Personal Finance edited

Which one of the following is not a source that provides data to credit bureaus?

Internal Revenue Service

The value of items owned minus the amounts owed to others equals:

Net Worth

People are commonly overwhelmed by the many influences on personal financial decisions. What are the factors affecting financial planning?

Personal values, household situation, age, income level, marital status, employment situation, and economic conditions.

Chapter 7 bankruptcy is also known as straight bankruptcy.

True

Credit bureaus obtain their data from banks, finance companies, merchants, credit card companies, other creditors, and court records.

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

In a Chapter 13 bankruptcy, the debtor normally keeps all or most of his or her property.

True

In a straight bankruptcy, many, but not all, debts are forgiven.

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

Interest is a periodic charge for the use of credit, or other finance charges.

True

Many retailers use open-end credit.

True

The Consumer Credit Counseling Service counseling is usually free.

True

The Truth in Lending law does not set the interest rates or tell the creditor how to make interest calculations.

True

With a revolving line of credit, borrowings are permitted up to a specified limit and for a stated period.

True

You have the right to file your own bankruptcy case and represent yourself at all court hearings.

True

You have two choices in declaring personal bankruptcy: Chapter 7 and Chapter 13 bankruptcy.

True

David Wynn gets a personal loan from his credit union for $1,000. David will make monthly payments $85.15 over the next year to repay the loan. What type of financial service is David using?

borrowing service

A term that refers to the borrower's assets or net worth is called:

capital.

A bank that is looking at your past payment records on your loans is most likely examining which aspect of the 5 Cs of lending?

character

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

character.

A cash flow statement reports a person's or a family's:

current income and payments.

Increased home building results in:

increased job opportunities, higher wages, increased consumer spending, overall economic expansion.

Which of the following represent the use of credit?

mortgage

Which one of the following is not a danger signal of potential debt problems?

repaying loans faster than required

The CCCS aids families by:

setting up a budget for them.

Jeff Bloom wants to have a house just like the one his parents had when he was a teenager. He finds the house he wants and gets an interest-only loan on it for the first five years. Which one of the answers best explains Jeff's spending?

the expectation of instant comfort

Which one of the following is most apt to qualify as an itemized deduction?

unreimbursed job-related travel expenses

What should you do when you shop on-line using your credit card?

use a secure browser

Which form of bankruptcy allows a debtor with a regular income to extinguish his or her debts from future earnings or other property over a period of time?

Chapter 13

Which of the following lenders is most likely to be sympathetic about legitimate payment problems?

Credit Union

Which federal credit law sets the procedure for promptly correcting billing mistakes?

Fair Credit Billing Act

Which federal law protects you by requiring credit bureaus to furnish correct and complete information to creditors?

Fair Credit Reporting Act

Which federal law requires credit-reporting agencies to send the consumer's version of a disputed item to certain businesses and creditors?

Fair Credit Reporting Act

A creditor may ignore your retirement income in rating your application.

False

Banks often encourage you to make the maximum payment.

False

Buying on credit is almost always cheaper than paying cash.

False

Credit unions rarely offer the same range of consumer loans that banks and other financial institutions do.

False

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

False

With an inflation rate of 9 percent, prices would double in about ___________ years.

8

Randy Ice starts the month with a balance on his credit card of $1000. On the 10th day of the month, he purchases $200 in clothes with his credit card. On the 15th day of the month he makes a payment on his credit card of $500. The average daily balance for the month including the new purchase is $883. The average daily balance for the month excluding the new purchase is $750. The bank charges 1.5 percent per month and uses the average daily balance excluding new purchases method. What would Randy's finance charges be for the month?

$11.25 Interest = $750 x .015 = $11.25

A family spends $40,000 on living expenses. With an annual inflation rate of 3 percent, they can expect to spend approximately _______ in three years.

$43,720 Future value calculation (Table 1-A) $40,000 × 1.093 = $43,720.

When prices are increasing at a rate of 6 percent, the cost of products would double in about how many years?

12 Years 72/6= 12

One aspect of financial planning is to control your use of credit. Which aspect of financial planning does this deal with?

Borrowing