FIN 223 Exam CH 4,5,6,7

an example of an open account credit would be a bank DEBIT CARD or CREDIT CARD

credit card

DEPRECIATION or AMORTIZATION is a loss of value in a asset over a period of ownership

depreciation

consolidation loans are generally INEXPENSIVE or EXPENSIVE

expensive

Using credit is the ideal way to provide for financial emergencies

false

the key to credit worthiness is to keep your debt safety ratio as high as possible

false

you can stop payment when you purchase an item with debit

false

commercial banks insured by

federal deposit insurance corporation

credit unions are more likely to be paying HIGHER or LOWER interest rates on their account

higher

the decision to grant you credit will be made by INDIVIDUAL CREDITORS or CREDIT BUREAUS

individual creditors

homeowners may be able to deduct mortgage PRINCIPLE or INTEREST from their taxable income

interest

having some type of overdraft protection with your bank will end up costing you MORE or LESS than having a check bounce

less

it would make sense to purchase a vehicle at the end of a close ended lease period if the residual value is MORE or LESS than cars market value

less

is LESSOR or LEASEE is another term for the landlord

lessor

credit unions are

member owned financial cooperatives

a person who pays their balance off every month should look for a credit card with LOW INTEREST or NO ANNUAL FEE

no annual fee

an improper use of extended credit would be to buy a CAR or NON DURABLE GOODS

non durable goods

to establish credit worthiness you should probably

open a checking and savings account

borrowing from relatives is HIGHLY or SELDOM recommended

seldom

sometimes it may be better to use savings rather than borrowing, this is recommended when

the cost of borrowing is greater than interest earned on savings

a closed ended automobile lease is the most popular type of lease

true

as a home owner the fed gov may allow you to deduct interest expenses and/or taxes on the property

true

automobiles tend to decrease in value over time

true

bank credit card cash advances will accrue interest charges immediately

true

consumer loans most commonly used to obtain durable goods

true

credit union members are expected to have some common bond

true

credit unions grant loans only to members of the union

true

fdic insures depositers funds up to 250k at member banks under same depositers name

true

having fully repaid a small loan will help improve your credit worthiness

true

loan to value ratio of 80% would require buyer to make 20% down payment.

true

the purpose of a credit report is to evaluate the risk you pose to the lender

true

most creditors WILL or WILL NOT be willing to work with you

will

as a percentage of take home pay monthly consumer credit payments should not exceed

20 percent

an important rule for establishing a savings plan is to

all of the above

to research used car prices you can check popular price guidelines using

all three

the first step in the auto buying process should be

analyzing how much you can afford to spend on a car

low interest rates that have persisted since the fin crisis of 08 09 have been a net benefit to BORROWERS or RETIREES

borrowers

what is the most pop use of a consumer loan

buying a car

an investor would typically expect to recieve higher interest rates on CERT OF DEPOSIT or TREASURY BILL

cert of deposit

lenders often look to the five C of credit

character; key factor in the borrowers willingness to live up to the terms of the loan. Capacity; the ability of the borrower to service the loan in a timely fashion. Collateral; something of value that is used to secure a loan and that the lender can claim in case of default. Capital; amount of unencumbered assets owned by the borrower used as another indicator of the borrower's ability to repay. Condition; the extent to which prevailing economic conditions could affect the borrowers ability to service a loan.

a CHECKING or SAVINGS account is called a demand deposit account

checking

with a CLOSE ENDED or OPEN ENDED lease you turn in the car at the end and have no additional obligation

closed

the best loan rates for loans are usually from SAVINGS AND LOAN ASSOC. or CONSUMER FINANCE COMPANIES

consumer finance companies