Question 1

The debt payments-to-income ratio is:

Accepted Answer

A)  calculated by dividing total liabilities by net worth.
B)  calculated by dividing monthly debt payments (excluding mortgage 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) A) and E)
G) A) and D)

Question 2

Credit,when effectively used,can help you have more and enjoy more.

Accepted Answer

A) True 
 B)False

Question 3

If you have a complaint about consumer credit,you should first:

Accepted Answer

A)  try to solve your problem directly with the creditor.
B)  contact your attorney.
C)  file a complaint with the Better Business Bureau.
D)  report it to the state consumer protection agency.
E)  complain to the Federal Reserve Bank in your district.F) C) and D)
G) B) and E)

Question 4

An example of open-end credit is:

Accepted Answer

A)  the use of a bank credit card to make a purchase.
B)  a mortgage loan from a savings and loan institution.
C)  an automobile loan from a credit union.
D)  an installment loan from a furniture store.
E)  an installment loan for purchasing a major appliance.F) A) and B)
G) B) and E)

Question 5

What should you do if your identity is stolen?

Accepted Answer

A)  File a police report.
B)  Ignore the problem and hope that it will go away.
C)  Close all of your accounts and do not say anything to anyone.
D)  Pay all the charges for which you are billed,even if they are not yours,so you can keep your credit accounts.
E)  Complain to your friends.F) A) and B)
G) D) and E)

Question 6

If you cosign a loan:

Accepted Answer

A)  you are only responsible for half of the debt obligation.
B)  you will be asked,but not required,to pay the loan in full if the borrower fails to pay.
C)  you will be required to pay the loan in full if the borrower does not pay.
D)  the creditor must first try to collect from the borrower.
E)  the creditor is prohibited from garnishing your wages if you refuse to pay the loan in full.F) B) and D)
G) A) and D)

Question 7

Your credit card company must send you a notice ________ days before they can increase your interest rate.

Accepted Answer

A)  30
B)  45
C)  50
D)  60
E)  90F) None of the above
G) A) and D)

Question 8

Credit bureaus obtain their data from banks,finance companies,merchants,credit card companies,other creditors,and court records.

Accepted Answer

A) True 
 B)False

Question 9

What are the three alternatives in financing current purchases for most consumers? Describe the trade-offs of each alternative.

Accepted Answer

Answers will vary.Most consumers have th...

Question 10

Elizabeth has a monthly net income of $1,400.She has a house payment of $600 per month,a car loan with payments of $300 per month,a Visa card with payments of $60 per month,and a credit card with a local department store with payments of $32 per month.What is Elizabeth's debt payment-to-income ratio? Is she within range of what experts suggest you spend on consumer credit payments?

Accepted Answer

Elizabeth's net monthly income = $1,400 ...

Question 11

Which of the following contains new protections for college students and young adults?

Accepted Answer

A)  Fair Credit Reporting Act
B)  Credit Card Accountability,Responsibility,and Disclosure Act
C)  Truth in Lending Act
D)  Equal Credit Opportunity Act
E)  Fair Credit Billing ActF) A) and C)
G) A) and E)

Question 12

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 D)
G) B) and E)

Question 13

Stored-value cards:

Accepted Answer

A)  look nothing like typical debit cards.
B)  have decreased in popularity over the past decade.
C)  work the same as a credit card.
D)  can lose their value if a retailer goes bankrupt.
E)  are currently being used for very limited purposes.F) A) and B)
G) B) and E)

Question 14

What are the two general rules of measuring credit capacity?

Accepted Answer

The two general rules of measuring credi...

Question 15

Today,Michael purchased a laptop computer from a retail outlet.He has agreed to pay for this purchase in full 30 days from today.This is an example of:

Accepted Answer

A)  open-end credit.
B)  mortgage loan.
C)  single lump-sum credit.
D)  installment cash credit.
E)  revolving check credit.F) All of the above
G) D) and E)

Question 16

If you want to improve your credit score,then you should:

Accepted Answer

A)  get copies of your credit report.
B)  pay your bills on time.
C)  make sure you understand how your credit score is determined.
D)  beware of credit-repair scams.
E)  do all of these things.F) A) and E)
G) A) and B)

Question 17

Which federal consumer credit law prohibits credit card issuers from sending unrequested cards?

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 B)
G) C) and E)

Question 18

To protect yourself against credit card fraud,you should shred anything with your account number on it before throwing it away.

Accepted Answer

A) True 
 B)False

Question 19

If you have a problem with your credit account,the best solution is to:

Accepted Answer

A)  file a lawsuit against the creditor.
B)  first call your creditor.
C)  complain to the Federal Reserve System.
D)  complain to the Board of Governors.
E)  wait for creditor action.F) A) and C)
G) None of the above

Question 20

Which of the following is not a valid reason for using credit?

Accepted Answer

A)  To pay for a medical emergency
B)  To purchase a car for a homemaker returning to the workforce
C)  To purchase an item now for less money than it will cost later
D)  To pay for everyday living expenses
E)  To pay for a college educationF) C) and E)
G) All of the above

Exam 6: Introduction to Consumer Credit

Which of the following contains new protections for college students and young adults?

Correct Answer
verified

The debt payments-to-income ratio is:

Correct Answer
verified

If you have a complaint about consumer credit,you should first:

Correct Answer
verified

If you want to improve your credit score,then you should:

Correct Answer
verified

If you cosign a loan:

Correct Answer
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If you have a problem with your credit account,the best solution is to:

Correct Answer
verified

Stored-value cards:

Correct Answer
verified

Correct Answer
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Elizabeth's net monthly income = $1,400 ...
View Answer

What should you do if your identity is stolen?

Correct Answer
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Which of the following is not a valid reason for using credit?

Correct Answer
verified

Credit bureaus obtain their data from banks,finance companies,merchants,credit card companies,other creditors,and court records.

Correct Answer
verified

What are the three alternatives in financing current purchases for most consumers? Describe the trade-offs of each alternative.

Correct Answer
verified
Answers will vary.Most consumers have th...
View Answer

Your credit card company must send you a notice ________ days before they can increase your interest rate.

Correct Answer
verified

An example of open-end credit is:

Correct Answer
verified

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

Correct Answer
verified

To protect yourself against credit card fraud,you should shred anything with your account number on it before throwing it away.

Correct Answer
verified

What are the two general rules of measuring credit capacity?

Correct Answer
verified
The two general rules of measuring credi...
View Answer

Which federal consumer credit law prohibits credit card issuers from sending unrequested cards?

Correct Answer
verified

Today,Michael purchased a laptop computer from a retail outlet.He has agreed to pay for this purchase in full 30 days from today.This is an example of:

Correct Answer
verified

Credit,when effectively used,can help you have more and enjoy more.

Correct Answer
verified

Exam 6: Introduction to Consumer Credit

Which of the following contains new protections for college students and young adults?

Correct AnswerverifiedShow Answer

The debt payments-to-income ratio is:

Correct AnswerverifiedShow Answer

If you have a complaint about consumer credit,you should first:

Correct AnswerverifiedShow Answer

If you want to improve your credit score,then you should:

Correct AnswerverifiedShow Answer

If you cosign a loan:

Correct AnswerverifiedShow Answer

If you have a problem with your credit account,the best solution is to:

Correct AnswerverifiedShow Answer

Stored-value cards:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedElizabeth's net monthly income = $1,400 ...View AnswerShow Answer

What should you do if your identity is stolen?

Correct AnswerverifiedShow Answer

Which of the following is not a valid reason for using credit?

Correct AnswerverifiedShow Answer

Credit bureaus obtain their data from banks,finance companies,merchants,credit card companies,other creditors,and court records.

Correct AnswerverifiedShow Answer

What are the three alternatives in financing current purchases for most consumers? Describe the trade-offs of each alternative.

Correct AnswerverifiedAnswers will vary.Most consumers have th...View AnswerShow Answer

Your credit card company must send you a notice ________ days before they can increase your interest rate.

Correct AnswerverifiedShow Answer

An example of open-end credit is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

To protect yourself against credit card fraud,you should shred anything with your account number on it before throwing it away.

Correct AnswerverifiedShow Answer

What are the two general rules of measuring credit capacity?

Correct AnswerverifiedThe two general rules of measuring credi...View AnswerShow Answer

Which federal consumer credit law prohibits credit card issuers from sending unrequested cards?

Correct AnswerverifiedShow Answer

Today,Michael purchased a laptop computer from a retail outlet.He has agreed to pay for this purchase in full 30 days from today.This is an example of:

Correct AnswerverifiedShow Answer

Credit,when effectively used,can help you have more and enjoy more.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified
Elizabeth's net monthly income = $1,400 ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Answers will vary.Most consumers have th...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The two general rules of measuring credi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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