FIN533 CONSUMER CREDIT_GROUP 5

What does APR (Annual Percentage Rate) represent?

• A. Your monthly income

• B. The yearly cost of borrowing, including interest and fees

• C. The maximum loan amount

• D. The number of payments you must make

What is a credit limit?

• A. The maximum amount a bank is willing to lend you

• B. The number of loans you can apply for in a year

• C. The maximum number of monthly payments

• D. The limit of your income

What is an installment loan?

• A. A loan you repay in one payment

• B. A loan repaid in equal monthly payments over time

• C. A loan that never needs repayment

• D. A loan only for businesses

Which of the following best describes the purpose of emergency savings?

• A. To invest in high-risk assets for faster growth

• B. To cover unexpected expenses without relying on debt

• C. To build long-term retirement wealth

• D. To pay off existing credit card balances

Which of the following is a disadvantage of using credit cards irresponsibly?

• A. Building a strong credit history

• B. Earning rewards points or cashback

• C. Accumulating high-interest debt

• D. Having access to short-term credit

What is the main benefit of diversification in an investment portfolio?

• A. It guarantees higher returns

• B. It eliminates all investment risks

• C. It spreads risk across different assets

• D. It reduces the need for financial planning

What is consumer credit mainly used for?

• a) Business investments

• b) Buying goods and services for personal use

• c) Government spending

• d) Corporate loans

Which of the following is an example of revolving credit?

• a) Personal loan

• b) Auto loan

• c) Credit card

• d) Mortgage loan

Which of these is NOT considered consumer credit?

• a) Credit card debt

• b) Mortgage loan for a house

• c) Business loan for expansion

• d) Personal installment loan

Consumer credit refers to the use of credit for personal needs, including home mortgages.

• TRUE

• FALSE