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WorksheetsPersonal Finance - Chapter 4 Debt
Total questions: 30
Worksheet time: 3600secs
Name
Class
Date
1.
Which of the following is not a factor in determining a FICO score?
a)
Getting a personal loan from a bank
b)
Paying cash for all purchases
c)
Using credit cards
d)
Taking out a mortgage on a house
2.
Which of the following is not a good idea for getting out of debt?
a)
Quit borrowing money
b)
Get a part-time job or work overtime
c)
Borrow money from your parents to pay for the debt
d)
Sell something
3.
Which of the following things cannot be done with a debit card but can be done with a credit card?
a)
Rent a car
b)
Purchase something online
c)
Purchase an airline ticket
d)
Go into debt
4.
What factors affect a credit score?
a)
Type of debt
b)
New debt
c)
Duration of debt
d)
All of the above
5.
Which of the following statements is false?
a)
Prior to the FCRA, consumers were unable to challenge errors in their credit reports.
b)
Under FCRA, consumers are allowed to receive one free credit report every five years.
c)
The U.S. Congress enacted the Fair Credit Reporting Act to address concerns over consumer credit report accuracy, privacy and fairness.
d)
Under FCRA, creditors must notify consumers if they deny credit based on a credit report file, and they must also tell the consumer which of the three credit bureaus provided the
6.
Which of the following is not a recommended step in the Drive Free method of purchasing a car?
a)
Plan your purchase in advance using the sinking fund method of saving.
b)
Place your savings in a mutual fund so that your money can make more money.
c)
Start with an inexpensive car and gradually move up in car value as your savings increases.
d)
Explore new car dealerships for the best interest rate.
7.
Which of the following is the most cost-effective option for purchasing a home?
a)
Get a 15-year mortgage with a 5% down payment.
b)
Get a 30-year mortgage so that you can get the lowest possible payments.
c)
The most ideal way to buy a house is with 100% down; if that is not an option, you should get no more than a 15-year, fixed rate mortgage with a down payment of at least 10%.
d)
Get a 30-year mortgage with a 20% down payment.
8.
Which of the following is not recommended in the debt snowball method of getting out of debt?
a)
List your debts in order from smallest to largest balance and focus on paying the smallest debt off first.
b)
Every extra dollar you get should be thrown at the largest debt first.
c)
Attack your debt with intensity.
d)
Every time you pay off a debt, you add its old minimum payment to your next debt payment.
9.
What is paycheck garnishment?
a)
A court-ordered attachment that allows a lender to take monies owed directly from a borrower’s paycheck
b)
Process of taking something back for failure to make payments
c)
Process by which the holder of a mortgage sells the property of a homeowner who has fallen behind on payments
d)
A legal procedure for dealing with debt problems of individuals and businesses
10.
Which of the following best summarizes how the use of a credit card for purchases instead of cash can change one’s spending behavior.
a)
Spending behavior does not matter as long as you pay off the credit card balance each month.
b)
Studies show that there is no change in spending behavior whether a person uses cash or credit.
c)
People typically spend less when they know that they are earning credit card “rewards.”
d)
Studies show that consumers typically spend more when using credit as opposed to cash purchases.
11.
Which of the following is not a credit myth?
a)
The lottery and other forms of gambling will make you rich.
b)
You have “arrived” financially once you get approved for a credit card.
c)
Debt is a tool and should be used to create prosperity.
d)
Borrowing money can have serious consequences and prevent you from building wealth.
12.
If you do not have a FICO score, what factors will determine whether or not you qualify for a mortgage?
a)
History of rental and utility payments
b)
Amount of your down payment and employment history
c)
The type of loan you select
d)
All of the above
13.
A credit score is intended to measure:
a)
Your financial success
b)
The risk of your not repaying debt
c)
Your income level
d)
The amount of money you have in the bank
14.
Which of the following is a sign that your identity may have been stolen?
a)
A call from a collection agency about a debt you didn’t incur
b)
Bank and / or billing statements don’t arrive on time
c)
Your credit report shows accounts you didn’t open
d)
All of the above
15.
Individual account information is removed from your credit report seven years after the last activity on the account, except for Chapter 7 bankruptcy, which stays on your credit report for:
a)
1 year
b)
10 years
c)
5 years
d)
20 years
16.
Preferred method of debt repayment; includes a list of all debts organized from smallest to largest balance; minimum payments are made to all debts except for the smallest, which is attacked with the largest possible payments.
a)
credit counseling
b)
financing
c)
debt snowball
d)
lease
17.
A detailed report of an individual’s credit history.
a)
budget
b)
annual percentage rate
c)
cash flow statement
d)
credit report
18.
Time frame that a loan agreement is in force, and before or at the end of which the loan should either be repaid or renegotiated.
a)
loan term
b)
credit report
c)
annual percentage rate (APR)
d)
financing
19.
Cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan.
a)
financing
b)
annual percentage rate (APR)
c)
lease
d)
inflation
20.
A decrease or loss in value.
a)
inflation
b)
depreciation
c)
lease
d)
annual percentage rate (APR)
21.
A yearly fee that is charged by the credit card company for the convenience of having the credit card.
a)
annual fee
b)
lease
c)
inflation
d)
loan term
22.
An interest rate charged to a customer during the early stages of a loan; the rate often goes up after a specified period of time.
a)
new customer fee
b)
annual fee
c)
annual percentage rate (APR)
d)
introductory rate
23.
A long-term rental agreement on a car; a form of secured long-term debt.
a)
secured debt
b)
unsecured debt
c)
lease
d)
loan
24.
When a person owes more on an item (like a car or house) than it is worth, the person is said to be _________ on the loan.
a)
backwards
b)
unsecured
c)
secured
d)
upside down
25.
A card issued by a bank or financial institution that allows users to finance a purchase.
a)
debit card
b)
credit card
c)
rewards card
d)
members card
26.
Which of the following is a consequence of overdrawing your checking account?
a)
Bounced check fee from the store
b)
Stress from money mismanagement
c)
Overdraft fee from your bank
d)
All of the above
27.
Percentage of Americans living paycheck to paycheck:
a)
70
b)
25
c)
50
d)
40
28.
The zero-based budget is the best method of budgeting because:
a)
This type of budget is less complicated than other types of budgets
b)
A zero-based budget allows less money for wants
c)
Sticking to a zero-based budget requires less discipline
d)
The zero-based budget ensures that every dollar you make is assigned a specific purpose
29.
To match your bank statement with your checkbook.
a)
Cash flow plan
b)
Envelope system,
c)
Zero-based budget)
d)
Reconcile
30.
A summary of all the income and outgo over a certain time period.
a)
Plan of action
b)
Zero-spending plan
c)
Cash flow statement
d)
Envelope system
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