Question 1

Chuck Stallings qualifies for a credit card from J.C.Penney.Which of the following offers this type of loan?

Accepted Answer

A)  credit union
B)  payday advance company
C)  finance company
D)  department store
E)  commercial bankF) A) and E)
G) A) and C)

Question 2

In a Chapter 7 bankruptcy,a person filing for relief is called a:

Accepted Answer

A)  bankrupt.
B)  debtor.
C)  dependent.
D)  criminal.
E)  creditor.F) A) and B)
G) C) and E)

Question 3

"Keeping up with the Joneses" is one of the reasons for indebtedness.

Accepted Answer

A) True 
 B)False

Question 4

A person filing for relief under the bankruptcy code is called a bankrupt,not a debtor.

Accepted Answer

A) True 
 B)False

Question 5

The least expensive loans are available from finance companies and retailers.

Accepted Answer

A) True 
 B)False

Question 6

Which one of the following financing methods provides a float period?

Accepted Answer

A)  installment loan
B)  credit card
C)  lump-sum loan
D)  home equity line of credit
E)  auto loanF) B) and C)
G) A) and D)

Question 7

Explain the Rule of 78s.

Accepted Answer

The answer of Explain the Rule of 78s....

Question 8

Which one of the following is a local organization that provides debt counseling services for families and individuals?

Accepted Answer

A)  Credit Bureau
B)  Chamber of Commerce
C)  Consumer Credit Counseling Service
D)  Internal Revenue Service
E)  Better Business BureauF) None of the above
G) B) and E)

Question 9

What is the number one reason why consumers default on their debts?

Accepted Answer

A)  medical expenses
B)  defective goods and services
C)  excessive use of credit
D)  fraudulent use of credit
E)  consumer fraudF) A) and D)
G) A) and B)

Question 10

The Federal Trade Commission enforces the:

Accepted Answer

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

Question 11

The CCCS counseling is:

Accepted Answer

A)  quite costly.
B)  usually free.
C)  often useless.
D)  fraught with red tape.
E)  available only if you declare bankruptcy.F) C) and D)
G) D) and E)

Question 12

The Rule of 78s demonstrates that a borrower pays:

Accepted Answer

A)  more interest at the beginning of the loan period.
B)  more interest at the end of the loan period.
C)  more interest in the middle of the loan period.
D)  less interest than indicated by the APR
E)  equal amounts of interest throughout the loan.F) A) and E)
G) A) and D)

Question 13

If you find that you cannot make your payments,the first thing you should do is:

Accepted Answer

A)  skip town.
B)  declare personal bankruptcy.
C)  borrow from a loan shark to make the payment.
D)  let the borrower go to a collection agency.
E)  contact your creditors and try to work out a modified payment plan with them.F) A) and D)
G) B) and D)

Question 14

In a Chapter 7 bankruptcy,debtor:

Accepted Answer

A)  is required to draw up a petition listing all assets and liabilities.
B)  does not have to pay a filing fee.
C)  is called a "bankrupt."
D)  is absolved of alimony and child support payments.
E)  does not have to repay educational loans.F) A) and B)
G) C) and D)

Question 15

Excessive indebtedness can result in:

Accepted Answer

A)  heavy drinking.
B)  a neglect of children.
C)  marital problems.
D)  drug abuse.
E)  all of the answers are possible results.F) B) and D)
G) All of the above

Question 16

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) A) and B)
G) D) and E)

Question 17

You just received your credit card statement.Which of the following are included on that statement?

Accepted Answer

A)  annual fee
B)  annual percentage rate for purchases
C)  penalty fees
D)  method used to calculate balance
E)  all of the above answersF) A) and B)
G) A) and C)

Question 18

With collateral,you will probably pay a higher interest rate on your loan than you would without collateral.

Accepted Answer

A) True 
 B)False

Question 19

If creditors add finance charges after subtracting payments made during the billing period,this is called the previous balance method.

Accepted Answer

A) True 
 B)False

Question 20

The Fair Debt Collection Practices Act regulates the ways debt collection agencies do business.

Accepted Answer

A) True 
 B)False

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

A person filing for relief under the bankruptcy code is called a bankrupt,not a debtor.

Correct AnswerverifiedShow Answer

Chuck Stallings qualifies for a credit card from J.C.Penney.Which of the following offers this type of loan?

Correct AnswerverifiedShow Answer

If creditors add finance charges after subtracting payments made during the billing period,this is called the previous balance method.

Correct AnswerverifiedShow Answer

If you find that you cannot make your payments,the first thing you should do is:

Correct AnswerverifiedShow Answer

In a Chapter 7 bankruptcy,a person filing for relief is called a:

Correct AnswerverifiedShow Answer

Which one of the following financing methods provides a float period?

Correct AnswerverifiedShow Answer

You just received your credit card statement.Which of the following are included on that statement?

Correct AnswerverifiedShow Answer

The CCCS counseling is:

Correct AnswerverifiedShow Answer

The Fair Debt Collection Practices Act regulates the ways debt collection agencies do business.

Correct AnswerverifiedShow Answer

The Federal Trade Commission enforces the:

Correct AnswerverifiedShow Answer

The Rule of 78s demonstrates that a borrower pays:

Correct AnswerverifiedShow Answer

"Keeping up with the Joneses" is one of the reasons for indebtedness.

Correct AnswerverifiedShow Answer

What is the number one reason why consumers default on their debts?

Correct AnswerverifiedShow Answer

With collateral,you will probably pay a higher interest rate on your loan than you would without collateral.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Excessive indebtedness can result in:

Correct AnswerverifiedShow Answer

Which one of the following is a local organization that provides debt counseling services for families and individuals?

Correct AnswerverifiedShow Answer

The least expensive loans are available from finance companies and retailers.

Correct AnswerverifiedShow Answer

Explain the Rule of 78s.

Correct AnswerverifiedShow Answer

In a Chapter 7 bankruptcy,debtor:

Correct AnswerverifiedShow Answer

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