Final Exam Review: PART B (#22-42)

Final Exam Review: PART B (#22-42)

Assessment

Quiz

Mathematics, Business

9th - 12th Grade

Easy

Created by

Schuyler Field

Used 1+ times

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21 questions

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1.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Why might a person decide to take advantage of a non-installment credit offer?

Interest on this type of loan is much lower than interest on other types of loans.

The loan can be paid back without interest charges any time within one year.

The loan offered by Company A can be used to purchase items at Company B.

There is no interest charged on the loan if it is paid back within a very short time.

2.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Why does a lender want information about a person’s current cash inflow and outflow?

The information helps to determine the number of cosigners a person will need for the loan to be approved.

Most lenders do not make loans to anyone whose assets are not twice his liabilities.

The lender needs to know the person’s credit score before making the loan.

The information helps the lender decide on the person’s ability to pay back the loan.

3.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Under what circumstance would it make financial sense for a person to make a purchase with an installment loan?

He is currently paying off a large credit card balance and the installment loan will enable him to buy new furniture for his living room.

He expects to receive a holiday bonus at the end of the year and he wants to buy a vacation package now while it is on sale.

He has wanted to buy a boat for years and he does not have enough savings or revolving credit to make the purchase.

He is offered a job that requires him to have a car, which he can only afford to buy with a loan.

4.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

If a person has a credit card with a limit of $2,000, it means that…

he will not be charged interest on purchases until he uses the credit card to make purchases over the $2,000 limit.

he must pay the full credit card balance each month even if it is under $2,000.

the credit card company is loaning him up to $2,000 to make purchases. He can pay the entire credit card balance each month or pay part of the bill and pay interest on the rest.

he earns interest at the bank that issued the credit card on purchases made up to the $2,000 limit. That interest is subtracted from the balance owed each month.

5.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

What is the purpose of a loan contract?

It is an offer by the lender to sell something at a given price to another person.

It is a legally binding agreement that explains the charges to be paid by the buyer and the obligations of the seller.

It is a promise made to the credit bureaus that the lender will protect the buyer from bankruptcy until the loan is paid in full.

It is a legally binding agreement that guarantees that the buyer will pay the lender in full and on time.

6.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Why is it possible that the interest rate advertised for a loan is very different from the annual percentage rate (APR) on that loan?

The APR includes fees associated with the application, credit report check, and closing costs in addition to the annual interest.

The APR provides for a 10% annual discount if all loan payments are made on time.

The advertised loan was not multiplied by 12 to figure out the annual percentage rate.

The advertised loan is a teaser rate and the APR is the interest rate after the teaser rate is over.

7.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

A financial tool that provides people with revolving open-end access to funds that they can draw from repeatedly up to some preset limit is known as a…

mortgage.

certificate of deposit.

credit card.

checking account.

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