Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Most economists do not recognize consumer credit as a major force in the American economy.

Accepted Answer

A) True 
 B)False

Question 3

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) None of the above
G) A) and E)

Question 4

The best way to maintain your credit rating is to:

Accepted Answer

A)   use credit sparingly.
B)   pay cash for your purchases.
C)   repay your debts on time.
D)   declare a Chapter 7 bankruptcy.
E)   use as many credit cards as you can.F) A) and E)
G) C) and E)

Question 5

Mohammad Ishaque has checked his credit report and believes there is an error in it. Which consumer protection law specifies that he has the right to have errors in his credit report investigated?

Accepted Answer

A)   Fair Credit Reporting Act
B)   Fair Credit Billing Act
C)   Equal Credit Opportunity Act
D)   Fair Debt Collection Practices Act
E)   Truth in Lending ActF) A) and D)
G) None of the above

Question 6

Larry Arnold gets a direct loan of money to go on vacation with his family. He will repay the loan over the next twelve months. What type of credit did Larry use?

Accepted Answer

A)   Installment sales credit
B)   Installment cash credit
C)   Single lump sum credit
D)   Revolving credit
E)   Incidental creditF) C) and D)
G) A) and B)

Question 7

In determining your credit capacity, you first provide for basic necessities, such as:

Accepted Answer

A)   furniture.
B)   home furnishings.
C)   mortgage or rent.
D)   automobile.
E)   durable goods.F) A) and E)
G) A) and D)

Question 8

Debit cards are also often called:

Accepted Answer

A)   bank cards.
B)   ATM cards.
C)   cash cards.
D)   check cards.
E)   All of theseF) B) and E)
G) D) and E)

Question 9

Many retailers use open-end credit.

Accepted Answer

A) True 
 B)False

Question 10

What are a few things to consider before you cosign a loan?

Accepted Answer

The answer of What are a few things to consider...

Question 11

A good example of closed-end credit is:

Accepted Answer

A)   a credit card issued by a department store.
B)   a credit card issued by VISA or MasterCard.
C)   the use of overdraft protection at a bank.
D)   the use of a cashier's check to pay for a purchase.
E)   a mortgage loan.F) A) and B)
G) A) and C)

Question 12

If you think you have been discriminated against by consumer reporting agencies or creditors, you should file a complaint with which government agency?

Accepted Answer

A)   Federal Reserve Board
B)   Federal Deposit Insurance Corporation
C)   Federal Trade Commission
D)   Office of the Comptroller of the Currency
E)   National Credit Union AdministrationF) A) and B)
G) A) and C)

Question 13

What are the two general rules of measuring credit capacity?

Accepted Answer

The answer of What are the two general rules of...

Question 14

The credit bureau cannot charge you a disclosure fee if you ask to see your file within ______ days of being notified of a denial based on a credit report.

Accepted Answer

A)   10
B)   20
C)   30
D)   40
E)   60F) B) and E)
G) A) and B)

Question 15

Jake Skinner purchases a big screen TV on credit and will repay the loan with one payment at the end of 90 days. What type of credit did Jake use?

Accepted Answer

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

Question 16

In evaluating your credit application, a lender may:

Accepted Answer

A)   ask your age.
B)   want to know if you are on public assistance.
C)   require your marriage certificate.
D)   ask if you are married or divorced.
E)   ask your race and nationality.F) A) and B)
G) A) and C)

Question 17

If you are a woman, a creditor must:

Accepted Answer

A)   require a spouse to cosign a loan.
B)   ask about your birth control practices or family plans.
C)   consider whether you have a telephone listing in your own home.
D)   refuse individual credit in your own name.
E)   consider income from your employment.F) C) and E)
G) B) and E)

Question 18

The Federal Trade Commission receives an average of how many complaints about the credit bureaus every year?

Accepted Answer

A)   5,000
B)   8,000
C)   12,000
D)   18,000
E)   22,000F) A) and E)
G) B) and C)

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is a credit bureau?

Accepted Answer

A)   Federal Reserve
B)   Federal Trade Commission
C)   Better Business Bureau
D)   Experian
E)   FICOF) B) and E)
G) C) and E)

Exam 6: Introduction to Consumer Credit

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

Correct AnswerverifiedShow Answer

Many retailers use open-end credit.

Correct AnswerverifiedShow Answer

What are the two general rules of measuring credit capacity?

Correct AnswerverifiedShow Answer

Larry Arnold gets a direct loan of money to go on vacation with his family. He will repay the loan over the next twelve months. What type of credit did Larry use?

Correct AnswerverifiedShow Answer

Jake Skinner purchases a big screen TV on credit and will repay the loan with one payment at the end of 90 days. What type of credit did Jake use?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Most economists do not recognize consumer credit as a major force in the American economy.

Correct AnswerverifiedShow Answer

In evaluating your credit application, a lender may:

Correct AnswerverifiedShow Answer

The Federal Trade Commission receives an average of how many complaints about the credit bureaus every year?

Correct AnswerverifiedShow Answer

Which of the following is a credit bureau?

Correct AnswerverifiedShow Answer

If you are a woman, a creditor must:

Correct AnswerverifiedShow Answer

Debit cards are also often called:

Correct AnswerverifiedShow Answer

The credit bureau cannot charge you a disclosure fee if you ask to see your file within ______ days of being notified of a denial based on a credit report.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If you think you have been discriminated against by consumer reporting agencies or creditors, you should file a complaint with which government agency?

Correct AnswerverifiedShow Answer

In determining your credit capacity, you first provide for basic necessities, such as:

Correct AnswerverifiedShow Answer

Mohammad Ishaque has checked his credit report and believes there is an error in it. Which consumer protection law specifies that he has the right to have errors in his credit report investigated?

Correct AnswerverifiedShow Answer

A good example of closed-end credit is:

Correct AnswerverifiedShow Answer

What are a few things to consider before you cosign a loan?

Correct AnswerverifiedShow Answer

The best way to maintain your credit rating is to:

Correct AnswerverifiedShow Answer

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