Unit 5 Quiz

What is the Annual Percentage Rate (APR)?

• The cost you pay each year to borrow money, including fees, expressed as a percentage

• The total amount of money you owe to creditors

• A three-digit number based on your credit history

• A type of bankruptcy for people with limited incomes

Ava has a credit card account and decides to let Grace use her card for purchases. Grace has permission to use and/or carry Ava's credit card, but isn't legally responsible for paying the bill. Which of the following best describes Grace's role?

• An authorized user, who has permission to use and/or carry another person's credit card, but isn't legally responsible for paying the bill

• A person who is responsible for paying off all debts on a credit card

• A person who issues credit cards to others

• A person who collects debts for a collection agency

What is the main purpose of the Consumer Financial Protection Bureau (CFPB)?

• To help protect consumers by regulating financial products and services

• To issue credit cards to consumers

• To collect debts from delinquent borrowers

• To provide loans to businesses only

What is a Credit Score?

• A three-digit number (ranging from 300-850) based on an individual's credit history detailed in a credit report

• A document with information about a person’s credit activity and history

• A type of bankruptcy for people who can afford monthly payments

• A method of debt repayment prioritizing highest interest rates

Luna has several debts with different interest rates. She wants to pay off her debts in the most cost-effective way possible. Which method should Luna use if she wants to prioritize paying down debts with the highest interest rates first?

• The debt avalanche method

• A strategy of taking out low-interest loans to use as income

• A type of bankruptcy for people with limited incomes

• A method of collecting past-due debts by a collection agency

Priya has several credit card debts and a car loan, each with different interest rates and payment dates. She is considering a financial product that would allow her to combine all these debts into a single loan with one monthly payment. What is this type of loan called?

• A debt consolidation loan

• A loan that increases your net worth

• A loan that is only for buying property

• A loan that is only for students

Mia has several debts and wants to use the Debt Snowball Method to pay them off. What should she prioritize?

• Paying down debts with the smallest balances first

• Paying off the highest interest rate debts first

• Consolidating all debts into one payment

• Settling debts for less than owed

Benjamin is trying to improve his credit score. He learns that a certain percentage of his credit score is based on his payment history. What percentage is it?

• 35%

• 10%

• 50%

• 25%

What is a Hard Inquiry?

• An inquiry into your credit history, typically in advance of applying for a loan, which can negatively affect your credit for 12 months and remain on your credit history for two years

• A type of loan for people with bad credit

• A payment made to reduce debt

• A law that protects consumers from discrimination

Mason wants to understand his financial situation. He calculates the value of everything he owns and subtracts what he owes. What is this measurement called?

• A measurement of your assets minus your liabilities

• The total amount of money you earn in a year

• The value of your home only

• The amount of money you owe in taxes