Unit 3 test-- econ

What is an amortization schedule?

• A document that outlines the terms and conditions of a loan.

• A schedule that shows the interest rate for each payment on a loan.

• A table that shows the breakdown of each periodic payment on a loan.

• A table that displays the remaining balance on a loan after each payment.

Aria is planning to apply for a loan. How does her credit score affect her loan?

• Her credit score only affects the approval of her loan.

• Her credit score determines the amount of loan she can get.

• Her credit score has no impact on her loan.

• Her credit score affects the interest rate of her loan.

Define amortization in the context of loans.

• paying off a loan over time through regular payments that include only principal.

• paying off a loan over time through irregular payments that include both principal and interest.

• paying off a loan over time through regular payments that include only interest.

• paying off a loan over time through regular payments that include both principal and interest.

Explain the purpose of an amortization schedule.

• An amortization schedule is used to calculate the total cost of a loan.

• help borrowers understand their loan balance and interest payments.

• An amortization schedule is a tool used by lenders to track borrower payments.

• An amortization schedule is a document that outlines the terms and conditions of a loan.

What are the common types of credit commonly used by individuals. (multiple options)

• Credit cards

• Auto loans

• Student loans

• Debit cards

Samuel is planning to apply for a loan. He has a high credit score. How would this impact his loan interest rates?

• He would have to pay higher loan interest rates

• His credit score would have no impact on his loan interest rates

• He would get the benefit of lower loan interest rates

• His high credit score would not affect his loan interest rates

James is considering taking a loan for his new car. How does a longer loan term affect the total interest paid by James?

• Increases

• Decreases

• Has no effect

• Stays the same

What is the difference between revolving credit and installment credit?

• Revolving credit is repaid in fixed installments, while installment credit allows for repeated use up to a limit.

• Revolving credit and installment credit have the same repayment terms.

• Revolving credit allows for repeated use up to a limit, while installment credit is repaid in fixed installments.

• Revolving credit is only available for personal use, while installment credit is for business use only.

How does secured credit differ from unsecured credit?

• Secured credit is only available to individuals with a steady income.

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

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

• Secured credit requires a higher credit score than unsecured credit.

What is the difference between a credit card and a debit card?

• A credit card allows you to borrow money from the card issuer up to a certain limit, while a debit card allows you to spend money directly from your bank account.

• A credit card and a debit card are the same thing.

• A credit card is used for online purchases, while a debit card is used for in-person purchases.

• A credit card allows you to spend money directly from your bank account, while a debit card allows you to borrow money from the card issuer up to a certain limit.