ALLIED FIN202 MODULE 3 CHECK YOUR UNDERSTANDING

Question Points
1. Which
formula dictates that you pay more interest at the beginning of the loan and
pay less and less interest as the debt is reduced?
a. Adjusted balance
method
b. Previous balance
method
c. The rule of 78s
d. Average daily
balance

2. If you
are denied credit, your first step should be to:
a. increase your
income and decrease your spending.
b. reapply for
credit.
c. hire an attorney
and file a suit against the creditor.
d. check your credit
file at the credit bureau.
3. The
debt-to-equity ratio is:
a. calculated by
dividing total liabilities by net worth.
b. calculated by
dividing monthly debt payments by net monthly income.
c. determined by
dividing your assets by your liabilities.
d. a useless ratio
for determining your credit capacity.
4. Float can
be defined as:
a. the interest
charged during one billing period.
b. the principal
balance due on a loan.
c. a home equity
loan.
d. a period of time
during which no interest is charged.
5. The total
dollar amount you pay to use credit is called the:
a. finance charge.
b. annual percentage
rate.
c. price of the
good/service purchased.
d. amortized rebate.
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6. Installment
sales credit is a:
a. direct loan of
money for personal purposes.
b. direct loan of
money for home improvement.
c. loan that allows
you to receive merchandise such as a refrigerator or furniture.
d. direct loan for
vacation purpose.
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7. Today,
Michael purchased a laptop computer from a retail outlet. He has agreed to pay
for this purchase in full 30 days from today. This is an example of:
a. open-end credit.
b. a line of credit.
c. single lump-sum
credit.
d. installment cash
credit.
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8. If you
borrow $100 at 10 percent simple annual interest and repay it in one lump-sum
at the end of one year, you will repay:
a. $100.
b. $105.
c. $110.
d. $115.
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9. Who
financially supports the Consumer Credit Counseling Service?
a. National
Foundation for Consumer Credit
b. Community-minded
firms and individuals
c. Federal Reserve
Banks
d. The Federal Home
Loan Bank
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10. What is
(are) the signal(s) of potential debt problems?
a. Paying only the
minimum balance each month.
b. Missing payments
or paying late.
c. Using savings to
pay normal bills.
d. All of the above
are danger signals.
.
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11. The CCCS
aids families by:
a. setting up a
budget for them.
b. paying off their
loans.
c. providing free
basic necessities.
d. providing one
month free shelter.
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12. Mortgage
loans, automobile loans, and installment loans for purchasing furniture or
appliances are examples of:
a. a line of credit.
b. a credit card
loan.
c. open-ended
credit.
d. closed-end
credit.
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13. Which type
of credit insurance repays your debt in the event of a loss of income due to
illness or injury?
a. Credit life
insurance
b. Credit accident
and health insurance
c. Credit property
insurance
d. Credit casualty
insurance
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14. The CCCS
is basically concerned with:
a. lending money to
destitute people.
b. giving debtors
food and shelter.
c. helping destitute
debtors to relocate into less expensive areas.
d. preventing and
solving the problems related to credit overextension.
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15. Which one
of the following is often the source of the least expensive loan?
a. Parents or family
members
b. Banks
c. Savings and loans
associations
d. Finance companies
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16. Which one
of the following financing methods provides a float period?
a. Installment loan
b. Credit card
c. Lump-sum loan
d. Home equity line
of credit
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17. The credit
bureau cannot charge you a disclosure fee if you ask to see your file within
______ days of being notified of a denial based on a credit report.
a. 10
b. 20
c. 30
d. 60
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18. Dave’s
take-home-pay per month is $2,200. What is the maximum dollar amount of debt
payments, excluding a home mortgage, he should have?
a. $880
b. $440
c. $330
d. $220
.
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19. The
Consumer Credit Counseling Service (CCCS) is affiliated with the:
a. National
Foundation for Consumer Credit.
b. Federal Trade
Commission.
c. Better Business
Bureau.
d. U.S. Consumer
Protection Agency.
.
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20. The
Federal Trade Commission enforces the:
a. Truth in Lending
Act.
b. Equal Credit
Opportunity Act.
c. Fair Credit
Billing Act.
d. Fair Debt
Collection Practices Act.