Question 1

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.
-When interest rates are rising,you would prefer a [fixed-rate | variable-rate] loan.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 2

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.
-If you want to calculate whether to take the rebate or the low interest rate on an auto financing deal,it would be most useful to have [time value of money tables | a financial calculator].

Accepted Answer

The calculation of whether to take the rebate or the low interest rate on an auto financing deal requires the use of present value calculations, which can be easily done using a financial calculator. While time value of money tables could be used, a financial calculator would provide more accurate results and be more efficient. Therefore, a financial calculator would be the most useful tool to have in this scenario.

Question 3

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.
-Almost half of all consumer loans are made by [commercial banks | finance companies].

Accepted Answer

The answer of Choose the word or phrase in [...

Question 4

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.
-[Interim financing | Single-payment loan] is used in situations where the funds to be used for repayment are known to be forthcoming.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 5

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.
-It is [legal | illegal] for a lender to charge a pre-payment penalty.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 6

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.
-The majority of consumer loans are made with [fixed | variable] interest rates.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 7

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.
-You must be a member of a [credit union | S&L] in order to borrow money there.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 8

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.
-A [sales finance company | captive finance company] purchases notes drawn up by sellers of typically big-ticket items.

Accepted Answer

A sales finance company purchases notes drawn up by sellers, while a captive finance company is owned by the seller and provides financing to their buyers. Therefore, "sales finance company" is the correct choice to complete the statement.

Question 9

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.
-A 529 plan is a [savings | lending] plan.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 10

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.
-The majority of single payment loans [are | are not] secured by collateral.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 11

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.
-When interest rates are falling,you would prefer a [fixed-rate | variable-rate] loan.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 12

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.
-Calculating interest using the [discount | simple interest] method will result in the higher APR on a single-payment loan.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 13

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.
-[Consumer finance companies | Credit unions] obtain funds from their shareholders and through open market borrowing.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 14

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.
-The longer the loan maturity,the [lower | higher] the total finance costs will be.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 15

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.
-Borrowers are more likely to ask for a(n)[single payment | installment payment] consumer loan.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 16

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.
-Loans to relatives and friends should be [verbal | written] agreements.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 17

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.
-The longer the loan maturity,the [lower | higher] the monthly payments will be.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 18

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.
-Borrowing from relatives is [highly | seldom] recommended by financial advisors.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 19

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.
-Your budget should be considered [before | after] taking on a large consumer loan.

Accepted Answer

The answer of Choose the word or phrase in [...

Question 20

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.
-You are borrowing $1,000,APR is 10%,and the loan maturity 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].

Accepted Answer

The answer of Choose the word or phrase in [...

Quiz 7: Using Consumer Loans

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. -When interest rates are rising,you would prefer a [fixed-rate | variable-rate] loan.

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. -Almost half of all consumer loans are made by [commercial banks | finance companies].

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. -It is [legal | illegal] for a lender to charge a pre-payment penalty.

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. -The majority of consumer loans are made with [fixed | variable] interest rates.

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. -You must be a member of a [credit union | S&L] in order to borrow money there.

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. -A 529 plan is a [savings | lending] plan.

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. -The majority of single payment loans [are | are not] secured by collateral.

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. -When interest rates are falling,you would prefer a [fixed-rate | variable-rate] loan.

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. -The longer the loan maturity,the [lower | higher] the total finance costs will be.

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. -Borrowers are more likely to ask for a(n)[single payment | installment payment] consumer loan.

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. -Loans to relatives and friends should be [verbal | written] agreements.

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. -The longer the loan maturity,the [lower | higher] the monthly payments will be.

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. -Borrowing from relatives is [highly | seldom] recommended by financial advisors.

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. -Your budget should be considered [before | after] taking on a large consumer loan.