054 CM Chapter 4 Review (Debt)

Front

Which of the following is not a factor in determining a FICO score?
Getting a personal loan from a bank, Using credit cards, Paying cash for all purchases, Taking out a mortgage on a house

Back

Paying cash for all purchases

Front

Which of the following is not a good idea for getting out of debt? Quit borrowing money, Get a part-time job or work overtime, Sell something, Borrow money from your parents to pay for the debt

Back

Borrow money from your parents to pay for the debt

Front

Which of the following things cannot be done with a debit card but can be done with a credit card?
Go into debt, Rent a car, Purchase something online, Purchase an airline ticket

Back

Go into debt

Front

What factors affect a credit score?

Back

Type of debt, New Debt, Duration of Debt

Front

Which of the following is not a recommended step in the Drive Free method of purchasing a car? Options: Plan your purchase in advance using the sinking fund method of saving., Place your savings in a mutual fund so that your money can make more money., Start with an inexpensive car and gradually move up in car value as your savings increases., Explore new car dealerships for the best interest rate.

Back

Explore new car dealerships for the best interest rate.

Front

Which of the following is the most cost-effective option for purchasing a home? Options: Get a 15-year mortgage with a 5% down payment. Get a 30-year mortgage so that you can get the lowest possible payments. The most ideal way to buy a house is with 100% down; if that is not an option, you should get no more than a 15-year, fixed rate mortgage with a down payment of at least 10%. Get a 30-year mortgage with a 20% down payment.

Back

The most ideal way to buy a house is with 100% down; if that is not an option, you should get no more than a 15-year, fixed rate mortgage with a down payment of at least 10%.

Front

Which of the following is not recommended in the debt snowball method of getting out of debt? Options: List your debts in order from smallest to largest balance and focus on paying the smallest debt off first., Every extra dollar you get should be thrown at the largest debt first., Attack your debt with intensity., Every time you pay off a debt, you add its old minimum payment to your next debt payment.

Back

Every extra dollar you get should be thrown at the largest debt first.

Front

What is paycheck garnishment?

Back

A court-ordered attachment that allows a lender to take monies owed directly from a borrower's paycheck.

Front

Which of the following best summarizes how the use of a credit card for purchases instead of cash can change oneʹs spending behavior?

Back

Studies show that consumers typically spend more when using credit as opposed to cash purchases.

Front

Which of the following is not a credit myth?
The lottery and other forms of gambling will make you rich.
You have ʺarrivedʺ financially once you get approved for a credit card.
Debt is a tool and should be used to create prosperity.
Borrowing money can have serious consequences and prevent you from building wealth.

Back

Borrowing money can have serious consequences and prevent you from building wealth.