Personal Finance 7th Canadian Edition by Jack Kapoor - Test Bank

Personal Finance 7th Canadian Edition by Jack Kapoor – Test Bank

 

Instant Download – Complete Test Bank With Answers

 

 

Sample Questions Are Posted Below

 

Chapter 05

Introduction to Consumer Credit

 

 

True / False Questions

1. Consumer credit refers to the use of credit for personal needs (except a home mortgage) by individuals.
   TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-01 Define consumer credit and analyze its advantages and disadvantages.
Topic: 05-01 What Is Consumer Credit?

2. Most consumers have only one choice in financing current purchases.
   FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-01 Define consumer credit and analyze its advantages and disadvantages.
Topic: 05-01 What Is Consumer Credit?

3. Consumer credit is based on trust in people’s ability and willingness to pay bills when due.
   TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-01 Define consumer credit and analyze its advantages and disadvantages.
Topic: 05-01 What Is Consumer Credit?

 

 

4. A credit file is a report which includes the individual’s present employer and position, former employer(s), public records and a list of cheques returned for insufficient funds.
   TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

5. Collateral refers to the borrower’s assets or net worth.
   FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

6. There are very few valid reasons for using credit.
   FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-01 Define consumer credit and analyze its advantages and disadvantages.
Topic: 05-01 What Is Consumer Credit?

7. “Shopaholics” and young adults are most vulnerable to misusing credit.
   TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-01 Define consumer credit and analyze its advantages and disadvantages.
Topic: 05-01 What Is Consumer Credit?

8. College students are not a prime target for credit card issuers.
   FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-01 Define consumer credit and analyze its advantages and disadvantages.
Topic: 05-01 What Is Consumer Credit?

9. Credit should not be considered a substitute for cash.
   FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

10. It is safer to use credit, since charge accounts and credit cards let you shop and travel without carrying large amounts of cash.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-01 Define consumer credit and analyze its advantages and disadvantages.
Topic: 05-01 What Is Consumer Credit?

11. The use of credit can provide up to a 45 day “float.”
    FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-01 Define consumer credit and analyze its advantages and disadvantages.
Topic: 05-01 What Is Consumer Credit?

12. The use of credit indicates personal and financial instability.
    FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-01 Define consumer credit and analyze its advantages and disadvantages.
Topic: 05-01 What Is Consumer Credit?

13. Perhaps the greatest disadvantage of using credit is the temptation to overspend.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-01 Define consumer credit and analyze its advantages and disadvantages.
Topic: 05-01 What Is Consumer Credit?

14. With an open-end credit, you pay back one-time loans in a specified period of time in equal amounts.
    FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

15. In a closed-end credit, loans are made on a continuous basis and you make at least partial payment.
    FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

16. Using a credit card, such as Visa or MasterCard is an example of closed-end credit.
    FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

17. A line of credit is the maximum dollar amount of credit the lender has made available to you.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

18. Interest is a periodic charge for the use of credit, or other finance charges.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

19. Incidental credit is a credit arrangement that has no extra costs and no specific repayment plan.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

20. A line of credit is considered a form of revolving credit.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

21. A car loan is an example of a consumer loan.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

22. A personal line of credit is a pre-arranged loan for a specified amount that you can use by writing a special check.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

23. The credit cardholders who pay off their balances in full each month are known as convenience users.
    FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

24. Cobranding has become increasingly unpopular since General Motors launched its credit card in 1992.
    FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

25. Cobranding is the linking of a credit card with a business trade name offering “points” or premiums toward the purchase of a product or service.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

26. In the near future, smart cards will provide a crucial link between the World Wide Web and the physical world.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

27. You should sign your new credit cards as soon as they arrive.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

28. Department stores and gasoline companies are good places to obtain your first credit card.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

29. A home equity loan is based only on the amount you still owe on your mortgage.
    FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

30. A home equity loan is usually set up as a revolving line of credit, typically with a variable interest rate.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

31. Financing from car dealers in affiliation with car manufacturers is called a conditional sales contract.
    FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

32. Financing from car dealers in affiliation with financial institutions is called factory financing.
    FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

33. A home equity loan is a good source of credit for daily expenses.
    FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

34. The debt-payment-to-income ratio is calculated by dividing your total liabilities by your net worth.
    FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

35. The debt-to-equity ratio is calculated by dividing your monthly debt payments (not including house payments) by your net worth.
    FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

36. Experts suggest that you spend no more than 20 percent of your net income on credit payments. (However, 15 percent is much better.)
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

37. The debt-to-equity ratio is calculated by dividing your total liabilities by your net worth.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

38. If your debt-to-equity ratio is about ½, you have reached the upper limit of debt obligations.
    FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

39. If your debt-to-equity ratio is about 1, you have probably reached the upper limit of debt obligations.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

40. There is always a transaction fee attached to make a cash advance.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

41. The larger the debt-to-equity ratio, the riskier the situation is for lenders and borrowers.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

42. Some studies show that as many as three out of four cosigners are asked to repay the loan.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

43. When you cosign a loan, you are being asked to guarantee this debt.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

44. A lender requires a cosigner even when a borrower meets the lender’s criteria for making a loan.
    FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

45. Most creditors rely heavily on borrowers’ bank reports when considering loan applications.
    FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

46. Provincial legislation regarding consumer reporting agencies regulate the type of information that can appear in a credit report and protects the consumer’s right not to suffer from false information.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

47. Your credit report may be issued only if this occurs with your consent.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

48. Your friends and neighbors can get credit information about you.
    FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

49. Generally, most of the information in your credit file may be reported for only 3 years.
    FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

50. It is legal for creditors to ask or assume anything about a woman’s childbearing plans.
    FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

51. Consumers have three alternatives in financing current purchases, including drawing up on savings, use their present earnings, or borrow against their expected future income
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-01 Define consumer credit and analyze its advantages and disadvantages.
Topic: 05-01 What Is Consumer Credit?

52. If you think your bill is wrong, you must notify your creditor in writing within 15 days after the bill was mailed.
    FALSE

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-05 Identify the steps you can take to avoid and correct credit mistakes and protect against fraud and identify theft.
Topic: 05-27 Avoiding and Correcting Credit Mistakes

53. A credit card cash withdrawal always incurs interest from the moment of withdrawal.
    TRUE

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

 

Multiple Choice Questions

54. When did installment credit explode on the North American scene?
    A.Just after World War II
    B. with the advent of television in the late 1940s
    C. with the advent of the automobile in the early 1900s
    D. during the recession of the 1950s
    E. during the inflation of the 1970s

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-01 Define consumer credit and analyze its advantages and disadvantages.
Topic: 05-01 What Is Consumer Credit?

55. The 25-to 44-age group currently represents about 30 percent of the population but holds nearly ____________ percent of the debt outstanding.
    A.80
    B. 70
    C. 60
    D. 50
    E. 40

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-01 Define consumer credit and analyze its advantages and disadvantages.
Topic: 05-01 What Is Consumer Credit?

56. Although credit permits more immediate satisfaction of needs and desires, it
    A.does increase total purchasing power.
    B. is always best to avoid credit purchases.
    C. does not diminish your ability to buy more goods and services on credit.
    D. has no opportunity costs attached to it.
    E. does not increase total purchasing power

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-01 Define consumer credit and analyze its advantages and disadvantages.
Topic: 05-01 What Is Consumer Credit?

57. By paying cash for a purchase, you
    A.forgo the opportunity to keep the cash in an interest-bearing account.
    B. always get a cash discount.
    C. can build a better credit rating.
    D. get better personal service from store employees.
    E. have a better selection of goods than if you use credit.

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-01 Define consumer credit and analyze its advantages and disadvantages.
Topic: 05-01 What Is Consumer Credit?

58. Another name for credit when loans are made on a continuous basis and borrower is billed periodically for at least partial payment is known as:
    A.a line of credit.
    B. convenience credit.
    C. revolving credit.
    D. installment credit.
    E. bank card credit.

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

59. Which of the following is not an example of a consumer loan?
    A.home mortgage
    B. automobile loan
    C. revolving credit
    D. debt consolidation installment loan
    E. demand loan

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

60. A common example of a consumer loan is:
    A.a credit card issued by a department store.
    B. a credit card issued by VISA or MasterCard.
    C. using overdraft protection at a bank.
    D. using a cashier’s check to pay for a purchase.
    E. a mortgage loan.

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

61. Which of the following is not an example of revolving credit?
    A.a line of credit.
    B. a credit card loan.
    C. overdraft protection.
    D. charge cards.
    E. automobile loans.

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

62. The maximum amount of credit you are allowed by a creditor is called a(n)
    A.revolving credit.
    B. installment cash credit.
    C. convenience credit.
    D. line of credit.
    E. single lump-sum credit.

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

63. An installment loan is a
    A.direct loan of money for personal purposes.
    B. direct loan of money for home improvement.
    C. loan that allows you to receive merchandise such as a refrigerator or furniture.
    D. direct loan for vacation purposes.
    E. synonym for a single lump-sum credit.

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

64. A good example of an open-end credit is
    A.the use of a bank credit card to make a purchase.
    B. the mortgage loan from a savings and loan institution.
    C. automobile loan from a credit union.
    D. installment loan from a furniture store.
    E. installment loan for purchasing a major appliance.

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

65. A credit arrangement that has no extra costs and no specific repayment plan is called
    A.installment sales credit.
    B. incidental credit.
    C. line of credit.
    D. single lump-sum credit.
    E. revolving check credit.

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

66. A personal line of credit is a
    A.credit arrangement that has no extra costs.
    B. prearranged loan for a specified amount that you can use by writing a special check.
    C. credit arrangement that has no specific repayment plan.
    D. synonym for installment cash credit.
    E. synonym for single lump-sum credit.

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

67. Which of these is not a true statement? To avoid online fraud, you should __________.
    A.keep your personal information private.
    B. review your monthly bank and credit card statements.
    C. give your password only to your internet service provider.
    D. use a secure browser.
    E. give payment information only to know known businesses.

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

68. Which of these is not a characteristic of Paypal?
    A.Facilitates online auction payments.
    B. Offers password protected accounts.
    C. Allows use of credit cards.
    D. Transfers funds in U.S. dollars.
    E. No annual fees.

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

69. Which of these is not a financing option for the purchase of a car?
    A.factory financing
    B. line of credit
    C. conditional sales contract
    D. installment loan
    E. cash

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

70. In determining your credit capacity, you first provide for basic necessities, such as
    A.furniture.
    B. home furnishings.
    C. mortgage or rent.
    D. automobile.
    E. durable goods.

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

71. Experts suggest that you spend no more than ____________ percent of your net income on credit purchases.
    A.10
    B. 20
    C. 30
    D. 40
    E. 50

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

72. If you cosign a loan,
    A.you are not being asked to guarantee the debt.
    B. it is not your legal responsibility to pay the debt.
    C. you’ll have to pay up to the full amount of the debt if the borrower does not pay.
    D. the creditor must first try to collect from the borrower.
    E. the creditor cannot garnish your wages.

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

73. Debt payments-to-income ratio is
    A.calculated by dividing total liabilities by net worth.
    B. calculated by dividing monthly debt payments (not including house payments) by net monthly income.
    C. determined by dividing your assets into liabilities.
    D. a useless ratio for determining your credit capacity.
    E. rarely used by creditors in determining credit worthiness.

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

74. Debt-to-equity ratio is
    A.a useless ratio for determining your credit capacity.
    B. calculated by dividing monthly debt payments by net monthly income.
    C. determined by dividing your assets by liabilities.
    D. calculated by dividing total liabilities by net worth.
    E. rarely used by creditors in determining credit worthiness.

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

75. Which of the following agencies can produce for a subscribing creditor, almost instantaneously, a report about your past and present credit activity?
    A.The Bank of Canada
    B. The Canada Customs and Revenue Agency
    C. Your financial institution
    D. A debit bureau
    E. A credit bureau

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

76. If your monthly net (after-tax) income is $1,500, what should be your maximum amount spent on credit payments?
    A.$200
    B. $300
    C. $400
    D. $500
    E. $600

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

77. What can be included in your credit report?
    A.race
    B. nationality
    C. sex
    D. employer
    E. religion

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

78. Generally, most of the information in your credit file may be reported for only ______ years.
    A.7
    B. 9
    C. 11
    D. 13
    E. 15

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

79. If there is incorrect information in your credit file,
    A.you should sue the credit bureau.
    B. you must sue the merchant who denied the credit.
    C. the credit bureau must reinvestigate and modify or remove inaccurate data.
    D. pray that the credit bureau goes bankrupt.
    E. you cannot dispute the derogatory information.

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

80. Kathy purchased a $2,000 digital TV from Young’s Appliances. She will make 12 equal payments over the next year to pay for it. She is using:
    A.an installment loan
    B. open-end credit
    C. revolving check credit
    D. a line of credit
    E. none of the above

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

81. If you are an Ontario resident and you have declared personal bankruptcy for the first time, that fact may be reported by credit bureaus for ____________ years.
    A.5
    B. 7
    C. 12
    D. 20
    E. 25

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

82. If you have incorrect information in your credit file,
    A.you can’t really do much about it.
    B. you have no legal remedies.
    C. credit bureaus are not required to change it.
    D. there are legal remedies available to you.
    E. don’t worry much because you will still get the credit.

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

83. The best way to maintain your credit rating is to
    A.use credit sparingly.
    B. pay cash for your purchases.
    C. repay your debts on time.
    D. declare a Chapter 7 bankruptcy.
    E. use as many credit cards as you can.

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

84. The borrower’s attitude toward his or her credit obligations is called
    A.capacity.
    B. capital.
    C. character.
    D. collateral.
    E. conditions.

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

85. The borrower’s financial ability to meet credit obligations is called
    A.capacity.
    B. character.
    C. capital.
    D. collateral.
    E. conditions.

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

86. A term that refers to the borrower’s assets or net worth is called
    A.capacity.
    B. character.
    C. capital.
    D. collateral.
    E. conditions.

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

87. A loan officer is examining your income and the amount of your existing debt payments to help in the decision to make a loan to you today. Which aspect of the Five Cs of lending is the loan officer most likely looking at?
    A.Character
    B. Capacity
    C. Capital
    D. Collateral
    E. Conditions

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

88. A valuable asset pledged to assure loan payments and subject to seizure upon default is called
    A.capacity.
    B. character.
    C. capital.
    D. collateral.
    E. conditions.

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

89. If you are a woman, a creditor must
    A.require a spouse to cosign a loan.
    B. ask about your birth control practices or family plans.
    C. consider whether you have a telephone listing in your own home.
    D. refuse individual credit in your own name.
    E. consider income from your part-time employment.

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

90. In evaluating your credit application, a lender may
    A.ask your age.
    B. want to know if you are on public assistance.
    C. require your marriage certificate.
    D. ask if you are married or divorced.
    E. ask your race and nationality.

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

91. If your credit application is denied, you
    A.can sue the credit rating agency.
    B. can file a complaint against the merchant.
    C. don’t have any rights provided by law.
    D. should ask to know specifically why.
    E. can reapply for credit after 30 days.

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

92. If you think that your bill is wrong, you should first
    A.contact the local credit bureau and inform it of the billing error.
    B. complain to the Better Business Bureau.
    C. contact your provincial consumer protection agency.
    D. notify the creditor of the error.
    E. contact your attorney to settle the matter.

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-05 Identify the steps you can take to avoid and correct credit mistakes and protect against fraud and identify theft.
Topic: 05-28 In Case of a Billing Error

93. Which of the following is considered to be a consumer loan?
    A.Debit card
    B. Credit loan
    C. Personal line of credit
    D. Overdraft protection
    E. Mortgage loan

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

94. When a creditor looks at the borrower’s attitude toward credit obligations, which of the 5 Cs of credit is she analyzing?
    A.Capacity
    B. Capital
    C. Character
    D. Collateral
    E. Conditions

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

95. Valid reasons for using credit include all of the following except
    A.medical emergency
    B. acquiring a car to return to the workforce
    C. borrowing for a higher education
    D. borrow for everyday living expenses
    E. buying an item now will cost less than in the future

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-01 Define consumer credit and analyze its advantages and disadvantages.
Topic: 05-01 What Is Consumer Credit?

96. Questions you should consider before you decide how and when to make a major purchase include all except
    A. do I have the cash I need for a down payment
    B. do I want to use my savings for this purchase
    C. could I postpone this purchase
    D. what are the psychological costs of using credit (being in debt and responsible for monthly payments)
    E. all these questions should be considered

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-01 Define consumer credit and analyze its advantages and disadvantages.
Topic: 05-01 What Is Consumer Credit?

97. The advantages of credit include
    A.can purchase goods even when funds are low
    B. carrying credit cards is safer than carrying cash
    C. a credit card can allow you to carry up to a 30 day “float
    D. credit cards may be used for identification when cashing a cheque
    E. all of these are advantages of credit

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-01 Define consumer credit and analyze its advantages and disadvantages.
Topic: 05-01 What Is Consumer Credit?

98. Which of the following is not an example of revolving credit?
    A.overdraft protection
    B. charge cards
    C. mortgage
    D. line of credit.
    E. bank card credit

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

99. What percentage of Canadian households carry 1 or more credit cards
    A.20%
    B. 30%
    C. 50%
    D. 70%
    E. more than 80%

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

100. What percentage of credit card users generally pay off their balance in full every month?
     A.20%
     B. 30%
     C. 50%
     D. 70%
     E. more than 80%

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

101. Which of these is a characteristic of Paypal?
     A.Facilitates online auction payments.
     B. Offers password protected accounts.
     C. Allows use of credit cards.
     D. Transfers funds in U.S. dollars.
     E. All are characteristics of Paypal

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

102. If you cosign a loan, all of the following are true except,
     A.you are being asked to guarantee the debt.
     B. it is your legal responsibility to pay the debt.
     C. you’ll have to pay only a portion of the debt if the borrower does not pay.
     D. the creditor must first try to collect from the borrower.
     E. the creditor can garnish your wages.

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

103. If your monthly net (after-tax) income is $2,000, what should be your maximum amount spent on credit payments?
     A.$200
     B. $300
     C. $400
     D. $500
     E. $600

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

104. Generally, most of the information in your credit file may be reported for only ______ years.
     A.1
     B. 3
     C. 7
     D. 9
     E. 12

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

105. The best way to maintain your credit standing is to:
     A.carry no credit cards
     B. pay all credit card invoices within 120 days
     C. repay your debts on time
     D. cancel any cars with outstanding balances
     E. if the balance is high and you cannot pay, claim your card was lost and misused by a 3^rdparty

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-05 Identify the steps you can take to avoid and correct credit mistakes and protect against fraud and identify theft.
Topic: 05-27 Avoiding and Correcting Credit Mistakes

106. If your identity is stolen you should
     A.Contact the fraud departments of each of the two credit bureaus.
     B. Contact the creditors for any accounts that have been tampered with or opened fraudulently.
     C. File a police report
     D. Keep a copy of the police report
     E. Take all of the actions indicated

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-05 Identify the steps you can take to avoid and correct credit mistakes and protect against fraud and identify theft.
Topic: 05-27 Avoiding and Correcting Credit Mistakes

107. There are _________ main credit bureaus in Canada
     A.1
     B. 2
     C. 3
     D. 5
     E. 8

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

108. Which of the following is the best rating to have on your credit report?
     A.L0
     B. L10
     C. R0
     D. R1
     E. R9

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

109. Which of the following is the worst possible rating to have on your credit report?
     A.L0
     B. L10
     C. R0
     D. R1
     E. R9

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

110. A FICO score of 700 would be considered
     A.poor
     B. very poor
     C. a risk to default
     D. very good
     E. fair

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

111. FICO scores range between
     A.1-10
     B. 1-100
     C. 1-1,000
     D. 300-900
     E. 100-500

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

112. If your put a trip on your credit card that charges you an APR of 19.99% and make the minimum monthly payment of $45 how long will it take to pay off the credit card debt (in months)?
     A.24
     B. 36
     C. 49
     D. 60
     E. 96

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-01 Define consumer credit and analyze its advantages and disadvantages.
Topic: 05-01 What Is Consumer Credit?

113. If your put a trip on your credit card that charges you an APR of 19.99% and make the minimum monthly payment of $45 how much interest will you pay once the credit card debt is totally paid off (round to the nearest dollar)?
     A.$2,207
     B. $1,948
     C. $1,500
     D. $3,121
     E. $$435

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-01 Define consumer credit and analyze its advantages and disadvantages.
Topic: 05-01 What Is Consumer Credit?

114. What is not a type of revolving credit?
     A.Credit cards
     B. Lines of credit
     C. Overdraft protection
     D. Mortgages
     E. Charge cards

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

115. What is not a type of consumer loan?
     A.Demand loans
     B. Auto loans
     C. Installment loans
     D. Mortgages
     E. Charge cards

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

116. In 2016 what type of financial institution held the most consumer credit, excluding mortgages?
     A.Trust companies
     B. Credit unions
     C. Life insurance companies
     D. Chartered banks
     E. Special purpose corporations

 

Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

117. What is the maximum home equity line of credit that can be obtained (as a percentage)?
     A.45%
     B. 50%
     C. 65%
     D. 75%
     E. 25%

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Differentiate among various types of credit.
Topic: 05-07 Types of Credit

118. What would your credit rating be if you are making regular payments through a special arrangement to settle your debts?
     A.R5
     B. R2
     C. R6
     D. R7
     E. R9

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

119. What would your credit rating be if you have merchandise repossessed?
     A.R5
     B. R8
     C. R6
     D. R7
     E. R9

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

120. What would your credit rating be if you are declare bankruptcy?
     A.R5
     B. R2
     C. R6
     D. R7
     E. R9

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

121. What would your credit rating be if your credit is too new to rate?
     A.R5
     B. R2
     C. R6
     D. R0
     E. R9

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

122. What would your credit rating be if you pay between 60 and 90 days from the due date, or not more than three payments late?
     A.R5
     B. R2
     C. R6
     D. R3
     E. R9

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-03 Assess your credit capacity and build your credit rating.
Topic: 05-15 Measuring Your Credit Capacity

123. What is not a typical credit application question?
     A.Marital status
     B. Social insurance number
     C. Age
     D. Income
     E. Number of dependents and their ages

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

124. What is not consideration of credit history (as part of the 5 Cs of credit)?
     A.Salary
     B. Previous credit
     C. Do you pay your bills on time
     D. Do you live within yours means
     E. Have you filed for bankruptcy?

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

125. What is not consideration of capacity (as part of the 5 Cs of credit)?
     A.Salary
     B. Previous credit
     C. Place of occupation
     D. Income reliability
     E. Other sources of income

 

Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

126. What percentage of your VantageScore is based on recent credit?
     A.30%
     B. 28%
     C. 23%
     D. 9%
     E. 1%

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

127. What percentage of your VantageScore is based on payment history?
     A.30%
     B. 28%
     C. 23%
     D. 9%
     E. 1%

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

128. What percentage of your VantageScore is based on credit use?
     A.30%
     B. 28%
     C. 23%
     D. 9%
     E. 1%

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

129. What percentage of your VantageScore is based on credit balances?
     A.30%
     B. 28%
     C. 23%
     D. 9%
     E. 1%

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

130. What percentage of your VantageScore is based on available credit?
     A.30%
     B. 28%
     C. 23%
     D. 9%
     E. 1%

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

131. What percentage of consumers are rated super prime based on the VantageScore?
     A.16%
     B. 20%
     C. 25%
     D. 9%
     E. 19%

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

132. What percentage of consumers are rated prime plus based on the VantageScore?
     A.16%
     B. 20%
     C. 25%
     D. 9%
     E. 19%

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

133. What percentage of consumers are rated prime based on the VantageScore?
     A.16%
     B. 20%
     C. 25%
     D. 9%
     E. 19%

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

134. What percentage of consumers are rated non-prime based on the VantageScore?
     A.16%
     B. 20%
     C. 25%
     D. 9%
     E. 19%

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

135. What percentage of consumers are rated high risk based on the VantageScore?
     A.16%
     B. 20%
     C. 25%
     D. 9%
     E. 19%

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-04 Describe the information creditors look for when you apply for credit.
Topic: 05-21 Applying for Credit

136. What is step one of the steps to resolve a billing dispute?
     A.Phone call
     B. Letter
     C. Other alternative
     D. Contact an ombudsman
     E. Contact a lawyer

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-05 Identify the steps you can take to avoid and correct credit mistakes and protect against fraud and identify theft.
Topic: 05-27 Avoiding and Correcting Credit Mistakes

137. What is step two of the steps to resolve a billing dispute?
     A.Phone call
     B. Letter
     C. Other alternative
     D. Contact an ombudsman
     E. Contact a lawyer

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-05 Identify the steps you can take to avoid and correct credit mistakes and protect against fraud and identify theft.
Topic: 05-27 Avoiding and Correcting Credit Mistakes

138. What is step three of the steps to resolve a billing dispute?
     A.Phone call
     B. Letter
     C. Other alternative
     D. Contact an ombudsman
     E. Contact a lawyer

 

Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-05 Identify the steps you can take to avoid and correct credit mistakes and protect against fraud and identify theft.
Topic: 05-27 Avoiding and Correcting Credit Mistakes