Question 1

Jim Roy visits the doctor for his annual check-up which costs $85. He is billed for this at the end of the month. What type of credit did Jim use?

Accepted Answer

A)   Installment sales credit
B)   Installment cash credit
C)   Single lump sum credit
D)   Revolving credit
E)   Incidental creditF) All of the above
G) None of the above

Question 2

Which federal consumer credit law starts all credit applicants off on the same footing?

Accepted Answer

A)   Fair Credit Reporting Act
B)   Truth in Lending Act
C)   Fair Credit Billing Act
D)   Fair Debt Collection Practices Act
E)   Equal Credit Opportunity ActF) B) and E)
G) C) and D)

Question 3

The aging of the baby boom generation has added to the growth of consumer credit.

Accepted Answer

A) True 
 B)False

Question 4

Which one of the following is important to do to help avoid credit card fraud?

Accepted Answer

A)   Sign your card as soon as you get it
B)   Give out your credit card number over the phone
C)   Write your credit card number on the outside of envelopes
D)   Leave your credit card lying around anywhere
E)   If your billing statement is incorrect, ignore itF) B) and C)
G) B) and E)

Question 5

In the 5 Cs of credit, conditions refers to general economic conditions that can affect your ability to repay a loan.

Accepted Answer

A) True 
 B)False

Question 6

An unauthorized person who obtains a credit report under false pretenses may be:

Accepted Answer

A)   sued by the lender.
B)   sued by the borrower.
C)   jailed for 5 years.
D)   subject to a fine and imprisonment.
E)   placed on a probation.F) B) and C)
G) B) and D)

Question 7

A bank that is looking at your past payment records on your loans is most likely examining which aspect of the 5 Cs of lending?

Accepted Answer

A)   Character
B)   Capacity
C)   Collateral
D)   Capital
E)   ConditionsF) A) and C)
G) None of the above

Question 8

Credit is an arrangement to receive cash, goods, or services now and pay for them in the future.

Accepted Answer

A) True 
 B)False

Question 9

The debt-to-equity ratio is:

Accepted Answer

A)   calculated by dividing total liabilities by net worth.
B)   calculated by dividing monthly debt payments by net monthly income.
C)   determined by dividing your assets by your liabilities.
D)   a useless ratio for determining your credit capacity.
E)   rarely used by creditors in determining credit worthiness.F) B) and D)
G) A) and D)

Question 10

With closed-end credit, loans are made on a continuous basis and you make at least a partial payment each billing period.

Accepted Answer

A) True 
 B)False

Question 11

A lender requires a cosigner even when a borrower meets the lender's criteria for making a loan.

Accepted Answer

A) True 
 B)False

Question 12

When did installment credit explode on the American scene?

Accepted Answer

A)   With the advent of the automobile in the early 1900s
B)   With the advent of television in the late 1940s
C)   Just after World War II
D)   During the recession of the 1950s
E)   During the inflation of the 1970sF) B) and C)
G) None of the above

Question 13

By paying cash for a purchase, you:

Accepted Answer

A)   forgo the opportunity to keep the cash in an interest-bearing account.
B)   always get a cash discount.
C)   can build a better credit rating.
D)   get better personal service from store employees.
E)   have a better selection of goods than if you use credit.F) All of the above
G) None of the above

Question 14

Which federal law allows consumers to withhold payment for faulty or defective goods or services (within certain limitations)  when purchased with a credit card?

Accepted Answer

A)   Truth in Lending Act
B)   Fair Credit Reporting Act
C)   Fair Credit Billing Act
D)   Equal Credit Opportunity Act
E)   Fair Debt Collection Practices ActF) A) and C)
G) C) and D)

Question 15

Another name for open-end credit is:

Accepted Answer

A)   revolving credit.
B)   a box of credit.
C)   convenience credit.
D)   installment credit.
E)   single lump-sum credit.F) B) and E)
G) A) and C)

Question 16

What does it mean when a credit card is cobranded?

Accepted Answer

The answer of What does it mean when a credit...

Question 17

A friend comes to you for advice about improving their credit score. What advice would you give them? Make sure to include the five steps for improving your credit score.

Accepted Answer

The answer of A friend comes to you for advice...

Question 18

The larger the debt-to-equity ratio, the riskier the situation is for lenders and borrowers.

Accepted Answer

A) True 
 B)False

Question 19

"Shopaholics" and young adults are most vulnerable to misusing credit.

Accepted Answer

A) True 
 B)False

Question 20

Interest is a periodic charge for the use of credit, or other finance charges.

Accepted Answer

A) True 
 B)False

Exam 6: Introduction to Consumer Credit

Another name for open-end credit is:

Correct AnswerverifiedShow Answer

With closed-end credit, loans are made on a continuous basis and you make at least a partial payment each billing period.

Correct AnswerverifiedShow Answer

"Shopaholics" and young adults are most vulnerable to misusing credit.

Correct AnswerverifiedShow Answer

Which federal consumer credit law starts all credit applicants off on the same footing?

Correct AnswerverifiedShow Answer

When did installment credit explode on the American scene?

Correct AnswerverifiedShow Answer

What does it mean when a credit card is cobranded?

Correct AnswerverifiedShow Answer

Jim Roy visits the doctor for his annual check-up which costs $85. He is billed for this at the end of the month. What type of credit did Jim use?

Correct AnswerverifiedShow Answer

The aging of the baby boom generation has added to the growth of consumer credit.

Correct AnswerverifiedShow Answer

A lender requires a cosigner even when a borrower meets the lender's criteria for making a loan.

Correct AnswerverifiedShow Answer

By paying cash for a purchase, you:

Correct AnswerverifiedShow Answer

A friend comes to you for advice about improving their credit score. What advice would you give them? Make sure to include the five steps for improving your credit score.

Correct AnswerverifiedShow Answer

Interest is a periodic charge for the use of credit, or other finance charges.

Correct AnswerverifiedShow Answer

Credit is an arrangement to receive cash, goods, or services now and pay for them in the future.

Correct AnswerverifiedShow Answer

An unauthorized person who obtains a credit report under false pretenses may be:

Correct AnswerverifiedShow Answer

The larger the debt-to-equity ratio, the riskier the situation is for lenders and borrowers.

Correct AnswerverifiedShow Answer

In the 5 Cs of credit, conditions refers to general economic conditions that can affect your ability to repay a loan.

Correct AnswerverifiedShow Answer

Which federal law allows consumers to withhold payment for faulty or defective goods or services (within certain limitations) when purchased with a credit card?

Correct AnswerverifiedShow Answer

Which one of the following is important to do to help avoid credit card fraud?

Correct AnswerverifiedShow Answer

The debt-to-equity ratio is:

Correct AnswerverifiedShow Answer

A bank that is looking at your past payment records on your loans is most likely examining which aspect of the 5 Cs of lending?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified