U5. D1-6

What is secured debt?

• Debt backed by collateral.

• Debt not backed by any asset.

• Debt with a fixed interest rate.

• Debt that cannot be repaid.

Which of the following is an example of unsecured debt?

• Car Loans

• Mortgages

• Credit Cards

• None of the above

What is revolving debt?

• Ongoing credit you can use repeatedly (credit cards).

• A one-time loan that must be paid back in installments.

• A type of debt that is forgiven after a certain period.

• A loan specifically for purchasing a home.

Which of the following is an example of installment debt?

• Credit Cards

• Student Loans

• Medical Bills

• Business Loans

What is considered good debt?

• High-interest credit card purchases

• Mortgage, student, business, and car loans

• Luxury items purchased with credit

What is considered bad debt?

• Mortgage, student, business, and car loans

• High-interest, unnecessary, or impulsive purchases

• Investments in education

Keeping your debt-to-income ratio low is important because:

• It improves your credit score.

• It increases your debt.

• It has no effect on your financial health.

• It makes it harder to get loans.

A high DTI ratio could affect your financial options in the future (like buying a car or home) by:

• Improving your credit score

• Limiting your ability to secure loans

• Increasing your savings

• Reducing interest rates on loans

What is a credit score?

• A number that represents a person's creditworthiness.

• A type of bank account.

• A measure of financial income.

• A loan interest rate.

A bank might care about your creditworthiness because:

• it affects your ability to repay loans.

• it determines your savings account interest rate.

• it influences the bank's customer service quality.

• it impacts the bank's location choices.