Economics

Debbie was behind on her stereo installment credit contract payments. As a result, the creditor seized and sold the stereo. The sale price did not cover all of the loan balance, the creditor got a court to order her employer to withhold part of her

Garnishment

Which of the following lenders charge the highest interest rate?

Pawn Shop

Why is maintaining a good credit history important to your future?

good credit history can help your obtain a job, or a loan.

Gwen receives a bill from her auto insurance company, and she sends a check to the company to make sure her policy is not canceled. The cost of her policy is called the:

B) Premium

Sue bought a copy of her credit report, and found incorrect information in it. She can:

B) Request that the credit bureau correct her credit report

Ben's truck is crushed by a hit-and-run driver. Scott is hit by an uninsured driver. How will they receive payments?

B) Uninsured or no-fault motorist coverage

When a person declares bankruptcy that fact will appear on the person's credit report

B) for a 10 year period.

When a person brings an item to a pawnshop to obtain cash, the transaction is considered

A) a collateralized loan.

One of Andre's seldom-used credit cards has been stolen without his knowledge. When he gets his monthly statement, he realizes that someone else has been using the card and reports it stolen. The maximum amount of the unauthorized purchases he is he liable for is:

50

To improve an UNFAVORABLE credit rating, a person should

A) pay bills on time.

A person buys a homeowner?s insurance policy with a $250 deductible, which means the person will

B) have to pay the first $250 which will be deducted from the claim settlement paid by the insurance company.

Generally, the higher the deductible on an insurance policy, the

B) lower the premium.

A woman has just received a very expensive piece of jewelry. The woman has homeowner's insurance. Which statement would it be most appropriate for her to make to her insurance agent?

A) "I think I need a personal property floater."

What is a credit score?

A) A number used to determine how much credit to extend to a person.

A creditor may deny credit because of:

A) Bad credit history

A creditor determines your creditworthiness based on:

A) Character, collateral, and capacity

The purpose of Insurance is NOT to:

A) Diversify an investment portfolio

If you are denied credit based on your credit report, you are entitled to a:

A) Free copy of the credit report if you request it within 60 days

An advantage of declaring bankruptcy is:

A) Most debts to creditors are eliminated

The only type of life insurance that does not develop a cash value is:

A) Term life insurance

Stephanie has several open department store credit charge cards that she has not used in two years. There are no credit balances on any of the accounts. The effect these charge cards may have on her application for a loan or mortgage is:

A) They are open accounts that she could use, will be considered in any application for credit, and could make it difficult for her to get a loan or mortgage.

The definition of credit is:

A) Using someone else's money, promising to repay in the future for a fee

Who does a credit bureau or credit reporting agency speak to when collecting information about you for your credit file?

A) Your creditors and landlords

Dawn graduated from high school and wants to get a credit card. How can Dawn establish credit-worthiness?

B) Opening a checking account, making regular deposits, and avoiding penalties for insufficient funds

What is meant by an uncollateralized loan?

B) A personal loan without assets to cover the loan amount.

Josh is shopping for a car loan. A friend told him to compare the actual cost of the loan for one year expressed as a percentage from three banks. He needs to ask for the:

B) Annual percentage rate (APR)

Mr. Akon's wife died. The money he received as the beneficiary on her life insurance is called the:

B) Death benefit or face value

Insurance is frequently described as a method of "sharing the risk" because the:

B) Insured shares the risk of loss with all the other policy holders

When Jessie needs health care, she must first go to her primary care physician who coordinates her care and decides whether Jessie should see a specialist. Jessie pays $10 as the co-pay when she sees her primary care doctor. Jessie has which type of health insurance?

B) Managed care health plan

Sally's health insurance policy requires her to pay the first $500 of medical costs each year before the company will pay any of her medical bills. This policy provision is the:

C) Annual deductible

Sally took out a $50,000 life insurance policy. The $50,000 amount of coverage is called the:

C) Death benefit or face value

A person has three credit cards with very large outstanding balances and is unable to make payments on any of them. Which action should the person take?

C) Notify the credit card companies in order to negotiate a new payment plan.

Ellen, Barbara, and Paul all charged $1,000 on their credit cards last year. Who paid the most in finance charges?

C) Paul, who only pays the minimum amount each month

Which statement does NOT accurately describe a characteristic of cash value for whole life insurance?

C) Policy that accumulates cash value is less expensive than a policy that does not accumulate cash value

Richard's auto insurance policy expired on 5/15/2002. Richard was upset with his insurance agent and decided to change insurance companies. At 10:00 a.m. on 5/16/2002, as he drove to a different agent to buy a new policy, he had an accident. Who is liable for damage to his car and his personal injuries?

C) Richard

You can continue to charge purchases on your credit card when:

C) The amount you owe on the card is below your credit limit.

For the past five years, a person has had a $20,000 whole life insurance policy that has a cash value clause. The person decides to surrender the policy. At the time of surrender, the person will receive

C) a calculated amount of money which includes the premiums paid as well as the interest on that money.

Money orders are

C) a purchased certificate to pay a specified amount to a specific payee

Which of the following is considered to be open-end credit?

C) department store charge cards

Consumer finance companies, which are often advertised on TV, are also known as

C) small loan companies

Claire got a new credit card from American Bank and wants to cancel her USA credit card. The best method is to dispose of her USA credit card is to:

Claire got a new credit card from American Bank and wants to cancel her USA credit card. The best method is to dispose of her USA credit card is to:

The decision to give an applicant credit is made a:

Creditor

Predatory lending practices do not include which of the following:

D) A loan that you can afford with an interest rate that is the same as the interest rate being charged by at least three other financial institutions

John's job provided the main income for his family. He died unexpectedly and had no life insurance. The probable financial consequence for his wife and two children does not include:

D) An increase in income and expenses

You were approved for a loan that combines all your debts into one loan with lower payments based on a longer repayment period or lower APR. This type of loan is a:

D) Consolidation loan

Maxine has an auto loan that she has to pay. She will make monthly payments over five years. She has a(an):

D) Installment loan

Debbie owns a clothing store. She is concerned that a customer who is injured in the store will sue. Which type of insurance should Debbie purchase?

D) Liability insurance

You are behind on your debt payments and go to a responsible credit counseling service, the Consumer Credit Counseling Services. How can they help you?:

D) They can work with those who loaned you money to set up a repayment schedule you can afford to make.

When Mary bought a DVD player, she charged it on her credit card. Her purchase created a(an):

Debt

One example of a long-term retirement goal is to?

Deposit at least $100,000 in a retirement account.

Jim is a college senior with $50,000 in student loans. He earned $2,000 last year. He has no savings so he charged a $5,000 vacation on his credit card. How would you characterize Jim's use of credit?

It is irresponsible use of credit because his current income is too low

Who uses consumer credit reports in making decisions?

Lenders

Jane opened her credit card bill and was surprised by the amount she owed. She cannot pay the full amount of the bill this month. The lowest dollar amount Jane is required to pay by the credit card company is the:

Minimum payment

Sharon is 20 years old. She has one gas, two bank, and two department store credit cards. Her application for another credit card has been declined. The probable reason is:

The total amount she can charge on her cards is more than her ability to repay