Personal Finance Planning Quiz 3 Chapters 5-6
Sue deposited $1,000 in an account paying 3 percent interest. The inflation rate is 5 percent. What is the buying power of the account after one year?
$980
If you have declared personal bankruptcy, that fact may be reported by credit bureaus for ____________ years.
10
A savings account earns 4 percent. If the saver is in a 28 percent tax bracket, the after-tax savings rate of return would be ____ percent.
2.88
If you want to improve your credit score you should:
Correct Answer is #5 Do everything 1) get copies of your credit report. 2) pay your bills on time. 3) make sure you understand how your credit score is determined. 4) beware of credit-repair scams. 5) do everything listed in the other answers.
Michael Flowers believes that his credit card company has made an error in its monthly statement to him. Which consumer protection law specifies procedures he can use to dispute this monthly statement?
Fair Credit Billing Act
With an open-end credit, you pay back one-time loans in a specified period of time in equal amounts.
False
With closed-end credit, loans are made on a continuous basis and you make at least a partial payment each billing period.
False
A home equity loan is usually set up as a revolving line of credit, typically with a variable interest rate.
True
A restrictive endorsement will usually include the words "for deposit only."
True
An asset management account combines several financial services for a single fee.
True
Demand deposits are another term for checking accounts.
True
You should sign your new credit cards as soon as they arrive.
True
Which law requires banks and other financial institutions to disclose fees, the annual percentage yield, and the other terms and conditions on checking and savings accounts?
Truth in Savings Law
Karen is notified by her credit card company that the credit limit on her credit card has just been increased to $10,000. This is one example of a change related to
a line of credit.
Charles Rickman is applying for a loan from the bank. The bank has determined that he has never been late making payments on past loans. Which of the 5 Cs of credit is the bank looking at?
character
Savings compounded ____________ would have the highest effective yield.
daily
Joan Zemke expects interest rates to decline over the next few months. To maximize her earnings she should use a(n):
five-year certificate of deposit.
By paying cash for a purchase, you:
forgo the opportunity to keep the cash in an interest-bearing account.
Jennifer Garner purchases a sofa, love seat and reclining chair for her family room and will make payments of $65 per month for the next twenty-four months. What type of credit did Jennifer use?
installment sales credit
Gordon Carey uses his Visa card to purchase a new digital camera and lens. What type of credit did Gordon use?
revolving credit
Time deposits consist of:
savings accounts.
If you have a problem with your creditor, the best solution is to:
solve your problem directly with the creditor.
When preparing a bank reconciliation, outstanding checks should be:
subtracted from the bank statement balance
The purpose of a "special" endorsement is to:
transfer a check to another person.
The purpose of a debit card is to:
transfer money electronically.
The Expedited Funds Availability Act requires that funds be available to depositors:
within 2 days for local checks
You may not be denied credit because you receive Social Security or public assistance.
True
Perhaps the greatest disadvantage of using credit is the temptation to overspend.
True
Many retailers use open-end credit.
True
Debit cards are often called bank cards, ATM cards, cash cards, and check cards.
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 the 5 Cs of credit, capital refers to your assets or net worth.
True
In the 5 Cs of credit, collateral is an asset that you pledge to a financial institution to obtain a loan.
True
In the 5 Cs of credit, conditions refers to general economic conditions that can affect your ability to repay a loan.
True
It is safer to use credit, since charge accounts and credit cards let you shop and travel without carrying large amounts of cash.
True