Ch. 4 Test Prep Question Preview (ID: 27465)

a) True

b) False

c)

d)

a) 1 year

b) 10 years

c) 5 years

d) 20 years

a) True

b) False

c)

d)

a) True

b) False

c)

d)

a) A) Your financial success

b) B) The risk of your not repaying debt

c) C) Your income level

d) D) The amount of money you have in the bank

a) A) A call from a collection agency about a debt you didnʹt incur

b) B) Bank and billing statements donʹt arrive on time

c) C) Your credit report shows accounts you didnʹt open

d) D) All of the above

a) A) History of rental and utility payments

b) B) Amount of your down payment and employment history

c) C) You cannot get a mortgage without a credit history

d) D) A and B

a) A) The lottery and other forms of gambling will make you rich.

b) B) You have ʺarrivedʺ financially once you get approved for a credit card.

c) C) Debt is a tool and should be used to create prosperity.

d) D) Borrowing money can have serious consequences and prevent you from building wealth.

a) Spending behavior does not matter as long as you pay off the credit card balance each month.

b) Studies show that there is no change in spending behavior whether a person uses cash or credit.

c) C) People typically spend less when they know that they are earning credit card ʺrewards.ʺ

d) Studies show that consumers typically spend more when using credit as opposed to cash purchases.

a) A court-ordered attachment that allows a lender to take monies owed directly from a borrowerʹs paycheck

b) B) Process of taking something back for failure to make payments

c) Process by which the holder of a mortgage sells the property of a homeowner who has fallen behind on payments

d) D) A legal procedure for dealing with debt problems of individuals and businesses

a) List your debts in order from smallest to largest balance and focus on paying the smallest debt off first.

b) B) Every extra dollar you get should be thrown at the largest debt first.

c) C) Attack your debt with intensity.

d) Every time you pay off a debt, you add its old minimum payment to your next debt payment.

a) A) Get a 15-year mortgage with a 5% down payment.

b) B) Get a 30-year mortgage so that you can get the lowest possible payments.

c) The most ideal way to buy a house is with 100% down; if that is not an option, you should get no more than a 15-year, fixed r

d) D) Get a 30-year mortgage with a 20% down payment.

a) Plan your purchase in advance using the sinking fund method of saving.

b) Place your savings in a mutual fund so that your money can make more money.

c) Start with an inexpensive car and gradually move up in car value as your savings increases.

d) Explore new car dealerships for the best interest rate.

a) A) Prior to the FCRA, consumers were unable to challenge errors in their credit reports.

b) B) Under FCRA, consumers are allowed to receive one free credit report every five years.

c) The U.S. Congress enacted the Fair Credit Reporting Act to address concerns over consumer credit report accuracy, privacy and

d) Under FCRA, creditors must notify consumers if they deny credit based on a credit report file, and they must also tell the co

a) Type of debt

b) New debt

c) Duration of debt

d) All of the above

a) Go into debt

b) Rent a car

c) Purchase something online

d) Purchase an airline ticket

a) A) Quit borrowing money

b) B) Get a part-time job or work overtime

c) C) Sell something

d) D) Borrow money from your parents to pay for the debt

a) Getting a personal loan from a bank

b) Using credit cards

c) Paying cash for all purchases

d) Taking out a mortgage on a house

a) True

b) False

c)

d)

a) True

b) False

c)

d)