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