Credit Basics Quiz

What is the difference between secured and unsecured credit?

• Secured credit is backed by collateral, while unsecured credit is not.

• Secured credit requires a credit check, while unsecured credit does not.

• Secured credit is only available to individuals with a high credit score.

• Secured credit has a higher interest rate than unsecured credit.

What are the common types of credit cards?

• student cards

• business cards

• prepaid cards

• rewards cards, cash back cards, travel cards, balance transfer cards, and secured cards

What is the purpose of a credit score?

• The purpose of a credit score is to determine an individual's income level.

• The purpose of a credit score is to evaluate an individual's physical health.

• The purpose of a credit score is to track an individual's spending habits.

• The purpose of a credit score is to assess an individual's creditworthiness and determine their risk as a borrower.

What is the interest rate on a fixed-rate loan?

• A fixed-rate loan has no interest rate.

• A fixed-rate loan has a fluctuating interest rate.

• A fixed-rate loan has a fixed interest rate.

• A fixed-rate loan has a variable interest rate.

What is the difference between a subsidized and an unsubsidized loan?

• A subsidized loan has a longer repayment period than an unsubsidized loan.

• The difference between a subsidized and an unsubsidized loan is that the government pays the interest on a subsidized loan while the borrower is in school or during deferment periods, whereas an unsubsidized loan accrues interest from the time it is disbursed and the borrower is responsible for paying all the interest.

• A subsidized loan requires a cosigner while an unsubsidized loan does not.

• A subsidized loan has a lower interest rate than an unsubsidized loan.

How does your net worth affect your financial health?

• Net worth is a measure of your overall financial health as it reflects your financial position and the extent of your wealth.

• Net worth is only important for wealthy individuals, not for financial health.

• Net worth only reflects your income, not your financial health.

• Net worth has no impact on financial health.

What are some examples of assets?

• Furniture, appliances, and electronics.

• Cash, real estate, stocks, bonds, vehicles, and machinery.

• Gold, silver, and precious metals.

• Pets, artwork, and collectibles.

What are some examples of liabilities?

• Credit cards, stocks, and bonds.

• Cash, inventory, and equipment.

• Revenue, assets, and equity.

• Loans, mortgages, accounts payable, and accrued expenses.

How do you calculate your net worth?

• Net worth = Assets / Liabilities.

• Net worth = Assets x Liabilities.

• Net worth = Assets + Liabilities.

• Net worth = Assets - Liabilities

Why is it important to track your net worth over time?

• To monitor financial progress and make informed decisions.

• To compare your net worth with others.

• To calculate your annual salary.

• To keep track of your expenses and income.