WorksheetsChapter 4 Test
Total questions: 20
Worksheet time: 10mins
Loans that directly help you advance in life, such as student loans, are acceptable debts.
True
False
______________ require the borrower to put up collateral for the loan.
Unsecured loans
Interest rates
Revolving credit
Secured loans
When a homeowner takes out a home equity line of credit (HELOC), that loan can only be used for home repairs and renovations.
True
False
A credit score is an indicator of how well someone pays off their debt, not how well they handle money.
True
False
A car is a depreciating asset.
True
False
When you buy with credit, you typically spend more than you would with cash or a debit card.
True
False
Something that credit card commercials don’t show you is . . .
People making payments for months or years on those credit card purchases
How much your credit score will grow right away
How happy your parents will be that they don’t have to lend you cash anymore
How great your life will be with payments
While it may not always appear so, the majority of Americans live paycheck to paycheck.
True
False
Debt and credit can negatively affect your life because:
They can lead to financial stress and difficulty managing money.
They always increase your income instantly.
They guarantee you will never have financial problems.
They make saving money unnecessary.
When looking over your credit report, it's important to make sure . . .
No lines of credit have been opened under your name without your knowledge
Your credit score is over 700
At least five businesses have requested your credit report
The information listed is over 10 years old
Which of the following lists three ways the credit card industry makes money off of customers?
Interest charges, annual fees, late payment fees
Cashback rewards, free credit reports, zero interest
Free balance transfers, complimentary travel insurance, no annual fees
Unlimited credit limit, free shopping vouchers, no late fees
Predatory lenders get their negative reputation from . . .
Limiting the amount of time a borrower has to use a loan
Taking advantage of people during the Great Depression
Charging high fees for loans and targeting desperate people
Discreetly selling personal bank information
Which is an example of an appreciating asset?
A computer used for business purposes
A new car purchased within the past 6 months
A piece of farming equipment
A home
Your greatest tool to building wealth is _________________
Tax cuts
Single stocks
Your income
Your credit score
Credit cards that offer flashy rewards like airline miles often . . .
Charge a high annual fee
Don't include protection against fraud
Can't be used for personal expenses
Have no interest fees
There are certain things, like renting a car or booking a hotel room, that you cannot do without having a credit card.
True
False
Marketing tactics that the credit industry uses to trick people into getting into debt include:
Offering low introductory interest rates that increase later
Providing free financial education resources
Encouraging saving before spending
Promoting debt consolidation to reduce overall debt
The difference between an appreciating asset and a depreciating asset is that an appreciating asset increases in value over time, while a depreciating asset loses value. Which of the following pairs is an example of each?
A house and a car
A car and a house
A computer and a phone
A phone and a house
The importance of a good credit score is a myth because:
It does not affect loan approvals or interest rates.
It is only relevant for people with high incomes.
It is not used by financial institutions to assess risk.
It is often exaggerated and not always necessary for financial success.
When you finance a new car, you will end up paying more than the sticker price.
True
False
