Personal Finance Unit 2

Which of the following is an example of open-end credit? A. single lump-sum credit B. a mortgage loan C. An installment loan for purchasing furniture D. An automobile loan E. A department store credit card

E. a department store credit card

Which of the following is an example of closed-end credit? A. a department store credit card B. all of these are examples of closed-end credit C. overdraft protection D. travel and entertainment cards E. a mortgage loan

E. a mortgage loan

Which of the following primarily provides loans for home purchases? A. payday loan company B. life insurance company C. investment company D. credit card company E. mortgage company

E. mortgage company

Which of the following items should be shredded to protect yourself from identity theft? A. envelopes B. magazines C. newspaper ads D. campaign mail E. papers with personal information

E. papers with personal information

What is correct about the lemon law?

It applies to vehicles that have been serviced four times to correct the same problem in the first 12,000 miles

What are the three major credit bureaus?

TransUnion, Experian, Equifax

A drawback of a regular savings account is

a relatively low rate of return

The APR is the percentage cost of credit on a(n) _________ basis

annual

What is a disadvantage of a car lease?

at the end of the lease, you have no ownership interest in the vehicle

Logan paid a bill with a special form. He received this form at his financial institution and had to pay the amount of the check plus a fee. He used a

cashier's check

The question "Will you repay the loan?" relates to

character

The use of property or savings to secure a loan relates to

collateral

Earning interest on previously earned interest is called

compounding

This type of promotion immediately reduces the amount a family spends on groceries each week

coupons

A fixed operating cost for a vehicle is

depreciation

The dealer's cost is also known as the

invoice price

The text identifies several phases in the research-based buying process. The correct order of the phases is

pre-shopping activities, evaluating alternatives, selection and purchase, post-purchase activities

Earnings on savings can be measured by the

rate of return

if you have a problem whose remedy will be between $1,500 and $3,000, the appropriate tool to use would be (a)

small claims court

Information about a personal bankruptcy may be reported in your credit file for

10 years

Sally has a major problem with a product and thinks that many others have had the same problem. Which of the following is the best way to resolve the problem? A. Class action lawsuit B. Prepaid legal service C. A lawyer D. Small claims court E. A legal aid society

A. Class action lawsuit

FICO scores generally range from

350-850

the periodic charge for the use of credit is called

interest

Which of the following electronically subtracts money from your savings or checking account to pay for goods and services? A. a debit card B. a credit card C. Closed-end credit D. A home equity loan E. a gift card

A. a debit card

Which of the following is NOT associated with credit cards? A. A debit to your checking account B. Convenience users and borrowers C. a finance charge D. an annual fee E. a grace period

A. a debit to your checking account

Which of the following offers a full range of financial services including checking, savings, lending, and other services? A. commercial bank B. rent-to-own center C. check-cashing outlet D. payday loan company E. pawnshop

A. commercial bank

ATM stands for

Automatic teller machine

Personal bankruptcy can be filed under which section(s) of the U.S. bankruptcy code?

Chapters 7 and 13

When misused, credit can result in A. a less satisfying life B. loss of creditworthiness C. default D. All choices are correct E. Bankruptcy

D. All the choices are correct

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

warranty

What is the only online source authorized to provide you with a free copy of your credit report annually?

www.annualcreditreport.com

Nora bought a used car and was told that she needed a personal check with guaranteed payment. She obtained a

certified check

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

When Jane researched the brands and prices of refrigerators, she was

comparison shopping

The average used car costs about ________ less than the average new car

$10,000

George has never bought a new car before. Which of the following techniques should he use to get the best deal? A. Highballing B. Research the dealer cost and begin negotiations from that point C. Leave a deposit to hold the vehicle D. Tell the dealer the highest monthly payment he can afford E. Lowballing

B. Research the dealer cost and begin negotiations

Common payment choices for everyday activities include all of the following except A. credit-card B. Short-term loan C. Debit card D. cash E. check

B. Short-term loan

Quentin wants his retail purchases to be deducted directly from his checking account. Which of the following tools should he use? A. Rewards points B. A debit cart C. PayNeaMe D. A credit card

B. a debit card

Which of the following is often considered to offer the least expensive loans (loans with low interest)? A. savings and loan associations B. Parents or family members C. finance companies D. loan companies E. banks

B. parents or family members

Which of the following is correct about inflation? A. As the inflation rate increases, the interest rates offered to savers decrease B. If inflation is 7% and your rate of return in your savings account is 4% you will experience an overall gain in buying power C. in order to increase buying power, you need tp earn a rate higher than the rate of inflation D. Inflation does not affect interest rates for savings accounts E. If you earn 5% and inflation is 10% your buying power will increase

C. in order to increase buying power, you need tp earn a rate higher than the rate of inflation

Cathy needs a full range of financial services, including checking, saving, and lending. To which of the following should she go? A. payday loan company B. rent-to-own center C. check-cashing outlet D. commercial bank E. pawnshop

D. commercial bank

Which of the following is NOT required when writing a check? A. The date written B. A signature C. The name of person or organization receiving payment D. The amount of check written in words E. A driver's license number

E. A driver's license number

A process used to settle grievances in a nonbinding process is called a(n)

Mediation

What is an advantage of a car lease?

Monthly lease payments are usually lower than monthly financing payments

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

capital

What is the opportunity to withdraw your money on short notice without incurring a loss in value?

liquidity

A credit card is a type of

loan/borrowing

A variable operating cost for a vehicle is

maintenance and repairs