Chapter 7 using consumer loans

các câu hỏi trắc nghiệm môn kế hoách tài chính, financial planing, đầy đủ, điểm cao, ôn thi cho final và các bài thi học phần, đại học Hà Nội, FMT, ngành tài chính ngân hàng, The majority of loans made by savings and loan associations are loans.

lOMoARcPSD|10289698 Chapter Using Consumer Loans Principles of Finance (Trường Đại học Ngoại thương) Studocu is not sponsored or endorsed by any college or university Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans Even if you have money, you may still be better off using an installment loan for a big-ticket purchase a True b Fals e ANSWER: True POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-5 - LO: 7-5 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM TOPICS: Bloom's: Understanding Consumer loans, like open account credit, result from a rather informal process a True b Fals e ANSWER: False POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Understanding Loans against a life insurance policy not have to be paid back a True b Fals e ANSWER: True POINTS: DIFFICULTY: Easy LEARNING OB PFIN.BILL.17.7-2 - LO: 7-2 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans The most common use of consumer loans is to purchase automobiles a True b Fals e ANSWER: True POINTS: DIFFICULTY: Easy LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering From a financial planning perspective when considering a consumer loan, you should ask yourself how the purchase fits into long-term financial plans a True b Fals e ANSWER: True POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-3 - LO: 7-3 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Analyzing When you take out a loan against the cash value of your life insurance policy, you're really borrowing from yourself a True b Fals e ANSWER: True POINTS: DIFFICULTY: Challenging LEARNING OB PFIN.BILL.17.7-2 - LO: 7-2 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans KEYWORDS: United States - AK - DISC: TVM Bloom's: Analyzing Collateral is an item of value used to secure the principal portion of a loan a True b Fals e ANSWER: True POINTS: DIFFICULTY: Easy LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering The cash value of a life insurance policy can be used as a source of loan collateral a True b Fals e ANSWER: True POINTS: DIFFICULTY: Easy LEARNING OB PFIN.BILL.17.7-2 - LO: 7-2 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering Consolidation loans are used to purchase new furniture and appliances when many items are needed at the same time a True b Fals e ANSWER: False POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Understanding 10 Consolidation loans are often used to help borrowers straighten out a critical financial situation a True b Fals e ANSWER: True POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 11 Borrowing to pay for a college education is a legitimate use of credit a True b Fals e ANSWER: True POINTS: DIFFICULTY: Easy LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Understanding 12 College costs have been escalating faster than the overall rate of inflation a True b Fals e ANSWER: True POINTS: DIFFICULTY: Easy LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 13 College costs have been escalating, but not as rapidly as the overall rate of inflation a True b Fals e ANSWER: False POINTS: DIFFICULTY: Easy LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 14 The student loans with the lowest rates of interest and the best loan terms are the PLUS loans a True b Fals e ANSWER: False POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Creating 15 The student loans with the best loan terms are the Stafford and Perkins loans a True b Fals e ANSWER: True POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Creating 16 PLUS loans are made to parents or legal guardians rather than to the student a True b Fals e ANSWER: True POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 17 Student loans are made by banks and other financial institutions, but students apply for these loans through their universities a True b Fals e ANSWER: True POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 18 In order to continue receiving student loans, the student must be making satisfactory progress in his academic program a True b Fals e ANSWER: True POINTS: Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 19 529 Plans are the newest type of student loans a True b Fals e ANSWER: False POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 20 Student loans are not dischargeable in Chapter 13 bankruptcy proceedings a True b Fals e ANSWER: True POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 21 Earnings on 529 college savings plans can be tax free when used for qualifying college education expenses a True b Fals e ANSWER: True Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans POINTS: DIFFICULTY: Easy LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 22 Student loans are dischargeable in Chapter bankruptcy proceedings a True b Fals e ANSWER: False POINTS: DIFFICULTY: Easy LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 23 Single-payment loans are often used as a form of interim financing a True b Fals e ANSWER: True POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-4 - LO: 7-4 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 24 Installment loans are typically repaid in one payment a True b Fals e Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans ANSWER: False POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Understanding 25 Installment loans are typically repaid in monthly payments a True b Fals e ANSWER: True POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Understanding 26 The repayment period on most installment loans is six to twelve months a True b Fals e ANSWER: False POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 27 The majority of consumer loans are set up with fixed interest rates a True b Fals Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-6 - LO: 7-6 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Understanding 102 Sometimes it may be better to use savings rather than credit to make a purchase This would be recommended when a the borrower has adequate savings b interest rates are rising c interest rates are falling d the cost of borrowing is greater than the interest earned on the savings e interest earned on savings is greater than the interest paid on the loan ANSWER: d POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-6 - LO: 7-6 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Analyzing 103 A legal claim that allows creditors to liquidate loan collateral is a a loan b note c security claim d lien e none of these ANSWER: d POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-6 - LO: 7-6 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page 38 lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans KEYWORDS: Bloom's: Remembering 104 The average graduating college senior leaves school with about _ in debt a $12,800 b $18,400 c $26,300 d $30,000 e $50,000 ANSWER: d POINTS: DIFFICULTY: Easy LEARNING OBJECT PFIN.BILL.17.7-1 - LO: 7-1 IVES: NATIONAL STANDA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills RDS: STATE STANDARDS United States - KS - DISC: Financial Markets and Inte - DISC: Financial : Markets and Interest Rates KEYWORDS: Bloom's: Remembering 105 Which of the following loan sources is the most expensive? a Commercial banks b Credit unions c Consumer finance companies d Savings and loan associations ANSWER: c POINTS: DIFFICULTY: Moderate LEARNING OBJECT PFIN.BILL.17.7-2 - LO: 7-2 IVES: NATIONAL STANDA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills RDS: STATE STANDARDS United States - KS - DISC: Financial Markets and Inte - DISC: Financial : Markets and Interest Rates KEYWORDS: Bloom's: Remembering 106 Which type of educational loan most likely carries the highest interest charges? a Stafford loan b Perkins loan c PLUS loan d 529 Plan ANSWER: c POINTS: DIFFICULTY: Easy LEARNING OBJECT PFIN.BILL.17.7-2 - LO: 7-2 Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page 39 lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans IVES: NATIONAL STANDA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills RDS: STATE STANDARDS United States - KS - DISC: Financial Markets and Inte - DISC: Financial : Markets and Interest Rates KEYWORDS: Bloom's: Remembering INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement Select A for the first item, B for the second item, and C if neither item will correctly complete the statement 107 Consolidation loans are generally [inexpensive | expensive] ANSWER: b POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 108 Loan repayment of a [Perkins | PLUS] loan would not begin until a student is out of school ANSWER: a POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 109 Loan repayment of a [PLUS | Stafford] loan begins within 60 days of loan disbursement ANSWER: a POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page 40 lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans KEYWORDS: Bloom's: Remembering 110 To get a government-backed student loan, one should contact his [bank | university] ANSWER: b POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 111 The interest paid on a student loan [is sometimes | is not] tax deductible ANSWER: a POINTS: DIFFICULTY: Challenging LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 112 529 plans are best suited for a child [already in college | with several years left before going to college] ANSWER: b POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Understanding 113 A 529 plan is a [savings | lending] plan ANSWER: a POINTS: DIFFICULTY: Easy LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page 41 lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 114 The majority of consumer loans are made with [fixed | variable] interest rates ANSWER: a POINTS: DIFFICULTY: Easy LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 115 When interest rates are rising, you would prefer a [fixed-rate | variable-rate] loan ANSWER: a POINTS: DIFFICULTY: Challenging LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Analyzing 116 When interest rates are falling, you would prefer a [fixed-rate | variable-rate] loan ANSWER: b POINTS: DIFFICULTY: Challenging LEARNING OB PFIN.BILL.17.7-1 - LO: 7-1 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Analyzing 117 The majority of single-payment loans [are | are not] secured by collateral Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page 42 lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans ANSWER: b POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-4 - LO: 7-4 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 118 Almost half of all consumer loans are made by [commercial banks | finance companies] ANSWER: a POINTS: DIFFICULTY: Easy LEARNING OB PFIN.BILL.17.7-2 - LO: 7-2 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 119 You must be a member of a [credit union | S&L] in order to borrow money there ANSWER: a POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-2 - LO: 7-2 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 120 [Consumer finance companies | Credit unions] obtain funds from their stockholders and through open market borrowing ANSWER: a POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-2 - LO: 7-2 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page 43 lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 121 A [sales finance company | consumer finance company] purchases notes drawn up by sellers of big-ticket items ANSWER: a POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-2 - LO: 7-2 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 122 Borrowing from relatives is [highly | seldom] recommended by financial advisors ANSWER: b POINTS: DIFFICULTY: Easy LEARNING OB PFIN.BILL.17.7-2 - LO: 7-2 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 123 Loans to relatives and friends should be [verbal | written] agreements ANSWER: b POINTS: DIFFICULTY: Easy LEARNING OB PFIN.BILL.17.7-2 - LO: 7-2 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 124 Your budget should be considered [before | after] taking on a large consumer loan ANSWER: a POINTS: Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page 44 lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans DIFFICULTY: Easy LEARNING OB PFIN.BILL.17.7-3 - LO: 7-3 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 125 The longer the loan maturity, the [lower | higher] the monthly payments will be ANSWER: a POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-3 - LO: 7-3 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Analyzing 126 The longer the loan maturity, the [lower | higher] the total finance costs will be ANSWER: b POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-3 - LO: 7-3 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Analyzing 127 You are borrowing $1,000, the APR is 10%, and the loan term is one year Total interest charges will be higher if [you pay off the loan in 12 monthly installments | you make one payment in full at the end of the year] ANSWER: b POINTS: DIFFICULTY: Challenging LEARNING OB PFIN.BILL.17.7-4 - LO: 7-4 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page 45 lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans KEYWORDS: United States - AK - DISC: TVM Bloom's: Evaluating 128 It is [legal | illegal] for a lender to charge a prepayment penalty ANSWER: a POINTS: DIFFICULTY: Easy LEARNING OB PFIN.BILL.17.7-4 - LO: 7-4 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 129 Borrowers are more likely to ask for a(n) [single payment | installment payment] consumer loan ANSWER: b POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-5 - LO: 7-5 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Understanding 130 [Installment | Single-payment] loans are used as interim financing when the funds to be used for repayment are known to be forthcoming ANSWER: b POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-5 - LO: 7-5 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Remembering 131 Calculating interest using the [discount | simple interest] method will result in the higher APR on a single-payment loan ANSWER: a POINTS: Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page 46 lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans DIFFICULTY: Challenging LEARNING OB PFIN.BILL.17.7-5 - LO: 7-5 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Creating 132 Credit life insurance [is | is not] a good financial deal from the perspective of the borrower ANSWER: b POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-2 - LO: 7-2 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Analyzing 133 Using [simple | add-on] interest would be less expensive for the borrower when determining the total to be paid to the lender ANSWER: a POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-6 - LO: 7-6 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Analyzing 134 The Rule of 78 loads an inordinate amount of interest charges to the [early | later] months of the loan ANSWER: a POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-6 - LO: 7-6 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page 47 lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans KEYWORDS: United States - AK - DISC: TVM Bloom's: Remembering 135 A finance company uses the discount method of calculating interest The loan principal is $5,000, the interest rate is 10%, and repayment is expected in two years You will receive [$5,000 | $4,000] from the lender ANSWER: b POINTS: DIFFICULTY: Challenging LEARNING OB PFIN.BILL.17.7-4 - LO: 7-4 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Analyzing 136 You are borrowing $5,000 at 9% You may choose a 24- or 36-month repayment plan Monthly payments will be higher with the [24-month | 36-month] plan ANSWER: a POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-3 - LO: 7-3 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Analyzing 137 You are borrowing $5,000 at 9% You may choose a 24- or 36-month repayment plan The total finance cost will be higher with the [24-month| 36-month] plan ANSWER: b POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-3 - LO: 7-3 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Analyzing 138 When the interest rate on savings is higher than the interest rate on a loan, it is less expensive to [borrow | use savings] to make a purchase Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page 48 lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans ANSWER: a POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-6 - LO: 7-6 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Analyzing 139 When the interest rate on savings is lower than the interest rate on a loan, it is less expensive to [borrow | use savings] to make a purchase ANSWER: b POINTS: DIFFICULTY: Moderate LEARNING OB PFIN.BILL.17.7-6 - LO: 7-6 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Analyzing 140 The recent average annual cost of a college education at a private college is [under $40,000 | over $45,000] ANSWER: b POINTS: DIFFICULTY: Easy LEARNING OBJECT PFIN.BILL.17.7-1 - LO: 7-1 IVES: NATIONAL STANDA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills RDS: STATE STANDARDS United States - KS - DISC: Financial Markets and Inte - DISC: Financial : Markets and Interest Rates KEYWORDS: Bloom's: Remembering 141 About [25% | 33%] of student loans are past due ANSWER: a POINTS: DIFFICULTY: Moderate LEARNING OBJECT PFIN.BILL.17.7-1 - LO: 7-1 IVES: NATIONAL STANDA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills RDS: STATE STANDARDS United States - KS - DISC: Financial Markets and Inte - DISC: Financial Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page 49 lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans : KEYWORDS: Markets and Interest Rates Bloom's: Remembering 142 There are now about [$5.3 billion | $1.2 trillion] in student loans outstanding ANSWER: b POINTS: DIFFICULTY: Moderate LEARNING OBJECT PFIN.BILL.17.7-1 - LO: 7-1 IVES: NATIONAL STANDA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills RDS: STATE STANDARDS United States - KS - DISC: Financial Markets and Inte - DISC: Financial : Markets and Interest Rates KEYWORDS: Bloom's: Remembering 143 Students borrowing to pay for college should base the amount borrowed on [current income | expected future salary] ANSWER: b POINTS: DIFFICULTY: Moderate LEARNING OBJECT PFIN.BILL.17.7-1 - LO: 7-1 IVES: NATIONAL STANDA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills RDS: STATE STANDARDS United States - KS - DISC: Financial Markets and Inte - DISC: Financial : Markets and Interest Rates KEYWORDS: Bloom's: Analyzing 144 [Public lenders | private lenders] of student loans are more flexible in providing financial relief when borrowers are under pressure ANSWER: a POINTS: DIFFICULTY: Moderate LEARNING OBJECT PFIN.BILL.17.7-2 - LO: 7-2 IVES: NATIONAL STANDA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills RDS: STATE STANDARDS United States - KS - DISC: Financial Markets and Inte - DISC: Financial : Markets and Interest Rates KEYWORDS: Bloom's: Remembering 145 Jamil is purchasing a new truck for $30,000 Jamil is making a $2,000 down payment, and he will make 60 monthly payments of $541 each What are the total finance costs on this loan? ANSWER: Loan amount = $28,000 ($30,000 - $2,000) Total monthly payments = $32,460 ($541 × 60) Total finance cost of loan = $4,460 POINTS: DIFFICULTY: Challenging Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page 50 lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans LEARNING OB PFIN.BILL.17.7-5 - LO: 7-5 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Analyzing 146 Jamie is going to buy some furniture with a single-payment loan that is discounted The loan will be for $5,000 for years at 10% interest Calculate the APR on this loan (Show all work.) ANSWER: Finance charge = $5,000 × 10 × = $1,000 Annual finance charge = $1,000/2 = $500 Average loan = $5,000 - $1,000 = $4,000 APR = = 125 or 12.5% POINTS: DIFFICULTY: Challenging LEARNING OB PFIN.BILL.17.7-4 - LO: 7-4 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Analyzing 147 Calculate the average percentage rate (APR) for an add-on loan with 36 monthly installments The principal is $4,000; the stated interest rate is 6% (Show all work.) ANSWER: where: M = number of payments in a year N = number of payments over entire loan F = total finance charges P = principal F = $4,000 ×.06 × = $720 POINTS: DIFFICULTY Challenging : LEARNING O PFIN.BILL.17.7-4 - LO: 7-4 BJECTIVES: NATIONAL S United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page 51 lOMoARcPSD|10289698 Chapter 7—Using Consumer Loans TANDARDS: STATE STAN United States - KS - DISC: Financial Markets and Inte - DISC: Financial Markets and DARDS: Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Evaluating 148 Calculate the finance charge and the monthly payment on a $20,000 add-on installment loan with an interest rate of 9% and a term of years (Show all work.) ANSWER: Finance charge = $20,000 ×.09 × = $9,000 Monthly payment = = $483.33 POINTS: DIFFICULTY: Challenging LEARNING OB PFIN.BILL.17.7-6 - LO: 7-6 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Analyzing 149 Downward Motors has offered Vicki either a $2,500 rebate or a 2%, 4-year loan on the new SUV she is purchasing for $33,000 with a $3,000 down payment Vicki has done her homework and knows that she can get a 6%, 4-year loan at her credit union Should Vicki take the rebate or the 2% loan from the dealer? (Show your key strokes.) ANSWER: PV = 30,000 PMT = (651) $30,000 $27,720 −27,500 I = 2/12 I = 6/12 − 2,500 N = × 12 N = × 12 $27,500 $ 220 PMT = $651 PV = 27,720 Taking the rebate and financing the SUV through the credit union will save Vicki $220 She should take the rebate POINTS: DIFFICULTY: Challenging LEARNING OB PFIN.BILL.17.7-6 - LO: 7-6 JECTIVES: NATIONAL STA United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills NDARDS: STATE STANDA United States - KS - DISC: Financial Markets and Inte - DISC: Financial RDS: Markets and Interest Rates United States - AK - DISC: TVM KEYWORDS: Bloom's: Analyzing Cengage Learning Testing, Powered by Cognero Downloaded by Thanh H?ng (thanhhang.hn131099@gmail.com) Page 52