Chapters 4-6

Question 1

1) A credit card is a type of:

Answer 1

Credit Service or loan

Question 2

2) An all-in-one account that provides a complete financial service program for a single fee is known as:

Answer 2

Asset management account

Question 3

When selecting a _______, you should consider all of the following to be major factors: Convenience, Fee structure, and other charges, Personal service, Rates for savings and borrowed funds

Answer 3

Financial services provider

Question 4

What type of financial institution offers a full range of financial services including checking, savings, lending, and other services?

Answer 4

Commercial bank

Question 5

John needed some cash quickly, so he received a short-term loan based on the proportional value of an old ring. Where did he go?

Answer 5

Pawn shop

Question 6

What is a drawback of a regular savings account?

Answer 6

Low-interest

Question 7

Earning interest on previously earned interest is called:

Answer 7

Compounding

Question 8

The Truth in Savings Act requires financial institutions to disclose the _____ on savings accounts.

Answer 8

APY 100= interest/principle

Question 9

Lee wants his retail purchases to be deducted directly from his checking account. What should he use?

Answer 9

Debit card

Question 10

Laura bought a used car and was told that she needed a personal check with guaranteed payment. She obtained a:

Answer 10

Certified check

Question 11

If a check is lost or stolen, you should use a

Answer 11

Stop payment order

Question 12

What is the APY for a savings account with a $250 balance that receives $9 interest for the year?

Answer 12

100=9/250
100(0.036)
3.6%

Question 13

What is the APY for a one-year $4,000 certificate of deposit with $280 interest?

Answer 13

100=280/4000
100(0.07)
7%

Question 14

APY

Answer 14

Annual Percentage Yield

Question 15

Southern Home Lending offers home equity loans up to 80 percent of the home value for its customers. If Sue Jones has a home valued at $290,000 and a current mortgage of $87,000, how much can she borrow in a home equity loan from Acme?

Answer 15

290,000(80%) = 232,000 - 87,000
145,000

Question 16

If Vince charged $270 on his credit card with a 21 percent APR and he paid his balance in full within the grace period, how much was he required to pay?

Answer 16

270 – because he paid it off before the interest charge

Question 17

APR

Answer 17

Annual Percentage Rate

Question 18

Peter borrowed $360 to be repaid in one year. He paid 10 percent interest and a service charge of $19. What is his finance charge?

Answer 18

interest + service charge
36 + 19 = 55

Question 19

Finance Charge

Answer 19

A fee for borrowing money, added to a monthly credit card bill.

Question 20

Karen received a $1,060 loan from the bank for a vacation. The bank is using the simple interest formula for this one-year, 8.25 percent loan. What is her total interest?

Answer 20

(Total amount)(%)(rate)
(1,060)(8.25)(1)
8,745(1)
8,745

Question 21

Total interest

Answer 21

A total fee for borrowing money

Question 22

Purchasing a car so a homemaker can return to work, Borrowing for a college education, Purchasing an item that costs less now than it will later, and Paying for a medical emergency are all valid reasons for using:

Answer 22

Credit card

Question 23

The greatest disadvantage of using credit is:

Answer 23

Temptation to overspend

Question 24

Examples of closed-end credit

Answer 24

Mortgage, automobile loan, personal loan, student loan

Question 25

Examples of open-end credit

Answer 25

Credit cards, DPT. store cards, bank credit cards, Visa, MS, Amex, Diners Club, overdraft protection

Question 26

The periodic charge for the use of credit is called:

Answer 26

Interest payment

Question 27

If you miss payments on a home equity loan, you can lose your:

Answer 27

Home

Question 28

A credit card holder who pays off his balances in full each month is known as

Answer 28

Convenience user

Question 29

What are the 5 C’s of credit?

Answer 29

Character, Capacity, Capital, Collateral, Conditions

Question 30

If you think your identity has been stolen, which of the following actions does the Federal Trade Commission recommend you take immediately?

Answer 30

File a police report

Question 31

Jack borrowed $225. He paid $20 interest and a service charge of $3.00. What is his finance charge?

Answer 31

$23

Question 32

Chris received a $1,400 loan from the bank for a new appliance. The bank is using the simple interest formula for this two-year, 8-percent loan. What is his total interest?

Answer 32

$112 + $112 = 224

Question 33

What is the unit price of a 22.4-ounce box of brown sugar that costs $13.44?

Answer 33

11.44/22.4 = .60 per ounce

Question 34

Researching the brands and prices of refrigerators is called:

Answer 34

Comparison shopping

Question 35

Impulse shopping is:

Answer 35

Unplanned purchasing

Question 36

What is a written guarantee from the manufacturer that specifies the conditions under which the product can be returned, replaced, or repaired?

Answer 36

Warranty

Question 37

What type of contract covers the repair costs of a product?

Answer 37

Service contract

Question 38

What are the techniques tp get the best deal on a car purchase?

Answer 38

Research, negotiate, read the fine print

Question 39

Where is the most expensive place to get a car repaired?

Answer 39

Dealership

Question 40

Most customer complaints result from?

Answer 40

1) Defective product
2) Low quality
3) Short product lives
4) Unexpected cost
5) Deceptive pricing
6) Poor repair

Question 41

If you have a problem in which the remedy will be between $1,500 and $3,000, the appropriate tool to use would be a

Answer 41

Small claims court lawsuit