called a: Multiple Choice Rental statement. Lessor. Lease. Sublease. Lessee.

c

A prearranged loan for a specified amount that a consumer can use by writing a special check is known as: Multiple Choice Installment sales credit. Single lump-sum credit. A revolving check credit. A bank credit card. Closed-end credit.

c

All of the following are warning signs of debt problems except: Multiple Choice The total balance on your credit cards increases every month. You exceed the credit limits on your credit cards. You pay your credit card bills in full each period. You use savings to pay for necessities such as food and utilities. You receive second and third payment due notices from creditors.

c

Tanya received a $1,000 loan from the bank for a vacation. The bank is using the simple interest formula for this one-year, 9 percent loan. What is her total interest? Multiple Choice $45 $1,009 $90 $9 $450

c

The minimum monthly payment on a credit card is: Multiple Choice The amount to be paid without paying interest. The amount needed to pay off the credit card in one year. The smallest amount you can pay and remain a borrower in good standing. The interest amount charged for the month. The minimum to be paid to avoid any charges or fees.

c

The owner/landlord is known as the: Multiple Choice Sublease. Lessee. Lessor. Lease. Renter.

c

This type of promotion immediately reduces the amount a family spends on groceries each week. Multiple Choice Unit pricing Rebates Coupons Open dating Warranty

c

All of the following are variable operating costs for a vehicle except: Multiple Choice Tires. Parking. Maintenance and repairs. Depreciation. Gasoline and oil.

d

Following the signing of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, a debtor seeking to erase all debts will have to wait ___ year(s) from her last bankruptcy before she can file again. Multiple Choice three seven one eight ten

d

Fredrick received a $1,400 loan from the bank for a new appliance. The bank is using the simple interest formula for this two-year, 8 percent loan. What is his total interest? Multiple Choice $112 $16 $1,416 $224 $80

d

If you are selling your house by owner, you should still enlist the assistance of: Multiple Choice A real estate agent to help with marketing efforts. A real estate agent to help with the closing. A lawyer to help stage your home. A lawyer or title company to assist with the contract, closing, and other legal matters. All of these are correct.

d

If you have a $150,000, 30-year, 5 percent mortgage, how much of your first monthly payment of $805.23 would go toward principal? Multiple Choice $625.00 $805.50 $665.28 $180.23 $7,500.00

d

If you miss payments on a home equity loan, you can lose your: Multiple Choice Furnishings. Car. Savings account. House. Retirement account.

d

Jim wants to make an offer to buy an older house. At this point, he should: Multiple Choice Move into the house. Contact the seller to purchase his lawn tools. Close the purchase transaction. Set up a home inspection. Sign his mortgage papers.

d

Resolution of any purchase concerns is part of the ____ phase of the research-based buying process. Multiple Choice evaluating alternatives pre-shopping activities selection and purchase postpurchase activities ordering activities

d

Sally has a major problem with a product and thinks that many others have had the same problem. Which of the following may be a way to resolve the problem? Multiple Choice Prepaid legal services A legal aid society Small claims court A class-action lawsuit A lawyer

d

The amount printed on a label with the suggested retail price that is posted on a vehicle is called the: Multiple Choice Residual value. Capitalized cost. Invoice price. Sticker price. Set price.

d

Which of the following is a disadvantage of renting? Multiple Choice Renting can be more convenient for those who move frequently. Renters have fewer responsibilities than home owners. Renters usually do not have to be concerned with maintenance and repairs. Taking possession of a rental unit is less expensive than buying a home. Tenants cannot take tax deductions for mortgage interest and property taxes.

e

Which of the following is an example of open-end credit? Multiple Choice An automobile loan Single lump-sum credit An installment loan for purchasing furniture A mortgage loan A department store credit card

e

Which of the following is correct about the lemon law? Multiple Choice It was enacted in 45 of the 50 states. It requires a refund for the vehicle after the owner has made repeated attempts to obtain financing. It applies when a vehicle has been out of service for 60 days. It applies to both new and used vehicle purchases. It applies to vehicles that have been serviced four times to correct the same problem or have been out of service for more than 30 days within 12 months of purchase or the first 12,000 miles.

e

While evaluating alternatives, comparison shopping will be beneficial for buying: Multiple Choice Products whose prices are the same at all retailers. One-time purchases of low-cost products. Inexpensive items. Products whose quality is the same at all retailers. Items that can be researched easily with advertisements.

e

Given the information here, what is the annual cost of owning? • Home value $ 300,000• Annual mortgage payments $ 19,200• Annual property taxes $ 4,800• Annual homeowner's insurance $ 1,200• Estimated maintenance and repairs 1 % of home value• Growth in equity $ 3,000• Tax savings (mortgage interest and property tax) $ 2,800• Estimate annual appreciation 1.5 % of home value a. $300,000b. $38,500c. $28,200d. $338,500e. $17,900

e. $17,900Total annual cost of buying = (annual Mortgage payments + annual Property taxes + annual homeowner's insurance + Maintenance and repairs) − (Growth in equity + Tax savings + Annual appreciation) = {$19,200 + $4,800 + $1,200 + (1% × $300,000)} - {$3,000 + $2,800 + (1.5% × $300,000)} = $28,200 - $10,300 = $17,900.