Question 1: Examples of _____ include automobile and installment loans for purchasing furniture or appliances.

• a line of credit
• a credit card loan
• open-end credit
• closed-end credit
• convenience credit

Question 2: A creditor may set a maximum amount of credit that a person is allowed, and this is called a(n)

• revolving credit.
• line of credit.
• convenience credit.
• installment cash credit.
• single lump-sum credit.

Question 3: If your monthly net (after-tax) income is $2,200, what should be your maximum amount spent on credit payments?

• $150
• $220
• $440
• $500
• $660

Question 4: Which one of these items can be included in your credit report?

• Race
• Marital status
• Sex
• Nationality
• Religion

Question 5: In determining your credit capacity, you first provide for basic necessities, such as 

• furniture.
• home furnishings.
• mortgage or rent.
• automobiles.
• durable goods.

Question 6: Personal bankruptcy can be reported to credit bureaus for _____ years.

• 5
• 7
• 10
• 15
• 25

Question 7: If a bank needs to examine the value of a specific asset when you are applying for a loan, this process refers to which aspect of the five Cs of lending?

• Character
• Capacity
• Collateral
• Capital
• Conditions

Question 8: When a lender analyzes a borrower's assets or net worth, this is called

• Capacity.
• Character.
• Capital.
• Collateral.
• Conditions.

Question 9: The first step you should take if you are denied credit is to

• increase your income and decrease your spending.
• check your credit file at the consumer bureau.
• hire an attorney and file a suit against the creditor.
• reapply for credit.
• sue the credit bureau that provided the negative information.

Question 10: Which one of the selections can be categorized as a disadvantage of credit?

• The use of credit can allow you to receive advance notice of sales.
• The use of credit can allow for you to purchase previously inaccessible items.
• The use of credit allows for the purchase of goods even when funds are low.
• The use of credit can allow for the easier return of merchandise.
• The use of credit can lead to overspending.

Question 11: One of the following financing methods typically provides individuals with a float period. Which one of these methods has this as an option?

• Installment loan
• A loan from a relative
• Lump sum loan
• Home equity line of credit
• Credit card

Question 12: While collateralized loans may provide lower interest rates, these loans have a disadvantage because

• the loan must be repaid in a short period of time.
• you ruin your credit rating.
• the loan is difficult to obtain.
• commercial banks do not make such loans.
• the assets used as collateral are tied up until the loan has been repaid.

Question 13: One source of the most expensive loans is through

• parents.
• finance companies.
• banks.
• friends.
• credit unions.

Question 14: Which one of the following is a signal of a potential debt problem?

• Paying the maximum balance due each month
• Borrowing money to pay old debts
• Using savings to pay for major purchases
• Receiving notice of prompt payment from creditors
• Occasionally working overtime and moonlighting

Question 15: If a debtor files for Chapter 7, he or she is

• absolved of alimony and child support payments.
• not required to pay a filing fee.
• not called bankrupt.
• required to draw up a petition listing all assets and liabilities.
• exempt from the repayment of educational loans.

Question 16: Jerry Dean starts the month with a balance of $1,500 on his credit card. On the 10th day of the month, he purchases $200 in clothes with his credit card. On the 15th day of the month, he makes a payment on his credit card of $500. The average daily balance for the month including the new purchase is $883. The average daily balance for the month excluding the new purchase is $750. Jerry's interest rate is 1.5% for the month. Jerry's bank calculates the finance charge on the credit card by using the previous balance method. What would Jerry's finance charges be for the month?

• $7.50
• $13.25
• $15.00
• $22.50
• $18.00

Question 17: Shelly Sanders gets a loan for $3,000 and repays the loan in 12 monthly payments of $258 per month. Under the rule of 78s, what is the amount of interest included in her first payment? 

• $16.00
• $4.87
• $8.96
• $14.77
• $1.23

Question 18: Over time, which method of payment is likely to be the least expensive?

• Bank credit card
• Check written on a home equity line of credit (HELOC)
• Store credit card
• Cash
• A title loan

Question 19: Payday, cash advance, check advance, and post-dated checks are _____ loans. 

• inexpensive
• medium-priced
• expensive
• low APR
• variable APR

Question 20: If Marjorie Wilcox borrows $200 for 1 year with an APR of 12% and an annual service fee of $10, what is her total cost of credit?

• $10
• $12
• $24
• $34
• $42