Question 1

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)   Simple interest method
D)   Adjusted balance method
E)   Average daily balance methodF) C) and D)
G) B) and D)

Question 2

Which type of debt would not be forgiven in a straight bankruptcy?

Accepted Answer

A)   Credit card debt
B)   Medical bills
C)   Personal loans
D)   Educational loans
E)   Utility billsF) C) and D)
G) A) and D)

Question 3

For some debtors, bankruptcy has become an acceptable tool of credit management.

Accepted Answer

A) True 
 B)False

Question 4

A few months ago, you sent a certified letter to a debt collector and requested verification of a debt the collector says you owe. You know the letter was received by the collector but you have received no response to your request. Today, you received a letter threatening court action. What should you do?

Accepted Answer

A)   Pay the debt and protect your credit rating
B)   Insist that communications about the debt cease
C)   Renegotiate payment terms with the creditor
D)   Sue the collection agency
E)   Pay half the outstanding balanceF) B) and E)
G) A) and E)

Question 5

Overindulgence of children is a signal of potential debt problems.

Accepted Answer

A) True 
 B)False

Question 6

If a new-car loan costs 6%, a used-car loan would cost approximately ___ percent.

Accepted Answer

A)   0
B)   1
C)   6
D)   7
E)   12F) A) and B)
G) C) and D)

Question 7

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

Accepted Answer

A)   add-on interest method.
B)   average daily balance method.
C)   adjusted balance method.
D)   declining balance method.
E)   previous balance method.F) B) and E)
G) All of the above

Question 8

What are the various methods used to calculate interest?

Accepted Answer

The answer of What are the various methods used to...

Question 9

Inflation increases the purchasing power of money.

Accepted Answer

A) True 
 B)False

Question 10

What is(are)  the signal(s)  of potential debt problems?

Accepted Answer

A)   Paying only the minimum balance each month
B)   Missing payments or paying late
C)   Using savings to pay normal bills
D)   Depending on overtime to meet normal expenses
E)   All of these are danger signalsF) C) and D)
G) A) and D)

Question 11

Gary Simpson notices that his neighbor has a brand new Ford F150 truck parked in the driveway. Even though his current car is fine, Gary decides that he needs a new car and goes out and purchases a Hummer with a six-year loan. Which one of the answers best explains Gary's spending?

Accepted Answer

A)   Misunderstanding or lack of communication
B)   The use of money to punish
C)   The expectation of instant comfort
D)   Keeping up with the Joneses
E)   Overindulgence of childrenF) B) and E)
G) A) and B)

Question 12

Jerrod Dean starts the month with a balance on his credit card of $1,000. On the 10th day of the month, he purchases $200 in clothes with his credit card. On the 15th day of the month he makes a payment on his credit card of $500. The bank charges 1.5 percent interest per month using the adjusted balance method. What would Jerrod's finance charges be for the month?

Accepted Answer

A)   $7.50
B)   $13.25
C)   $11.25
D)   $15.00
E)   $18.00F) A) and E)
G) A) and B)

Question 13

Which one of these methods is the fairest of calculating interest?

Accepted Answer

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

Question 14

Which interest formula may be used by creditors to determine how much interest you have paid at any point in a loan?

Accepted Answer

A)   Simple interest formula
B)   Compound interest formula
C)   Multiple compound interest formula
D)   The rule of 78s
E)   The rule of 72sF) D) and E)
G) B) and E)

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Explain the concept of "float."

Accepted Answer

The answer of Explain the concept of "float."...

Question 17

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

Question 18

In addition to the counseling services of the CCCS, nonprofit services are sometimes provided by:

Accepted Answer

A)   universities.
B)   military bases.
C)   credit unions.
D)   state and federal authorities.
E)   All of these organizationsF) B) and D)
G) A) and E)

Question 19

You have two choices in declaring personal bankruptcy: Chapter 7 and Chapter 13 bankruptcy.

Accepted Answer

A) True 
 B)False

Question 20

Jeff Bloom wants to have a house just like the one his parents had when he was a teenager. He finds the house he wants and gets an interest-only loan on it for the first five years. Which one of the answers best explains Jeff's spending?

Accepted Answer

A)   Misunderstanding or lack of communication
B)   The use of money to punish
C)   The expectation of instant comfort
D)   Keeping up with the Joneses
E)   Overindulgence of childrenF) A) and B)
G) A) and C)

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

Which one of these methods is the fairest of calculating interest?

Correct Answer
verified

Inflation increases the purchasing power of money.

Correct Answer
verified

Gary Simpson notices that his neighbor has a brand new Ford F150 truck parked in the driveway. Even though his current car is fine, Gary decides that he needs a new car and goes out and purchases a Hummer with a six-year loan. Which one of the answers best explains Gary's spending?

Correct Answer
verified

For some debtors, bankruptcy has become an acceptable tool of credit management.

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

What are the various methods used to calculate interest?

Correct Answer
verified

If a new-car loan costs 6%, a used-car loan would cost approximately ___ percent.

Correct Answer
verified

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

Correct Answer
verified

In addition to the counseling services of the CCCS, nonprofit services are sometimes provided by:

Correct Answer
verified

You have two choices in declaring personal bankruptcy: Chapter 7 and Chapter 13 bankruptcy.

Correct Answer
verified

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

Correct Answer
verified

Jeff Bloom wants to have a house just like the one his parents had when he was a teenager. He finds the house he wants and gets an interest-only loan on it for the first five years. Which one of the answers best explains Jeff's spending?

Correct Answer
verified

Explain the concept of "float."

Correct Answer
verified

Correct Answer
verified

What is(are) the signal(s) of potential debt problems?

Correct Answer
verified

Which interest formula may be used by creditors to determine how much interest you have paid at any point in a loan?

Correct Answer
verified

Overindulgence of children is a signal of potential debt problems.

Correct Answer
verified

Which type of debt would not be forgiven in a straight bankruptcy?

Correct Answer
verified

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

Correct Answer
verified

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

Which one of these methods is the fairest of calculating interest?

Correct AnswerverifiedShow Answer

Inflation increases the purchasing power of money.

Correct AnswerverifiedShow Answer

Gary Simpson notices that his neighbor has a brand new Ford F150 truck parked in the driveway. Even though his current car is fine, Gary decides that he needs a new car and goes out and purchases a Hummer with a six-year loan. Which one of the answers best explains Gary's spending?

Correct AnswerverifiedShow Answer

For some debtors, bankruptcy has become an acceptable tool of credit management.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What are the various methods used to calculate interest?

Correct AnswerverifiedShow Answer

If a new-car loan costs 6%, a used-car loan would cost approximately ___ percent.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In addition to the counseling services of the CCCS, nonprofit services are sometimes provided by:

Correct AnswerverifiedShow Answer

You have two choices in declaring personal bankruptcy: Chapter 7 and Chapter 13 bankruptcy.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Jeff Bloom wants to have a house just like the one his parents had when he was a teenager. He finds the house he wants and gets an interest-only loan on it for the first five years. Which one of the answers best explains Jeff's spending?

Correct AnswerverifiedShow Answer

Explain the concept of "float."

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What is(are) the signal(s) of potential debt problems?

Correct AnswerverifiedShow Answer

Which interest formula may be used by creditors to determine how much interest you have paid at any point in a loan?

Correct AnswerverifiedShow Answer

Overindulgence of children is a signal of potential debt problems.

Correct AnswerverifiedShow Answer

Which type of debt would not be forgiven in a straight bankruptcy?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
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