Credit and Finance Quiz

What are the benefits of using credit?

• Limited purchasing power

• Interest charges and fees

• Ability to defer payments

• Restricted financial flexibility

How do you calculate the total price of an item including sales tax?

• Total price = Original price - Sales tax

• Total price = Original price + Sales tax

• Total price = Original price x Sales tax

• Total price = Original price / Sales tax

What does the total purchase price with interest/finance charges include?

• Only the principal amount

• Principal plus any interest or finance charges

• Principal minus interest charges

• Principal divided by interest charges

What costs are involved in owning and buying an item such as a home?

• Only the purchase price

• Purchase price and interest charges

• Purchase price, maintenance, and insurance

• Purchase price and sales tax

How are finance charges calculated for single payment loans?

• By multiplying the principal by the interest rate

• By subtracting the principal from the interest rate

• By dividing the principal by the interest rate

• By adding the principal and the interest rate

What does an installment loan cost calculation involve?

• Only the amount financed

• Amount financed, installment price, and finance charge

• Installment price and finance charge

• Amount financed and installment price

How can you estimate the Annual Percentage Rate (APR) using a table?

• By subtracting the interest rate from the finance charge

• By dividing the finance charge by the amount financed

• By finding the corresponding APR based on the term and finance charge

• By adding the finance charge to the amount financed

When comparing costs, which is typically more expensive: leasing or buying?

• Leasing

• Buying

• They cost the same

• It depends on the item

How is the finance charge and new balance found using the average daily balance method?

• By dividing the finance charge by the average daily balance

• By adding the average daily balance to the finance charge

• By multiplying the average daily balance by the finance charge

• By subtracting the average daily balance from the finance charge

What information can you determine by reading amortization tables?

• Payment amount, interest, and balance

• Sales tax, finance charge, and installment payment

• Purchase price, finance charge, and total price

• Monthly payment and sales tax