Question 1

In the near future, smart cards will provide a crucial link between the World Wide Web and the physical world.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is not an example of revolving credit?

Accepted Answer

A)  a line of credit.
B)  a credit card loan.
C)  overdraft protection.
D)  charge cards.
E)  automobile loans.F) B) and D)
G) A) and E)

Question 3

A credit file is a report which includes the individual's present employer and position, former employer(s), public records and a list of cheques returned for insufficient funds.

Accepted Answer

A) True 
 B)False

Question 4

If your debt-to-equity ratio is about ½, you have reached the upper limit of debt obligations.

Accepted Answer

A) True 
 B)False

Question 5

Experts suggest that you spend no more than ____________ percent of your net income on credit purchases.

Accepted Answer

A)  10
B)  20
C)  30
D)  40
E)  50F) A) and B)
G) C) and D)

Question 6

Which of the following is considered to be a consumer loan?

Accepted Answer

A)  Debit card
B)  Credit loan
C)  Personal line of credit
D)  Overdraft protection
E)  Mortgage loanF) A) and D)
G) B) and E)

Question 7

The advantages of credit include

Accepted Answer

A)  can purchase goods even when funds are low
B)  carrying credit cards is safer than carrying cash
C)  a credit card can allow you to carry up to a 30 day "float
D)  credit cards may be used for identification when cashing a cheque
E)  all of these are advantages of creditF) A) and D)
G) C) and D)

Question 8

What is not a type of consumer loan?

Accepted Answer

A)  Demand loans
B)  Auto loans
C)  Installment loans
D)  Mortgages
E)  Charge cardsF) A) and B)
G) C) and D)

Question 9

Debt payments-to-income ratio is

Accepted Answer

A)  calculated by dividing total liabilities by net worth.
B)  calculated by dividing monthly debt payments (not including house payments)  by net monthly income.
C)  determined by dividing your assets into liabilities.
D)  a useless ratio for determining your credit capacity.
E)  rarely used by creditors in determining credit worthiness.F) B) and D)
G) None of the above

Question 10

Your friends and neighbors can get credit information about you.

Accepted Answer

A) True 
 B)False

Question 11

What would your credit rating be if you are making regular payments through a special arrangement to settle your debts?

Accepted Answer

A)  R5
B)  R2
C)  R6
D)  R7
E)  R9F) A) and C)
G) B) and E)

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

If your debt-to-equity ratio is about 1, you have probably reached the upper limit of debt obligations.

Accepted Answer

A) True 
 B)False

Question 14

Most consumers have only one choice in financing current purchases.

Accepted Answer

A) True 
 B)False

Question 15

Incidental credit is a credit arrangement that has no extra costs and no specific repayment plan.

Accepted Answer

A) True 
 B)False

Question 16

You should sign your new credit cards as soon as they arrive.

Accepted Answer

A) True 
 B)False

Question 17

The best way to maintain your credit standing is to:

Accepted Answer

A)  carry no credit cards
B)  pay all credit card invoices within 120 days
C)  repay your debts on time
D)  cancel any cars with outstanding balances
E)  if the balance is high and you cannot pay, claim your card was lost and misused by a 3rdpartyF) C) and D)
G) None of the above

Question 18

A home equity loan is usually set up as a revolving line of credit, typically with a variable interest rate.

Accepted Answer

A) True 
 B)False

Question 19

It is legal for creditors to ask or assume anything about a woman's childbearing plans.

Accepted Answer

A) True 
 B)False

Question 20

Debt-to-equity ratio is

Accepted Answer

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

Exam 5: Introduction to Consumer Credit

Debt-to-equity ratio is

Correct AnswerverifiedShow Answer

Which of the following is not an example of revolving credit?

Correct AnswerverifiedShow Answer

If your debt-to-equity ratio is about ½, you have reached the upper limit of debt obligations.

Correct AnswerverifiedShow Answer

What would your credit rating be if you are making regular payments through a special arrangement to settle your debts?

Correct AnswerverifiedShow Answer

Which of the following is considered to be a consumer loan?

Correct AnswerverifiedShow Answer

It is legal for creditors to ask or assume anything about a woman's childbearing plans.

Correct AnswerverifiedShow Answer

Incidental credit is a credit arrangement that has no extra costs and no specific repayment plan.

Correct AnswerverifiedShow Answer

In the near future, smart cards will provide a crucial link between the World Wide Web and the physical world.

Correct AnswerverifiedShow Answer

What is not a type of consumer loan?

Correct AnswerverifiedShow Answer

Experts suggest that you spend no more than ____________ percent of your net income on credit purchases.

Correct AnswerverifiedShow Answer

A home equity loan is usually set up as a revolving line of credit, typically with a variable interest rate.

Correct AnswerverifiedShow Answer

Your friends and neighbors can get credit information about you.

Correct AnswerverifiedShow Answer

Debt payments-to-income ratio is

Correct AnswerverifiedShow Answer

Most consumers have only one choice in financing current purchases.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

You should sign your new credit cards as soon as they arrive.

Correct AnswerverifiedShow Answer

The best way to maintain your credit standing is to:

Correct AnswerverifiedShow Answer

A credit file is a report which includes the individual's present employer and position, former employer(s), public records and a list of cheques returned for insufficient funds.

Correct AnswerverifiedShow Answer

If your debt-to-equity ratio is about 1, you have probably reached the upper limit of debt obligations.

Correct AnswerverifiedShow Answer

The advantages of credit include

Correct AnswerverifiedShow Answer

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