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Multiple Choice Quiz
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1
Which of the following is not an advantage of a credit card?
A)Credit cards permit the purchase of goods and services even when funds are low.
B)Credit cards allow shopping convenience and the efficiency of paying for several things with one monthly bill.
C)The use of credit cards can provide up to a 50-day float on purchases.
D)The interest rate on credit cards can be higher than other sources of credit.
E)All of the above are advantages of credit cards
2
You purchase $2500 worth of furniture from Mathis Sisters Furniture. You decide to use their plan where you make 12 equal payments over the next year to pay for it. You sign a contract which specifies what your payments are and when they are due. This is an example of:
A)Closed-ended credit.
B)Open-ended credit.
C)Revolving check credit.
D)A line of credit.
E)None of the above.
3
Which of the following is not a suggestion for choosing a credit card?
A)Be aware of some cards that offer 'no fee' or low interest rates but charge you a transaction fee each time you use it.
B)Use a local financial institution for your credit card even if the interest rate and annual fee charged are higher.
C)Be aware of some credit cards that do not charge you an annual fee or have low interest but start charging you interest as soon as you purchase an item.
D)If you are using your credit card as monthly installment credit, look for a credit card with a low monthly finance charges.
E)Department stores and gasoline companies are good places to obtain your first credit card.
4
John Camey has a house that is worth $150,000. He has a mortgage on it worth $85,000. His bank allows him to borrow up to 90 percent of the value of the house. What size home equity loan can John get?
A)$65,000
B)$50,000
C)$135,000
D)$85,000
E)None of the above
5
Stacia Wert-Gray has found that her take home pay per month is $2200. What is the maximum dollar amount of debt payments she should have?
A)$880
B)$440
C)$330
D)$0
E)None of the above
6
Suppose John Ashby has calculated that the value of all of his assets (excluding the value of his home) is $225,000. He has also estimated that the value of all of his debts (excluding his mortgage) is $100,000. What is John's debt to equity ratio?
A).80
B).44
C)1.25
D)2.25
E)None of the above
7
A bank that is looking at your past payment records on your loans by examining your credit report is most likely examining which aspect of the 5 C's of lending?
A)Character
B)Capacity
C)Collateral
D)Capital
E)Conditions
8
Paula Smith has been married for five years and plans on staying married. She wants to establish her own credit history. Which of the following is a step she should take?
A)Close all joint accounts.
B)Establish a separate credit card account in her own name.
C)Change her name.
D)Transfer all joint accounts to her name alone.
E)All of the above are things she should do.
9
Miranda Sellars pays off the balance on her credit card every month. What type of credit card user is she known as?
A)A borrower
B)A convenience user
C)A discriminating user
D)A economical user
E)None of the above
10
The __________ is the law that places the burden of proof for accurate credit information on the credit reporting agency.
A)Fair Credit Reporting Act
B)Equal Credit Opportunity Act
C)Fair Debt Collection Act
D)Consumer Credit Reporting Reform Act
E)Fair Credit Billing Act





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