FIN 101 Ch. 5 quiz part 1

Eric borrows $9200 on January 1 for one year. Interest is calculated annually. He does not have to make any monthly payments, but he has to repay the entire loan plus interest on December 31 of the same year. If the loan has an annual interest rate of 10% what amount will Eric have to repay on December 31?

$10120.

When shopping for a checking account, it is important to compare banks and credit unions based on fees charged. All of the following are reasonable fees except:

$3-per-transaction fee for in-network ATMs.

Abed carries an average monthly balance of $1500 in his checking account. If his bank charges $12.00 per month as a minimum service fee, how much in annual interest must Abed earn to cover the monthly fee?

9.60%

The difference between a bank and a credit union is as follows:

A credit union depositor is known as a member but a bank depositor is simply a customer.

When Ann was traveling outside the United States, she found the perfect souvenir. Unfortunately, when she went to make the purchase with her debit card, the transaction was denied. This happened because Ann had only $200 in her account, and the souvenir cost $300. Ann was disappointed and regretted having to pass on her purchase. What could Ann have done before her trip to ensure that she could spend more than what was in her account?

Added overdraft protection transfers from her savings account to her checking account.

Which of the following are included in the finance charge for a loan?

All of the answer choices are correct.

Rahim purchased a car 6 months ago. When he applied for an auto loan, the lender required that Rahim allow the bank to automatically debit his checking account on the 15th day of each month until the car is paid for in full. This transfer is an example of what type of electronic payment method?

Automated Clearing House transfer.

A digital code on a check that helps facilitate check processing is known as a(n):

Bank Routing Number.

Marc is just starting out in the world of personal finance. Help him determine the most appropriate way to avoid being a victim of debit card fraud. Which of the following should Marc do on a regular basis to protect himself?

Cut up or shred his old card(s).

Place the following Automated Clearing House or hybrid process steps in order: I. Sign check. II. Record check information with device. III. Deduct payment after bank receives information. IV. Merchant system sends check data to ACH operator.

I, II, IV, III.

Jorge opened a no-cost checking account at a local bank last month. He was surprised when he was charged several service fees. Under federal law, which of the following service fees is allowed in a no-cost checking account?

Inactive account fee.

Which of the following terms best represents the amount of money that is borrowed, and which must be repaid?

Principal.

Nedra uses her debit card on a daily basis. The last time she used it was the evening before at a restaurant. This morning, she noticed that the card was missing. How long does she have to report the card as lost to have 100% protection against fraudulent use?

She must report the card immediately before any unauthorized withdrawals are made.

What should installment loan lenders disclose to credit applicants?

The interest rate (as an APR) and the finance charge (in dollars).

Xavier is purchasing a new car. The car dealership needs a $3,000 down payment before it will process a loan for the remaining balance. Xavier does not have a checking account, but he does have $3,000 in a savings account. He does not want to risk having the money stolen or lost from the bank to the car dealership. What option could Xavier use to make the down payment that is both acceptable to the dealership while providing protection for Xavier?

Unfortunately, he does not have many choices other than to use cash.