Personal Financial Literacy Unit 3 Quiz 1

16. Choose the best answer. The ___ is the annual rate charged for borrowing that includes base interest and other fees.

Annual Percentage Rate

8. Choose the best answer. A short-term loan charged to a credit card is a(n) ____.

Cash Advance

10. Match the statements with the types of loans. An asset, which the lender may seize if the borrower defaults, secures the loan. This type of loan charges an APR that may exceed 200% and often leads to a borrower losing his automobile. The borrower makes periodic, scheduled payments until the loan is repaid. This loan is used to purchase automobiles, home renovations, or other short-term loans. This form of credit requiring a deposit equal to the credit line is ideal for a person seeking to build credit.

Collateralized Loan Title Loan Installment Credit Consumer Loan Secured/prepaid Credit Card

7. Choose the best answer. The annual percentage yield (APY) accounts for ____ when computing interest expenses.

Compounding

15. Choose the best answer. ___ issuers make money by charging interest and collecting fees from cardholders.

Credit Card

9. Choose the best answer. ____ is peer-to-peer lending that bypasses banks to match lenders with borrowers.

Crowdlending

13. Choose the best answer. To fail to repay a loan is to ____.

Default

5. Choose the best answer. A(n) ____ is the monthly interest charged on any balance after making an on-time payment.

Finance Charge

1. Choose the best answer. The ____ period is a time during which a cardholder may pay off a card balance without incurring interest.

Grace

3. Choose the best answer. A student loan and an auto loan are examples of ___ credit.

Installment

11. Choose the best answer. A(n) ____ is the maximum amount a borrower may borrow in a revolving credit account.

Line of credit

4. Choose the best answer. A(n) ___ is a fee covering a lender's costs when processing a loan.

Origination Fee

12. Choose the best answer. How does the prime rate affect credit cards with variable interest rates?

The card interest rate increases or decreases with changes in the prime rate.

2. Choose the best answer. Ownership of property is legally recorded on a(n) ____.

Title

6. Choose the best answer. ____ debt is money borrowed without having to provide collateral.

Unsecured

14. Choose the best answer. Which action has a negative effect on one's credit score?

utilizing a high percentage of one's credit limit