WorksheetsRamsey Classroom Chapter 4 Honors Test 2
Total questions: 40
Worksheet time: 20mins
Which of the following is not shown in credit card commercials?
The benefits of using credit cards
People making payments for months or years
The ease of getting a credit card
The variety of uses for credit cards
What is the key principle when it comes to money?
To invest wisely
To stay out of debt
To use credit cards frequently
To borrow as much as possible
What is the primary reason for avoiding debt?
It allows for better budgeting of money.
It is considered smart financial planning.
It limits the amount you can save, give, or spend on other things.
It enhances your reputation.
What happens when you accept a credit offer?
You immediately receive a cash bonus
You get a discount on your first purchase
You go into debt and start making money for the lender
Your credit score automatically improves
At what age do individuals typically become targets for credit card marketing?
16 years old
18 years old
21 years old
25 years old
What is the primary reason credit card companies encourage only minimum monthly payments?
To quickly settle the debt
To reduce the interest rate
To keep customers in debt longer
To offer more rewards
Why should one be cautious of credit card rewards like cash back?
They provide substantial financial benefits
They are designed to make the company money
They decrease the amount of interest paid
They eliminate the need for credit payments
What happens if the debt is not repaid as agreed when using Collateral?
The item's value appreciates
The item is forfeited to the lender
The debt amount decreases
The collateral is returned to the owner
Which of the following best describes an Appreciating Asset?
An asset that loses value over time
An asset that increases in value over time
A fixed amount of money loaned and paid back in installments
A deceptive lending practice
What is Default in terms of loan repayment?
Paying the loan amount in full before the due date
The transfer of asset ownership
Failure to repay a loan on time
Renewing the loan terms
Which of the following is an example of a Depreciating Asset?
A house that increases in market value
A car that loses value over time
A piece of jewelry that appreciates
Stock investments that increase in value
What is a secured loan?
A loan that does not require any collateral
A loan that requires collateral which the lender can sell if payments are not made
A loan with no interest rates
A loan that is provided without any credit checks
What can personal loans be used for?
Only for purchasing vehicles
Only for medical expenses
Various purposes including vacations and debt consolidation
Strictly for educational purposes
What is the main financial risk associated with taking a home equity loan?
Decreasing property value
High interest rates
The bank owning the house if the loan defaults
Overspending the equity
What is the repayment period for most student loans?
5-10 years
10-20 years
20-30 years
30-40 years
What is a car considered as in terms of asset value?
Appreciating asset
Stable asset
Depreciating asset
Variable asset
Which of the following is NOT true about predatory lenders?
They offer loans with low interest rates.
They are known for charging high interest rates and fees.
They often target desperate individuals.
They include payday loans, title loans, and pawn shops.
Why is it advised to avoid using predatory lenders?
They provide helpful financial advice.
They help improve one's credit score.
They can trap people in a cycle of debt.
They offer competitive interest rates.
What is a common attitude towards credit card usage?
People use credit cards sparingly and cautiously
People use credit cards without much thought
People prefer using cash over credit cards
People are generally afraid of using credit cards
Using a credit card is _______.
Similar to spending cash for an item
Less costly than using cash
Guaranteed to cost more money than using cash
Beneficial for saving on purchase costs
How is a cash advance fee associated with credit cards?
A fee charged for transferring money internationally.
A fee for exceeding your credit limit.
A fee for converting currencies.
A fee for using your card at an ATM.
What should you remember about credit card fees?
They are negligible and can be ignored.
They are optional for most credit cards.
Nothing is free, implying fees are always involved.
They are refundable at the end of each year.
What is a late payment fee in the context of credit cards?
A fee for exceeding the credit limit
A fee charged for payments made on time
A fee for not making the minimum payment required
A reward for good financial behavior
What is the primary reason spending with credit can lead to spending more money?
Credit cards have high interest rates.
You don't feel the pain of spending actual money.
Credit cards are more widely accepted than cash.
Credit cards can be used for online purchases.
Which of the following can you NOT do with a debit card?
Shop online
Travel
Rent a car
Go into debt
"Interest" is:
The cost of borrowing the principal of a loan - usually a percentage
The grace period of a loan term
The attention you receive from a bank when you want to borrow money
The principal you borrow plus the Annual Percentage Yield on a loan
Cash equals Credit
True
False
What are the FOUR types of Debt?
Secured, Unsecured, Rotating, Non-Rotating
Secured, Unsecured, Personal, Business
Secured, Unsecured, Revolving, Non-Revolving
Home Loans, Lines of Credit, Credit Cards, Auto Loans
What is "Collateral"?
The interest rate you pay on a loan
The assets which are pledged as security for a loan.
the score you receive for paying a loan on time
The promise to pay back a loan
Revolving Credit allows the borrower to:
Borrow up to the maximum amount again and again until the account is closed
Use for anything they want, not just for one thing
All answers are correct
borrow up to the limit as they wish
An example of an UNSECURED REVOLVING CREDIT would be:
Mortgage
Car Loan
Student Loan
Credit Card
Unsecured Credit:
Is Riskier for the LENDER
Usually results in a HIGHER INTEREST RATE
Means the BORROWER doesn't need collateral to secure the loan
All answers are correct
