Chapter 9- Loans and Leases

Which term refers to a payment made to secure a rental agreement?

• Depreciation

• Collateral

• Security deposit

• Repossession

What does the acronym ARM stand for in the context of mortgages?

• Adjustable-rate mortgage

• Annual rate mortgage

• Amortization rate mortgage

• Assessment rate mortgage

What is the purpose of an escrow account?

• To hold a security deposit

• To manage mortgage payments

• To store funds for taxes and insurance

• To calculate depreciation

Do you think a car is an investment? Why or why not?

• Yes, because it appreciates in value over time.

• No, because it depreciates in value over time.

• Yes, because it generates income.

• No, because it has no resale value.

How does the price of a car affect the cost of car insurance?

• Higher car price usually means higher insurance cost.

• Lower car price usually means higher insurance cost.

• Car price does not affect insurance cost.

• Insurance cost is always the same regardless of car price.

What is a secured debt?

• A debt with no collateral.

• A debt backed by collateral.

• A debt that is forgiven.

• A debt that is unsecured.

Describe an installment loan and its purpose.

• A loan paid in one lump sum.

• A loan paid in regular installments over time.

• A loan that does not require repayment.

• A loan that is paid only at the end of the term.

What is an upside-down or underwater loan?

• A loan where the borrower owes more than the asset's value.

• A loan that is fully paid off.

• A loan with no interest.

• A loan that is forgiven.

Why would a person lease a car instead of buying a car?

• To own the car immediately.

• To have lower monthly payments.

• To avoid any payments.

• To increase the car's value.

Who pays the insurance on a leased car?

• The leasing company.

• The car manufacturer.

• The person leasing the car.

• The car dealership.