Cost Of Money Question Preview (ID: 33603)
WISE Test Questions.
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Lamar believes that interst rates are going to fall in the near future and remain low for a considerable period of time. She should invest in
a) nothing, she should put her money under the mattress
b) a variable rate of certificate of deposit
c) a long-term, fixed rate certificate of deposit
d) a short-term, fixed rate certificate of deposit
A person is convinced that a lending institution is charging too much interest on a loan. This person whould be aware that
a) there are state usury laws.
b) lending institutions all have their rates of interest set by the SEC
c) interset rates depend entirely on the borrower's ability to pay back the loan
d) the Federal Trade Commission has laws against intimidating borrowers
Who benefits the most from inflation?
a) long-term fixed rate borrowers
b) lenders
c) persons on fixed incomes
d) the government
The information that a lender must disclose to consumers applying for a cash loan is
a) the formula for compunded interest
b) the annual percentage rate (APR) and/or the finance charge
c) full dollar amount being paid back on the loan over its life
d) the tax obligations
The Rule of 72 is an easy way to
a) approximate your savings balance each year
b) calculate how fast your savings will double in value at given interest rates
c) calculate how much tax you will owe on the interest earned
d) calcualte the length of time it takes to pay off a credit balance
Why might rising interest rates depress stock prices:
a) stock investors are luredaway from interest-paying investments to stocks
b) rising interest rates can result in lower business profits
c) rising interest rates usually means the economy has less
d) rising interest rates can result in higher business profits
To determine the time value of money of depositing $100 in a savings account, a person needs to know the interest rate and
a) her total income
b) the rate of inflation
c) whether the account is FDIC protected
d) whether the bank offers overdraft protection
Which type of financial institution usually pays the highest rate of interest on a savings account balances?
a) savings and loan associations
b) commercial banks
c) credit unions
d) investment firm money market accounts
Which investment would you choose today if you believe interest rates will go up?
a) Long-term bonds
b) Variable-rate loans
c) Short-term savings instruments
d) Stocks
Which of the following is the federal law that requires the cost of credit be disclosed to consumers in bold print on loan agreement?
a) Fair Credit Reporting Act
b) Equal Credit Opportunity Act
c) Truth in Lending Act
d) Fair Debt Collection Practices Act
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