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Ch. 5: Consumer Credit Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1. Calculate the effective annual rate for an interest rate of 10 percent calculated quarterly (4 times a year):

Question 2 2. Your beginning balance is $1200. With an APR of 12 percent, what is your balance at the end of the year if calculations are done on a monthly basis?

Question 3 3. Loans often require the repayment of

Question 4 4. Which of these is NOT an advantage of loans?

Question 5 5. When a variable interest rate is advertised as '5/1,' what do each of those numbers mean?

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Question 6 6. Sam borrows $800 from the local bank, at an annual rate of 6.85%. The loan period is 37 weeks. How much money will he have to pay back at the end of the loan?

Question 7 7. Kevin wants to file bankruptcy. He's the married father of three college-aged children. Kevin's family owns several assets including three cars and two houses. Between Kevin and his wife, the family makes an income of approximately $300,000. Their overall debt is over $1 million, with more than half of that in unsecured debt like credit cards and medical bills. Kevin will likely use _____ while filing for bankruptcy.

Question 8 8. Judy is buying a car, which is being financed by a local dealership. What will happen once she pays the dealership back?

Question 9 9. Gertie and Nate are planning to open a small landscaping company. They intend to use the equity in their home to secure a business loan from the bank. Their home is an example of:

Question 10 10. Joseph's family owns several assets, including three cars and two houses. Between Joseph and his wife, the family makes an income of approximately $300,000, which is more than the median income in their state. Their overall debt is almost $1 million, with more than half of that in unsecured debt like credit cards and medical bills. What type of bankruptcy is BEST for Joseph?

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Question 11 11. What is the economic term for the rate at which money loses value?

Question 12 12. Which of the following is a reason a lender would encourage a consumer to accept an adjustable rate mortgage?

Question 13 13. Not all debts can be discharged through personal bankruptcy. Which of the following must still be paid, even after a successful bankruptcy?

Question 14 14. Rebecca wants to borrow $500 to buy her favorite video game player and a couple of games. She asks a friend to lend her this amount, offering to pay him back $548 in 9 months. What is the annual interest rate for this short term loan?

Question 15 15. Greg wants to file bankruptcy. He wants to keep all of his assets, though his house is in foreclosure. He owes $200,000 on his house and $100,000 in unsecured debt, but has a regular salary of almost $30,000 a year. Which chapter of bankruptcy is Greg likely use?

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Question 16 16. Margie's credit card bill is due on the 30th of each month. She sent her payment on the 25th, but the company posted the payment on the 5th of the following month and charged her a late fee. This is likely a violation of the:

Question 17 17. Anne would like to file bankruptcy because she owes around $100,000 in unsecured credit card bills she cannot pay. She is a single mother and has very few assets. She has a regular salary but makes only minimum wage. What type of bankruptcy is BEST for Anne?

Question 18 18. Sean needs to borrow $1000 to fly to Europe in the summer. His friend Tim offers him a loan over two years, at an annual interest rate of 4%. He can also borrow the same amount from his bank at an annual rate of 5%, but the loan needs to be paid back in 18 months. In addition, his cousin offers to loan him the $1000, provided that Sean pay her back $1100 in two years. Which of the following statements is true?

Question 19 19. Once a credit is used, it _____.

Question 20 20. Sally received a copy of her credit report and noticed an error. The report lists a credit card she has never owned. She wants to dispute this error. What law contains information about how to do this?

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Question 21 21. What is the future value of a loan of $2800 to be repaid in 8 months at an annual interest of 9%?

Question 22 22. John has just paid off the full balance of his credit card. What happens to the debt?

Question 23 23. Helen expects to receive $2000 in six months. Her bank offers loans at an annual rate of 5.60%. How much could she borrow now if she wants to be able to pay off the entire loan (including interest) with the $2000 she will receive in six months?

Question 24 24.

Suzie's Superstores, Inc. wants to file bankruptcy. They are insolvent and want to re-organize their debt, but stay in business.

Which type of Bankruptcy proceeding will Suzie's Superstores most likely to use?

Question 25 25. Which type of credit requires you to pay the total balance in 30, 60, or 90 days?

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Question 26 26. Which of the following scenarios illustrates a situation in which a lender quantifies a borrower's character to determine creditworthiness?

Question 27 27. The Federal Trade Commission is made up of several different bureaus. Which bureau handles credit protection?

Question 28 28. Mary has never had a credit card, and she has never taken out any loans before. Why might she be denied a loan if she applies for one?

Question 29 29. Jillian wants to keep all of her assets, though the bank is threatening foreclosure on her house. She owes $200,000 on her house and another $50,000 in unsecured debt. She has a regular salary of almost $40,000 a year. What type of bankruptcy is BEST for Jillian?

Question 30 30. Financing, or money that can be borrowed, is called _____.

Ch. 5: Consumer Credit Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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