Finance Chapter 6 Quiz
d. incidental credit
A credit arrangement that has no extra costs and no specific repayment plan is called:
a. the use of a bank credit card to make a purchase
A good example of an open-end credit is:
c. subject to fine and imprisonment.
An unauthorized person who obtains a credit report under false pretenses may be:
a. revolving credit
Another name for open-end credit is:
c. calculated by dividing monthly debt payments (not including house payments) by net monthly income.
Debt payments-to-income ratio is:
c. the credit bureau must reinvestigate and modify or remove inaccurate data.
If there is incorrect information in your credit file:
c. you'll have to pay up to the full amount of the debt if the borrower does not pay.
If you cosign a loan:
c. mortgage or rent.
In determining your credit capacity, you first provide for basic necessities, such as:
b. direct loan of money for personal purposes
Installment cash credit is a :
c. loan that allows you to receive merchandise such as a refrigerator or furniture.
Installment sales credit is a:
c. a line of credit
Karen is notified by her credit card company that credit limit on her credit card has just been increased to $10,000. This is one example of:
a. closed-end credit
Kathy purchased a $2,000 digital TV from Young's Appliances. She will make 12 equal payments over the next year to pay for it. She is using:
c. single lump-sum credit
Michael purchases a laptop computer from Best Buy. He will make one big payment without paying any interest as long as he pays it on or before August 15. This is an example of:
d. closed-end credit
Mortgage loans, automobile loans, and installment loans for purchasing furniture or appliances are examples of:
a. 7
Most of the information in your credit file may be reported for only ______ years.
b. prearranged loan for a specified amount that you can use by writing a special check.
Revolving check credit is a:
T
T or F: "Shopaholics" and young adults are most vulnerable to misusing credit.
T
T or F: Although credit allows more immediate satisfactory of needs and desires, it does not increase total purchasing power.
T
T or F: Closed-end in credit is used for a specific purpose and involves a specified amount
F
T or F: Consumer credit dates back to World War II.
T
T or F: Consumer credit dates back to colonial time.
T
T or F: Consumer credit is based on trust in people's ability and willingness to pay bills when due.
T
T or F: Consumer credit refers to the use of credit for personal needs (except a home mortgage) by individuals.
T
T or F: Credit is an arrangement to receive cash, goods, or services now and pay for them in the future.
T
T or F: Credit when effectively used, can help you have more and enjoy more.
T
T or F: In a closed-end credit, generally the seller holds title to the merchandise until the payments have been completed.
F
T or F: In a closed-end credit, loans are made on a continuous basis and you make at least partial payment.
T
T or F: It is safer to use credit, since charge accounts and credit cards let you shop and travel without carrying large amounts of cash.
F
T or F: Most consumers have only one choice in financing current purchases.
F
T or F: Most economists do not recognize consumer credit as a major force in the American economy
T
T or F: Perhaps the greatest disadvantage of using credit is the temptation to overspend.
T
T or F: The aging of the baby boom generation has added to the growth of consumer credit
T
T or F: The three most common types of closed-end credit are installment sales credit, installment cash credit, and single lump-sum credit.
F
T or F: There are very few valid reasons for using credit.
F
T or F: With an open-end credit, you pay back one-time loans in a specified period of time in equal amounts.
c. 60
The baby boom generation currently represents about 30 percent of the population but holds nearly ____________ percent of the debt outstanding.
a. debits your account at the moment you buy goods or services.
The debit card:
b. line of credit
The maximum amount of credit you are allowed by a creditor is called a(n):
c. 1.00
What would be the maximum limit for an individual's debt-to-equity ratio, excluding the home mortgage?
a. with the advent of the automobile in the early 1900s
When did installment credit explode on the American scene?
d. the Fair Credit Reporting Act of 1971
Which federal law regulates the use of credit reports, requires the deletion of obsolete information, and gives you access to your file?
e. Credit Bureau
Which of the following agencies can produce for a subscribing creditor, almost instantaneously, a report about your past and present credit activity?
b. $300
If your monthly net (after-tax) income is $1,500, what should be your maximum amount spent on credit payments?
a. forgo the opportunity to keep the cash in an interest-bearing account.
By paying cash for a purchase, you:
F
T or F: College students are not a prime target for credit card issuers.
e. a mortgage loan
A good example of a closed-end credit is:
b. does not increase total purchasing power.
Although credit permits more immediate satisfaction of needs and desires, it:
d. installment credit.
Another name for closed-end credit is:
b. 20
Experts suggest that you spend no more than ____________ percent of your net income on credit purchases.
d. marital status
What can be included in your credit report?
