Question 1

Which of the following is not an element of a credit report?

Accepted Answer

Marital status is not included in a credit report. The other options listed are common elements found in a credit report.

Question 2

If Brian has a home worth $400 000 and a mortgage of $200 000,he should be able to get a HELOC for $160 000 at a better interest rate than if he got an unsecured line of credit.

Accepted Answer

The answer of If Brian has a home worth $400...

Question 3

Which of the following is a typical example of an instalment loan?

Accepted Answer

A student loan is a typical example of an instalment loan as it involves borrowing a set amount of money and repaying it in fixed monthly payments over a specific period of time, usually with a set interest rate.

Question 4

Credit card use can be good for your financial plan if you have budgeted to pay the entire balance when the statement is due.

Accepted Answer

If you pay off your entire credit card balance each month, you can avoid accruing interest and improve your credit score. However, if you carry a balance, the high-interest rates charged on credit card debt can lead to financial trouble. Therefore, responsible credit card use requires budgeting to pay off the entire balance when due.

Question 5

Which of the following is an advantage of using credit?

Accepted Answer

Using credit reduces the need to carry cash, which can be inconvenient and potentially unsafe. Credit allows for electronic transactions and the ability to make purchases without having cash on hand.

Question 6

If not objected to by the creditors,a consumer proposal could enable someone with $50 000 in consumer debt to pay off $30 000 of it and have it removed from their credit bureau report.

Accepted Answer

A consumer proposal allows a person to negotiate with their creditors to pay back a portion of their debt, typically less than the full amount, in exchange for having the remaining debt forgiven. If the proposal is accepted by the creditors, the person can pay off the reduced amount and have it removed from their credit report after a certain period of time. However, if the proposal is not accepted, the person may need to file for bankruptcy or find another solution to manage their debt.

Question 7

The greatest benefit of student loans is that the interest is tax deductible.

Accepted Answer

The greatest benefit of student loans is that they can make higher education accessible to those who otherwise couldn't afford it, not the tax deductibility of the interest.

Question 8

One of the greatest benefits of leasing a car is that you do not have the hassles of ownership.

Accepted Answer

The answer of One of the greatest benefits of leasing...

Question 9

The risk in co-signing on a loan for a friend is not significant,as you are not the primary borrower.

Accepted Answer

Co-signing on a loan means you are equally responsible for the repayment of the loan as the primary borrower. If the primary borrower defaults on the loan, you are legally responsible for repaying the loan, which can have a significant impact on your credit score and financial stability. Therefore, the risk in co-signing on a loan for a friend is significant.

Question 10

If a buyer has limited capital,leasing a car will usually require lower monthly payments than a car loan.

Accepted Answer

Leasing typically involves lower monthly payments than a car loan because the lessee is only paying for the use of the car for a certain period of time, rather than paying for the full value of the car. However, it's important to consider the long-term costs and potential limitations of leasing versus buying.

Question 11

Which of the following will not be included on your credit report?

Accepted Answer

Employment income is not included on your credit report. Your personal information, unpaid accounts, and companies that have recently inquired about your credit report will be included on your credit report.

Question 12

The worst outcome from identity theft is that you could be responsible for charges someone made fraudulently on your credit card.

Accepted Answer

Identity theft can lead to more severe consequences than fraudulent charges on your credit card, such as damage to your credit score, legal issues, or even criminal charges if the thief commits crimes under your identity.

Question 13

If you were charged the maximum legal rate of interest on a $1000 loan for one year,the interest cost would be $60.

Accepted Answer

The maximum legal rate of interest varies by state and country, so it cannot be assumed that it is always 6%. Additionally, the interest cost would be $60 if the interest rate was 6%, but it could be more or less depending on the actual interest rate charged.

Question 14

A 20 percent annual interest rate on a $10 000 loan amortized over five-years would result in interest charges of $10 000.

Accepted Answer

A 20 percent annual interest rate on a $10 000 loan amortized over five-years would result in interest charges of approximately $8,000, not $10,000.

Question 15

The item that receives the most weight in the BEACON credit scoring system is

Accepted Answer

Credit payment history is the item that receives the most weight in the BEACON credit scoring system. This is because it reflects the borrower's ability to make timely payments, which is a critical factor in determining creditworthiness.

Question 16

The proceeds from a home equity loan must be used for home improvements.

Accepted Answer

The proceeds from a home equity loan can be used for any purpose, but homeowners often use it for home improvements or other investments.

Question 17

Which of the following will have a negative effect on a credit history?

Accepted Answer

Making as many purchases as possible with cash will not establish a credit history or show responsible use of credit, which can have a negative effect on a credit history.

Question 18

Using the previous balance method,if you paid your credit card off five days late and your balance was $5000,with interest 20% calculated daily,you would owe $15.16 in interest.

Accepted Answer

Using the previous balance method, interest is calculated based on the balance at the beginning of the billing cycle, not on daily balances or late payments. The calculation provided seems to reflect a daily interest calculation rather than the previous balance method.

Question 19

In considering the true cost of a personal loan,if you used collateral to reduce the interest charge,then the appraisal fee charged to evaluate the assets should not be considered Chapter of the cost of borrowing.

Accepted Answer

The appraisal fee charged to evaluate the assets used as collateral should be considered as part of the cost of borrowing, as it is an expense incurred as a result of taking out the loan.

Question 20

Someone with a poor credit rating might be offered a credit card with a 28 percent interest rate while someone with a high credit rating may be offered 21 percent.

Accepted Answer

The answer of Someone with a poor credit rating might...

Quiz 2: Managing Your Financial Resources - Assessing,Managing and Securing Your Credit