Question 1

Some studies show that as many as three out of four cosigners are asked to repay the loan.

Accepted Answer

A) True 
 B)False

Question 2

Most creditors rely heavily on borrowers' bank reports when considering loan applications.

Accepted Answer

A) True 
 B)False

Question 3

A loan officer is examining your income and the amount of your existing debt payments to help in the decision to make a loan to you today.Which aspect of the Five Cs of lending is the loan officer most likely looking at?

Accepted Answer

A)   Character
B)   Capacity
C)   Capital
D)   Collateral
E)   ConditionsF) A) and E)
G) B) and E)

Question 4

Which of these is not a characteristic of Paypal?

Accepted Answer

A)   Facilitates online auction payments.
B)   Offers password protected accounts.
C)   Allows use of credit cards.
D)   Transfers funds in U.S.dollars.
E)   No annual fees.F) B) and E)
G) A) and E)

Question 5

An installment loan is a

Accepted Answer

A)   direct loan of money for personal purposes.
B)   direct loan of money for home improvement.
C)   loan that allows you to receive merchandise such as a refrigerator or furniture.
D)   direct loan for vacation purposes.
E)   synonym for a single lump-sum credit.F) None of the above
G) B) and C)

Question 6

There is always a transaction fee attached to make a cash advance.

Accepted Answer

A) True 
 B)False  True

Question 7

College students are not a prime target for credit card issuers.

Accepted Answer

A) True 
 B)False

Question 8

The 25-to 44-age group currently represents about 30 percent of the population but holds nearly ____________ percent of the debt outstanding.

Accepted Answer

A)   80
B)   70
C)   60
D)   50
E)   40F) B) and E)
G) D) and E)

Question 9

The borrower's attitude toward his or her credit obligations is called

Accepted Answer

A)   capacity.
B)   capital.
C)   character.
D)   collateral.
E)   conditions.F) A) and B)
G) A) and C)

Question 10

Consumers have three alternatives in financing current purchases,including drawing up on savings,use their present earnings,or borrow against their expected future income

Accepted Answer

A) True 
 B)False

Question 11

Perhaps the greatest disadvantage of using credit is the temptation to overspend.

Accepted Answer

A) True 
 B)False

Question 12

Another name for credit when loans are made on a continuous basis and borrower is billed periodically for at least partial payment is known as:

Accepted Answer

A)   a line of credit.
B)   convenience credit.
C)   revolving credit.
D)   installment credit.
E)   bank card credit.F) A) and B)
G) None of the above

Question 13

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 part-time employment.F) B) and C)
G) A) and E) E

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False  False

Question 16

There are very few valid reasons for using credit.

Accepted Answer

A) True 
 B)False

Question 17

Generally,most of the information in your credit file may be reported for only 3 years.

Accepted Answer

A) True 
 B)False

Question 18

If there is incorrect information in your credit file,

Accepted Answer

A)   you should sue the credit bureau.
B)   you must sue the merchant who denied the credit.
C)   the credit bureau must reinvestigate and modify or remove inaccurate data.
D)   pray that the credit bureau goes bankrupt.
E)   you cannot dispute the derogatory information.F) A) and D)
G) A) and E)

Question 19

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) B) and C)
G) A) and E)

Question 20

The use of credit indicates personal and financial instability.

Accepted Answer

A) True 
 B)False

Exam 5: Consumer Credit: Advantages, Disadvantages, Sources, and Costs

Some studies show that as many as three out of four cosigners are asked to repay the loan.

Correct AnswerverifiedShow Answer

Most creditors rely heavily on borrowers' bank reports when considering loan applications.

Correct AnswerverifiedShow Answer

A loan officer is examining your income and the amount of your existing debt payments to help in the decision to make a loan to you today.Which aspect of the Five Cs of lending is the loan officer most likely looking at?

Correct AnswerverifiedShow Answer

Which of these is not a characteristic of Paypal?

Correct AnswerverifiedShow Answer

An installment loan is a

Correct AnswerverifiedShow Answer

There is always a transaction fee attached to make a cash advance.

Correct AnswerverifiedTrue

College students are not a prime target for credit card issuers.

Correct AnswerverifiedShow Answer

The 25-to 44-age group currently represents about 30 percent of the population but holds nearly ____________ percent of the debt outstanding.

Correct AnswerverifiedShow Answer

The borrower's attitude toward his or her credit obligations is called

Correct AnswerverifiedShow Answer

Consumers have three alternatives in financing current purchases,including drawing up on savings,use their present earnings,or borrow against their expected future income

Correct AnswerverifiedShow Answer

Perhaps the greatest disadvantage of using credit is the temptation to overspend.

Correct AnswerverifiedShow Answer

Another name for credit when loans are made on a continuous basis and borrower is billed periodically for at least partial payment is known as:

Correct AnswerverifiedShow Answer

If you are a woman,a creditor must

Correct AnswerverifiedE

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedFalse

There are very few valid reasons for using credit.

Correct AnswerverifiedShow Answer

Generally,most of the information in your credit file may be reported for only 3 years.

Correct AnswerverifiedShow Answer

If there is incorrect information in your credit file,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The use of credit indicates personal and financial instability.

Correct AnswerverifiedShow Answer

Correct Answer
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True

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E

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False

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