Borrowing Basics Review

Which of the following is the issue of money, goods or services to an individual or entity with the expectation of future payments?

• Revolving credit

• Interest

• Debit

• Credit

Which of the following is NOT an impact of credit decisions?

• Monthly budget

• Collateralized statement

• Net worth statement

• Income statement

Which of the following types of credit is issued and supported by a borrower’s reliability, rather than the value of an asset?

• Unsecured credit

• Collateralized credit

• Revolving credit

• Installment credit

In order to assess an individual’s credit worthiness, five factors are reviewed. Which of the following factors evaluates a person’s income and household expenses?

• Character

• Capacity

• Condition

• Collateral

Which of the following involves a lending institution allowing a consumer to borrow money and then pay back some or all of it each month?

• Income statement

• Payday loan

• Credit card

• Interest

Which of the following is a short-term, high-interest loan designed to bridge the gap from one paycheck to the next?

• Mortgage

• Payday loan

• Personal loan

• Student loan

Which of the following best describes higher down payment?

• Initial payment includes a higher amount of money being paid up front so the amount borrowed is less

• Money is agreed to be paid back and only goes towards the lender

• Down payment which is charged for borrowing or earning through an investment

• Paying off debt with a fixed payment plan over time

Which of the following is the annual or yearly rate charged for borrowing or earning through an investment?

• Fixed interest rate

• Variable interest rate

• Interest rate

• Annual percentage rate

Which of the following types of interest fluctuates over time as the market interest rates change?

• Fixed

• Irregular

• Variable

• Annual

Which of the following is the gap between when the credit card’s billing cycle closes and when the bill becomes due?

• Prepayment penalty

• Grace period

• Cash advance

• Late payments