PF Final

A market analysis is not

a guarantee of the price you will receive when selling a home.

Your home value is likely to be higher with all of the following, except

being in an area that has just been zoned for industrial use.

Generally, the ________ the credit history, the ________ the credit limit.

better; higher

A commitment by an insurance company to cover credit repayments under adverse conditions such as accident or illness is called

credit insurance

Which of the following statements is true regarding non-installment credit?

credit is usually issued for 30 days or less

The ________ is the most important factor used in the FICO credit scoring model.

credit payment history

) The first step in the home-buying process should be to

determine a realistic price range of homes you can afford.

personal bankruptcy

discharge of almost all debts but must surrender assets court takes control of your finances and develops 3-5 year plan to be out of debt

Going through documents discarded by your bank to obtain information in order to access your bank account is an example of

dumpster diving

The law that prohibits denying credit due to gender, age, race, national origin, religion, or marital status is

equal credit opportunity act

When buying a home, all of the following are economic factors one should consider, except

existing paint color

All of the following are true of prestige credit cards except they

have a longer grace period than other cards.

Posing as an employee of a brokerage firm to obtain information to allegedly update your account information is an example of

pretexting

The ________ method charges interest based on the balance at the beginning of the new billing period.

previous balance method

Which of the following methods of calculating finance charges on credit cards is least favorable to the cardholder?

previous balance method

interest is charged on the balance at the beginning of the new billing period.

previous balance method

When purchasing a home, which of the following costs will you not incur?

real estate agent commission

When selling a home, which of the following costs will you incur?

real estate agent commission

Of the following criteria for selecting a home, which would probably be least important for buyers older than 55?

school system

All of the following illustrate lessons learned regarding the 2008-2009 financial crisis except

sellers were able to attract potential buyers by slightly reducing sale prices.

As a result of the financial crisis of 2008-2009, some financial institutions accepted a(n) ________ arrangements in which the lender accepted the proceeds of the sale of a home as full payment on the debt owed even though the proceeds were less than the debt owed.

short sale

One disadvantage of a neighborhood with a homeowner's association is that

the association covenants can restrict how you decorate the outside of your home as well as what you store outside on the property.

An advantage of using online real estate services is that

the commissions and fees are often less than those charged by traditional full-service real estate agents.

Credit cards have all of the following advantages except

they allow you to borrow cash interest free for 60 days.

By reviewing your credit card statement, you can determine all of the following except

total purchases made year to date

Which of the following federal agencies should always be notified in the event of identity theft?

Federal Trade Commission

________ is a borrowing arrangement in which regular monthly payments of principal and interest must be made.

Instalment credit

Which of the following is true of private mortgage insurance

It generally is required if the borrower makes a down payment of less than 20%.

Sandy had a beginning balance on her MasterCard statement of $300. This month she had purchases of $400, payments of $300, and a $100 cash advance. To avoid interest charges, Sandy must make a payment of

Sandy can not avoid interest payments

Which of the following statements is true about bank credit cards like VISA and MasterCard?

They are an excellent source of emergency funds for unexpected expenses.

________, ________, and ________ are the three major credit bureaus.

Equifax; Experian; TransUnion

Which of the following will not be included on your credit report

FICO

The Identity Theft and Assumption Deterrence Act has designated which federal agency as the central clearinghouse for all identity theft complaints?

FTC

Which of the following is not one of the three primary credit bureaus

Fair Isaac Corporation

Regulates online checking accounts, credit cards, and student loan. It set rules to ensure accurate consumer information and prevent deceptive practices

Financial Reform Act of 2010

economic impact on home values

Economic conditions affect the valuation of homes As demand for homes increase, prices rise When economic conditions weaken, and demand declines resulting in lower home prices

Consumer Financial Protection Bureau created in 2010 under the Financial Reform Act

Goal—enforce consumer finance laws Make sure consumers receive full disclosures

Which of the following is true about condominiums?

Maintenance fees of common areas are shared.

Which of the following would not be contacted in all cases of identity theft

Postal Inspection Service

Which of the following is a disadvantage of using credit?

Slowing of progress toward financial goals

Which of the following will not protect you from identity theft while on vacation

carry all credit cards, passports and birth certificates

Which of the following can be used by a creditor in deciding whether or not to grant credit?

credit history

Creditors prefer a ________ amount of capital and ________ collateral in the best of circumstances.

high; high

Creditors prefer a ________ level of cash inflows and ________ level of cash outflows.

high; low

Credit scores in the 500-600 range will likely result in

higher interest rates

The type of home that probably would require the lowest maintenance is a (an)

home built by a well known construction company

Advantages of using credit are all of the following except

increase in the number of checks written

Of the following statements, which is not a disadvantage of using credit?

it is more difficult to obtain than to reply

The annual percentage rate (APR) is all of the following except

it requires a complex formula to compute.

All of the following are disadvantages of proprietary credit cards except

it takes considerable time to process your application to allow you to begin obtaining credit.

When obtaining a mortgage you should

maintain some funds for liquidity purposes to cover unanticipated bills.

Which of the following is not a disadvantage of using credit?

makes it easier to save

Which of the following is not a factor in the FICO credit scoring

marital status

To determine how much home you can afford to purchase, you should not consider

money you receive if you win a small lottery

On your credit card statement, the amount that you owe the financial institution now is called the

new balance

Credit extended to consumers for short periods of time to make specific purchases is

non instalment credit

In negotiating a price for the purchase of a home, you should do all of the following, except

offer the highest price you can afford first to get the purchase settled quickly.

Homeowner's association fees are not

optional

If a credit card has a provision allowing you to make purchases beyond the stated credit limit for a fee, it is referred to as

over limit protection

Manipulating e-mail viruses and host files to redirect users from legitimate commercial Web sites to bogus Web sites to obtain log-in names and passwords is referred to as

pharming

You can take all of the following steps to recognize and avoid identity theft online except

responding promptly to e-mails asking you to click on a link and change the passwords for your online accounts.

________ is a credit arrangement where the balance may be paid off monthly and interest is only charged on the remaining unpaid amount.

revolving open ended credit

If a person obtains your credit card number by standing close enough to you to either see your credit card or hear you speak the number during a telephone call, they are

shoulder surfing

Identity thieves that obtain your information from the magnetic strip on your credit card are using a technique known as

skimming

The widespread adoption of EMV technology is likely to reduce

skimming

taxes

usually between 1 and 2 percent of market value of home

The minimum credit score required by financial institutions

varies by institution

A personal credit card statement does not contain which of the following?

who purchased the item

Free credit reports are accessible to all U.S. consumers at

www.annualcreditreport.com.

ssuming you were charged simple interest of 5% on a loan of $1,000 that requires you to repay in two payments, one at the end of the first six months and one at the end of the second six months, total payments on the loan would be

1037.50

As of November 14, Ben has an outstanding credit card balance of $1,100 from purchases made over the past month. The new billing period begins on November 15. Assume Ben's outstanding balance for the first 15 days of this new billing period (Nov. 15-29) is $1,100. Then on November 29, the financial institution receives a payment of $600 from Ben, reducing his balance to $500. This is the balance for the remaining 15 days. Using the average daily balance method and a monthly interest rate of 2.5%, Ben's finance charge would be

20

interest is charged on the balance at the end of the new billing period

adjusted balance method

When considering "how much home" you can afford, you should consider all of the following, except

all

It is a good practice to review your credit card statement online as often as daily or weekly in order to

all of the above

APR means

annual percentage rate

interest is charged on the average daily balance during the billing period

average daily balance

All of the following are provisions of the Credit CARD Act of 2009 except

cardholders can spend beyond the limit imposed on the credit card.

Ben owes $3500 on his credit card which bears an interest rate of 1.5% per month or 19.6% per year. Since Ben is maxed out on his credit limit he is no longer charging anything to the card, but is only making the required monthly minimum payment which is 1.25% of the outstanding balance. How much of Ben's next payment will go towards paying off the outstanding balance?

0

As of November 14, Ben has an outstanding credit card balance of $1,100 from purchases made over the past month. The new billing period begins on November 15. Assume Ben's outstanding balance for the first 15 days of this new billing period (Nov. 15-29) is $1,100. Then on November 29, the financial institution receives a payment of $600 from Ben, reducing his balance to $500. This is the balance for the remaining 15 days. Using the adjusted balance method and a monthly interest rate of 2.5%, Ben's finance charge would be

12.50

John is considering pursuing one of two credit cards. Credit card "A" has no annual fee and charges an interest rate of 12.5%. Credit card "B" has an annual fee of $45 but charges an interest rate of 9%. If John is likely to have an average credit card balance of $2,000, the lowest annual expenses John could have with one of these two cards would be

225

Jill just borrowed $6,000 and will be charged a simple interest rate of 12 percent. Jill will pay ________ interest for borrowing the money on September 1 and repaying the money on December 31.

240

During the financial crisis of 2008-2009, approximately ________% of subprime mortgages had late payments of at least 30 days.

25

Credit card companies' fees cannot exceed ________of the initial credit limit.

25%

Using the previous balance method and a monthly interest rate of 2.5%, Ben's finance charge would be

27.50

Suppose you have a credit card balance of $500 that you were unable to pay off. During the current month you purchase another $250 worth of products. You made a payment during the grace period of $300. Assuming your retail credit card company charges an annual interest rate of 22%, compute your new balance.

294

Bill borrowed $3,600 and will be charged a simple interest rate of 18%. Bill will pay ________ interest for borrowing the money on April 1 and repaying the money on December 31.

486

If you borrowed $8,700 at 6% for one year, what would your total interest be if you are charged simple interest?

522

good score

600

Lucky Louie qualified for a $250,000 mortgage for his new home. The loan application was $400, closing attorney fee $500, appraisal fee $400, title insurance $1200, document fee $75, credit check $50. The loan requires a 1% origination fee plus 1 point ( 1 %) interest to buy down the rate. How much are Louie's total closing costs?

7625

Assuming you were charged simple interest on a loan of $4,900 which requires you to repay in one year $5,292, what rate of interest would you be charged? (Round interest rate to the nearest hundredth percent if necessary.)

8%

What is the interest cost and the total amount due on a six-month loan of $1,500 at 13.2% simple annual interest?

99 1599

What steps can you take to improve your credit score?

A) catch up late payments; B) reduce unnecessary expenditures; C) destroy credit cards to reduce temptation; D) notify creditors of late payment and work out arrangements to pay

Which of the following is false about condominiums?

An individual owner must mow the grass or make any repairs to the common areas when needed.

Which of the following should not be considered when selecting a condominium?

Availability of companies that perform maintenance and repair services in the area

Of the following statements, which is not an advantage of using credit?

Buying today and paying tomorrow seems ideal, but continual spending can lead to financial problems.

houses vs condo

Condo have maintenance fees for the building and lawn care Houses must take care of the building—paint, new roof, lawn, etc.

Which of the following is not true?

Veterans Administration mortgages are extended to most first-time homebuyers.

Credit has its advantages and disadvantages. Which of the following is false?

You should spend up to the limit on all your credit cards.

When a mortgage lender provides loans to borrowers without sufficient income or a down payment, the lender is said to provide a ________ mortgage.

subprime