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FinLit Unit 3 Study Guide

Total questions: 34

Worksheet time: 17mins

Name
Class
Date
1.
Low income is the most common symptom of financial ​irresponsibility.
a)
True
b)
False
2.

Interest is charged on the unused portion of a line of credit.

a)
True
b)
False
3.
A rental agreement is also called a month-to-month agreement.
a)
True
b)
False
4.
Garnishments are the legal process that allows part of an employee's paycheck to be withheld for payment of debt.
a)
True
b)
False
5.
Bankruptcy is the legal procedure to relief a person of excess debt.
a)
True
b)
False
6.
With installment credit, a consumer can charge to the account repeatedly up to a maximum limit.​
a)
True
b)
False
7.
Paying for a purchase with a credit card, rather than cash or a debit card, gives the consumer more leverage in the event of a dispute.
a)
True
b)
False
8.
Loan refinancing usually results in lower interest costs.​
a)
True
b)
False
9.
Title loans generally have low interest rates because lenders hold the titles to borrowers' vehicles as collateral.
a)
True
b)
False
10.
​Chapter 13 bankruptcy is also known as straight bankruptcy or liquidation bankruptcy because it involves forfeiture of an individual's assets in exchange for discharging the individual's debt.
a)
True
b)
False
11.

The purpose of Chapter 13 bankruptcy is to make sure that the business can remain viable after the bankruptcy proceeding.​

a)
True
b)
False
12.
Debt consolidation results in a single payment rather than multiple payments to different creditors.
a)
True
b)
False
13.
A type of credit that allows you to purchase goods or services only from a specific store or merchant is a(n)
a)
charge account
b)
revolving account
c)
store credit
d)

installment credit

14.
​Credit card companies can charge all of the following fees except
a)
​cash advance fees
b)
billing dispute fees
c)
penalty fees
d)
​balance transfer fees
15.
When buying a car a ______________ is a cash deposit toward the purchases price that is paid up front.
a)
Trade in
b)
Down payment
c)
Preapproved loan
d)
Financing
16.
Recommended ways to keep credit costs to a minimum include​
a)

​having no more than six or seven credit accounts

b)
​using a debit card instead of a credit card for small purchasess
c)
​getting preapproved for a loan when planning a large purchase
17.
A written plan that allocates (determines & splits) expenses among roommates so that each person pays his or her share is called _______.​
a)
shared responsibility
b)
a group budget
c)
a rental contract
d)
logistics
18.
_______ is the failure to pay your debts as required by agreement or by law.​
a)
​Credit delinquency
b)
Garnishment
c)
Foreclosure
d)
Repossession
19.
All of the following are warning signs of financial trouble except
a)
You don't know how much you owe.
b)
You often pay bills late
c)
You create and follow a monthly budget
d)
You overspend each month
20.
All of the following actions may help prevent credit card fraud except
a)
storing your credit card information on a merchant's website if the site is secure
b)
verifying website security when shopping online
c)
notifying creditors immediately if your card is lost or stolen
d)
tearing up old receipts and credit card statements when you no longer need them
21.
Which type of bankruptcy involves the forfeiture of an individual's assets in exchange for the discharge of debts?
a)
Chapter 11
b)
Chapter 13
c)
Chapter 7
d)
None of the above
22.
An excellent credit score will help with which aspect of car financing?
a)
Bargaining for a great sales price
b)
Receiving a large down payment
c)
Qualifying for a low interest rate
d)
Having a wide selection of term lengths
23.
As a young adult, all of the following are good strategies for building credit, EXCEPT:
a)
Open a credit card, with your parent or guardian as a cosigner
b)
Take out a payday loan
c)
Become an authorized user on a credit card used by your parent or guardian
d)
Open and use a secured credit card
24.
Which of the following statements is true about this Schumer Box?
a)

The APR for a borrower will always either be 8.99%, 10.99% or 12.99%

b)

The introductory APR that is valid only for 1 year is set to 14.99%.

c)

You will never be charged an APR higher than 15.99%

d)

A 28.99% APR may be applied to your account if you go over your credit limit.

25.
The two major signs of a scam are a request for personal information and ___________.
a)
A free 30 day trial of a product or service
b)
A coupon code offered for a current sale
c)
A request to like and subscribe an account on social media
d)
An urgent need for money
26.
Which of the following is TRUE about scams?
a)
You are guaranteed to get your money back from a scam by filing a claim with your local police department
b)
Scams today most commonly occur through paper mail you receive
c)
There are a number of red flags you can be aware of that can help you avoid being scammed
d)
Young people don’t have to worry about being targeted for scams unless they have a bank account
27.
Which of the following is not a major credit bureau?
a)
TransUnion
b)
Experian
c)
Equifax
d)

Federal Trade Commission

28.

James has a credit card with a $2000 credit limit. His outstanding balance is currently $900. What is the maximum amount he can now spend on this credit card?

a)

$1100

b)
$800
c)
$1000
d)
$1800
29.
What is the advantage of paying your credit card balance in full each month?
a)
You will incur only a small "paid in full" fee on your next credit card statement
b)
You pay only a small amount of interest
c)
You have less of your credit limit available, therefore, less temptation to spend
d)
You avoid paying any interest and fees
30.
A fully amortized payment is split into which two components?
a)
The principal and the payment
b)
The principal and the interest
c)
The loan term and the interest
d)
The interest rate and the total interest
31.

​Randall and Janet Jackson purchased new furniture for $1,600 and financed the entire purchase price with a three-year installment loan with an annual interest rate of 12 percent. Total interest to be paid on the loan over three years is $576. What is the amount of the monthly payment on the loan?

a)
$253.14
b)

$60.44

c)
$119.80
d)
$84.38
32.

Melissa, Christi, and Marla have just signed a lease on a two-bedroom apartment. Melissa will have her own bedroom and has agreed to pay half the monthly rent and half the utilities. Christi and Marla will share the other bedroom, and they will divide the other half of the rent and utilities evenly between them. All other expenses will be divided evenly among the three roommates. The monthly rent is $830, and other estimated monthly expenses are as follows: Utilities: $180, TV/Internet: $45, Renter's insurance: $30, Groceries and supplies: $480. Calculate Melissa's share of total estimated monthly expenses.

a)
$782.50
b)
$690
c)
$1,565
d)
$785
33.

What are negative aspects of debt?

a)

  • Being pursued by collections agencies

b)

  • Shame around how they obtained the debt or are dealing with the debt

c)

  • Urgency to pay debt (rent, repossession)

d)

  • Being able to pay for their college, car, home, etc.

34.

  1. Which statement most accurately describes the difference between leasing and owning a vehicle?

a)

  1. Leasing is a term used when you purchase a car for the longest term possible

b)

  1. Leasing a car is making monthly payments to use a car for a fixed period of time, but then you return it without owning it

c)

  1. Leasing is a term used when you take the car for an initial test drive

d)

  1. Leasing a car requires a very large down payment, while purchasing a car does not

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