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WorksheetsUnit 3 test-- econ
Total questions: 30
Worksheet time: 15mins
What is an amortization schedule?
A document that outlines the terms and conditions of a loan.
A schedule that shows the interest rate for each payment on a loan.
A table that shows the breakdown of each periodic payment on a loan.
A table that displays the remaining balance on a loan after each payment.
Aria is planning to apply for a loan. How does her credit score affect her loan?
Her credit score only affects the approval of her loan.
Her credit score determines the amount of loan she can get.
Her credit score has no impact on her loan.
Her credit score affects the interest rate of her loan.
Define amortization in the context of loans.
paying off a loan over time through regular payments that include only principal.
paying off a loan over time through irregular payments that include both principal and interest.
paying off a loan over time through regular payments that include only interest.
paying off a loan over time through regular payments that include both principal and interest.
Explain the purpose of an amortization schedule.
An amortization schedule is used to calculate the total cost of a loan.
help borrowers understand their loan balance and interest payments.
An amortization schedule is a tool used by lenders to track borrower payments.
An amortization schedule is a document that outlines the terms and conditions of a loan.
What are the common types of credit commonly used by individuals. (multiple options)
Credit cards
Auto loans
Student loans
Debit cards
Samuel is planning to apply for a loan. He has a high credit score. How would this impact his loan interest rates?
He would have to pay higher loan interest rates
His credit score would have no impact on his loan interest rates
He would get the benefit of lower loan interest rates
His high credit score would not affect his loan interest rates
James is considering taking a loan for his new car. How does a longer loan term affect the total interest paid by James?
Increases
Decreases
Has no effect
Stays the same
What is the difference between revolving credit and installment credit?
Revolving credit is repaid in fixed installments, while installment credit allows for repeated use up to a limit.
Revolving credit and installment credit have the same repayment terms.
Revolving credit allows for repeated use up to a limit, while installment credit is repaid in fixed installments.
Revolving credit is only available for personal use, while installment credit is for business use only.
How does secured credit differ from unsecured credit?
Secured credit is only available to individuals with a steady income.
Secured credit has a higher interest rate than unsecured credit.
Secured credit is backed by collateral, while unsecured credit is not.
Secured credit requires a higher credit score than unsecured credit.
What is the difference between a credit card and a debit card?
A credit card allows you to borrow money from the card issuer up to a certain limit, while a debit card allows you to spend money directly from your bank account.
A credit card and a debit card are the same thing.
A credit card is used for online purchases, while a debit card is used for in-person purchases.
A credit card allows you to spend money directly from your bank account, while a debit card allows you to borrow money from the card issuer up to a certain limit.
What is the purpose of a credit score?
To determine the amount of debt a person has.
To evaluate a person's income level.
To assess creditworthiness and determine likelihood of repaying debts.
To determine a person's spending habits.
What is an outstanding balance?
What best describes an installment loan
What best describes revolving credit?
The following are the components of a loan EXCEPT
What is the most common form of revolving credit?
Michael has a credit card and a student loan. Which best represents the difference in these credit types
Which best describes the difference between fixed and variable rates
Billy has just taken out a secured loan. Why is it important that Billy pay this loan on time?
Timmy has a car loan. This month he paid $400 and noticed that his balance only went down $100.
What best explains why this happened?
He is early on in his amortization schedule so the majority of his payment went to interest
He is late on his payment so they put it to interest
He is late in his amortization schedule so the majority of the payment went to principal
His loan is not amortized so he is paying a lot of principal
In an Amortized loan, which is TRUE about the amount of interest paid early on in the loan?
I hate you Mr belton
Higher than principal
The same as principal
Lower then the principal
Which of the following statements comparing credit and debit cards is TRUE?
Far more businesses accept credit cards than debit cards
Credit cards pull money directly from your bank account, while debit cards get their money from Visa or Mastercard
Credit card companies provide you with a monthly statement, while debit cards do not
With debit cards, you're spending your own money at point of sale, but with credit cards, you're getting a loan that you need to pay back later
Which of the following is most likely to represent a fixed rate, secured debt?
Auto Loan
Which of these statements best explains why it's often a good idea to pay more than the monthly amount due on an amortized loan?
Every time you pay extra, the lender will reduce the interest rate they're charging by a small amount
The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly
The extra payment will be applied to the interest you owe, which will reduce the overall cost of your loan
Amortized loans typically have much higher interest rates than credit cards, so they're the best place to put your extra cash
When loans are amortized, monthly payments are _______ , while the amount of your monthly payment applied to interest ________ and the amount of your monthly payment applied to the principal _______ over time.
Constant, Increases, Increases
Constant, Decreases, Increases
Variable, Decreases, Increases
Variable, Decreases, Decreases
Taylor is about to go car shopping, and she has $5000 saved that she can use for a down payment.
She expects the exact model car she’s looking for to cost $35,000. If her top priority is having the lowest monthly payments possible, which advice should she follow?
Put in $0 for your down payment, and choose a loan with a short term length
Put in $2500 for your down payment, and choose a loan with a short term length
Put in $3500 for your down payment, and choose a loan with a long term length
Put in $5000 for your down payment, and choose a loan with a long term length
A loan with a shorter term length will have __________ monthly payments, and you will pay __________ in total interest.
higher, less
higher, more
lower, less
lower, more
Select the statement below that accurately describes a characteristic of a credit card.
You owe the same payment every month
You must have money deposited into a checking account to use the credit card for purchases
Making full payments on-time every month is the only way to avoid interest charges
They do not charge interest
Which of the following statements is CORRECT about secured loans?
They are a good choice to use for student loans
If the borrower does not make payments, the lender can repossess the item
In the event of default, the borrower loses nothing except for the down payment
They usually have higher interest rates as compared with unsecured loans
Which of these credit payback strategies would lead to the HIGHEST overall cost?
Paying off your credit card bill in full every month
Paying 20% of your credit card balance every month on time
Making the minimum payment (3% of your credit card balance) every month on time
Making the minimum payment (3% of your credit card balance) every month with an occasional late payment
