Subject: Business    / Finance    

Question
Quiz: Consumer Credit Issues and Bankruptcy
Contains 20 multiple choice questions worth 1 point each.
40 min has been allotted for the quiz.
Must take the quiz now and submit solution in 40 minutes and counting… This is an online
quiz and the timer has begun. I am standing by for solution within the 40 min constraint.
Thanks in advance.

1. (TCO 3) _____ is a good example of a closed-end credit. (Points : 1)
A credit card issued by a department store
A credit card issued by VISA or MasterCard
A mortgage loan
Using a cashier's check to pay for a purchase
Using overdraft protection at a bank Question 2. 2. (TCO 3) A creditor may set a maximum amount of credit that a person is allowed, and
this is called a(n) (Points : 1)
revolving credit.
line of credit.
convenience credit.
installment cash credit.
single lump-sum credit. Question 3. 3. (TCO 3) If your monthly net (after-tax) income is $2,200, what should be your maximum
amount spent on credit payments? (Points : 1)
$150 $220
$440
$500
$660 Question 4. 4. (TCO 3) Which one of these items can be included in your credit report? (Points : 1)
Race
Marital status
Sex
Nationality
Religion Question 5. 5. (TCO 3) All of the following provide data to credit bureaus except (Points : 1)
banks.
finance companies.
merchants.
court records.
the Internal Revenue Service. Question 6. 6. (TCO 3) Personal bankruptcy can be reported to credit bureaus for _____ years.
(Points : 1)
5
7
10 15
25 Question 7. 7. (TCO 3) If a bank needs to examine the value of a specific asset when you are applying
for a loan, this process refers to which aspect of the five Cs of lending? (Points : 1)
Character
Capacity
Collateral
Capital
Conditions Question 8. 8. (TCO 3) When a lender examines your job situation and the security of your
employment, it is considering which area of lending? (Points : 1)
Capacity
Character
Capital
Collateral
Conditions Question 9. 9. (TCO 3) Which one of the selections can be categorized as an advantage of credit?
(Points : 1)
The use of credit can lead to court action and bankruptcy.
The use of credit can lead to overspending.
The use of credit can lead to anxiety.
The use of credit ties up the use of future income. The use of credit allows for the purchase of goods even when funds are low. Question 10. 10. (TCO 3) Which one of the selections can be categorized as a disadvantage of credit?
(Points : 1)
The use of credit can allow you to receive advance notice of sales.
The use of credit can allow for you to purchase previously inaccessible items.
The use of credit allows for the purchase of goods even when funds are low.
The use of credit can allow for the easier return of merchandise.
The use of credit can lead to overspending. Question 11. 11. (TCO 3) By evaluating your credit options, you can do all of the following except
(Points : 1)
reduce your finance charges.
reconsider your decision to borrow money.
discover a less expensive type of loan.
find a lender that charges a lower rate.
purchase goods and services without specific limitations. Question 12. 12. (TCO 3) Typically, a person can obtain the least expensive loan through (Points : 1)
parents or family members.
banks.
savings and loan associations.
finance companies.
loan sharks. Question 13. 13. (TCO 3) Referring to trends in credit union membership, it can be observed that
membership has been (Points : 1)
restricted by the Tax Reform Act of 1986.
declining gradually.
static.
growing steadily.
restricted by state laws. Question 14. 14. (TCO 3) Which one of the following is a signal of a potential debt problem? (Points :
1)
Paying the maximum balance due each month
Borrowing money to pay old debts
Using savings to pay for major purchases
Receiving notice of prompt payment from creditors
Occasionally working overtime and moonlighting Question 15. 15. (TCO 3) Allison Smith starts the month with a balance of $1,100 on her credit card.
On the 10th day of the month, she purchases $200 in clothes with her credit card. On the 15th day of the
month, she makes a payment on her credit card of $500. The average daily balance for the month
including the new purchase is $883. The average daily balance for the month excluding the new
purchase is $750. Allison's interest rate is 1.5% for the month. Allison's bank calculates the finance
charge on the credit card by using the adjusted balance method. What would Allison's finance charges
be for the month? (Points : 1)
$7.50
$9.00
$11.25
$13.25 $16.50 Question 16. 16. (TCO 3) Jerry Dean starts the month with a balance of $1,500 on his credit card. On
the 10th day of the month, he purchases $200 in clothes with his credit card. On the 15th day of the
month, he makes a payment on his credit card of $500. The average daily balance for the month
including the new purchase is $883. The average daily balance for the month excluding the new
purchase is $750. Jerry's interest rate is 1.5% for the month. Jerry's bank calculates the finance charge
on the credit card by using the previous balance method. What would Jerry's finance charges be for the
month? (Points : 1)
$7.50
$13.25
$15.00
$22.50
$18.00 Question 17. 17. (TCO 3) If Sarah goes out and spends $600 in new clothes for herself, putting it all on
her credit card after her husband returns at 4 a.m. the previous morning from a night on the town, this is
an example of which of the following? (Points : 1)
Misunderstanding or lack of communication
Keeping up with the Joneses
The expectation of instant comfort
The use of money to punish
Overindulgence of children Question 18. 18. (TCO 3) One day, Gary notices that is neighbor has purchased a new Land Rover
and it is sitting in his driveway. Gary decides that he also needs a new car and goes out and purchases
a Hummer with a 6-year loan on it. Which reason for indebtedness is this an example of? (Points : 1)
Misunderstanding or lack of communication
Keeping up with the Joneses The expectation of instant comfort
The use of money to punish
Overindulgence of children Question 19. 19. (TCO 3) In terms of borrowing expenses, which of the following options would be
relatively the cheapest? (Points : 1)
Car dealer
Appliance store
Department store
Relative
Finance company Question 20. 20. (TCO 3) If Marjorie Wilcox borrows $200 for 1 year with an APR of 12% and an
annual service fee of $10, what is her total cost of credit? (Points : 1)
$10
$12
$24
$34
$42