Question 1

The finance charge is the total dollar amount you pay to use credit.

Accepted Answer

A) True 
 B)False

Question 2

Inflation increases the purchasing power of money.

Accepted Answer

A) True 
 B)False

Question 3

Credit unions offer loans with a single repayment schedule to non-members.

Accepted Answer

A) True 
 B)False

Question 4

Which one of these is the fairest method of calculating finance charges on a credit card?

Accepted Answer

A)  Declining balance method
B)  Adjusted balance method
C)  Current balance method
D)  Average daily balance method
E)  Previous balance methodF) B) and E)
G) A) and B)

Question 5

What are the various methods used to calculate interest?

Accepted Answer

The various methods used to calculate in...

Question 6

Chapter 7 bankruptcy is also known as a straight bankruptcy.

Accepted Answer

A) True 
 B)False

Question 7

When more than one payment is made on a simple interest loan,the method of computing interest is known as the declining balance method.

Accepted Answer

A) True 
 B)False

Question 8

If you pledge property or other assets as collateral,you will probably pay a higher interest rate on your loan than you would without collateral.

Accepted Answer

A) True 
 B)False

Question 9

In addition to the Consumer Credit Counseling Service,the following entities also provide counseling services:

Accepted Answer

A)  Universities
B)  Credit unions
C)  Military bases
D)  State and federal housing authorities
E)  All of theseF) C) and E)
G) B) and E)

Question 10

Explain the Rule of 78s.

Accepted Answer

The rule of 78s is a mathematical formul...

Question 11

There is never a charge for a debt repayment plan administered by a Consumer Credit Counseling Service office.

Accepted Answer

A) True 
 B)False

Question 12

Sandra Jennings gets a loan from General Motors Acceptance Corporation.Which type of lending institution is this?

Accepted Answer

A)  Credit union
B)  Payday advance company
C)  Finance company
D)  Department store
E)  Commercial bankF) All of the above
G) A) and B)

Question 13

The fairest method of calculating interest is the average daily balance method.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following methods calculates interest on the full amount of the original principal?

Accepted Answer

A)  Declining balance method
B)  Add-on interest method
C)  Previous balance method
D)  Adjusted balance method
E)  Average daily balance methodF) C) and D)
G) D) and E)

Question 15

If a new-car loan costs 6%,then a used-car loan would cost:

Accepted Answer

A)  a lower percentage.
B)  the same percentage.
C)  slightly more.
D)  significantly more.
E)  none of these.F) A) and E)
G) A) and D)

Question 16

What can you do if you are unable to meet your credit obligations?

Accepted Answer

If you cannot meet your credit obligatio...

Question 17

If creditors give you no credit for payments made during the billing period,then this is called the:

Accepted Answer

A)  APR method.
B)  discount method.
C)  previous balance method.
D)  adjusted balance method.
E)  average daily balance method.F) B) and C)
G) A) and E)

Question 18

The CCCS sometimes charges a fee if it:

Accepted Answer

A)  administers a debt repayment plan.
B)  helps families manage their debts better.
C)  sets up a realistic budget for them.
D)  provides credit education.
E)  contacts creditors.F) None of the above
G) A) and E)

Question 19

The CCCS is primarily concerned with:

Accepted Answer

A)  lending money to destitute people.
B)  giving debtors food and shelter.
C)  helping destitute debtors to relocate into less expensive areas.
D)  preventing and solving the problems related to overindebtedness.
E)  paying off mortgage loans.F) A) and D)
G) C) and E)

Question 20

In a straight bankruptcy,many,but not all,debts are forgiven.

Accepted Answer

A) True 
 B)False

Exam 7: Choosing a Source of Credit: The Costs of Credit Alternatives

Explain the Rule of 78s.

Correct AnswerverifiedThe rule of 78s is a mathematical formul...View AnswerShow Answer

If a new-car loan costs 6%,then a used-car loan would cost:

Correct AnswerverifiedShow Answer

There is never a charge for a debt repayment plan administered by a Consumer Credit Counseling Service office.

Correct AnswerverifiedShow Answer

The fairest method of calculating interest is the average daily balance method.

Correct AnswerverifiedShow Answer

In a straight bankruptcy,many,but not all,debts are forgiven.

Correct AnswerverifiedShow Answer

Which one of these is the fairest method of calculating finance charges on a credit card?

Correct AnswerverifiedShow Answer

Sandra Jennings gets a loan from General Motors Acceptance Corporation.Which type of lending institution is this?

Correct AnswerverifiedShow Answer

Credit unions offer loans with a single repayment schedule to non-members.

Correct AnswerverifiedShow Answer

Which of the following methods calculates interest on the full amount of the original principal?

Correct AnswerverifiedShow Answer

If creditors give you no credit for payments made during the billing period,then this is called the:

Correct AnswerverifiedShow Answer

In addition to the Consumer Credit Counseling Service,the following entities also provide counseling services:

Correct AnswerverifiedShow Answer

The CCCS sometimes charges a fee if it:

Correct AnswerverifiedShow Answer

If you pledge property or other assets as collateral,you will probably pay a higher interest rate on your loan than you would without collateral.

Correct AnswerverifiedShow Answer

Inflation increases the purchasing power of money.

Correct AnswerverifiedShow Answer

When more than one payment is made on a simple interest loan,the method of computing interest is known as the declining balance method.

Correct AnswerverifiedShow Answer

What can you do if you are unable to meet your credit obligations?

Correct AnswerverifiedIf you cannot meet your credit obligatio...View AnswerShow Answer

Chapter 7 bankruptcy is also known as a straight bankruptcy.

Correct AnswerverifiedShow Answer

What are the various methods used to calculate interest?

Correct AnswerverifiedThe various methods used to calculate in...View AnswerShow Answer

The CCCS is primarily concerned with:

Correct AnswerverifiedShow Answer

The finance charge is the total dollar amount you pay to use credit.

Correct AnswerverifiedShow Answer

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The rule of 78s is a mathematical formul...
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If you cannot meet your credit obligatio...
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The various methods used to calculate in...
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