1.Being over 60 days past-due on a credit card can result in your lender raising the APR on that card and on other credit cards you have with the lender. This new APR is referred to as a(n)

a. error rate.

b. cumulative rate.

c. penalty rate.

d. nominal rate.

2You wish to obtain a $1,000 single-payment loan and have four loan options to choose from. Loan A is a two-year loan with an 8 percent APR and finance charge of $160. Loan B is a one-year loan with a 9 percent APR and a finance charge of $90. Loan C is a two-year loan with an 11 percent APR and a finance charge of $220. Loan D is a discount method loan for one year with a finance charge of $85. Which loan is the best deal?

a. Loan A

b. Loan B

c. Loan C

d. Loan D

3. Which type of purchase loan calls for title of the property involved to be transferred to the buyer only when the final payment has been made?

a. installment purchase agreement

b. second mortgage

c. simple-interest loan

d. conditional sales contract

4.VISA and MasterCard are examples of

a. installment credit.

b. travel and entertainment accounts.

c. thirty-day accounts.

d. bank credit card accounts.

5.A loan backed up by collateral is referred to as a(n)

a. secured loan.

b. installment loan.

c. signature loan.

d. line of credit.

6.The ending balance on your credit card statement last month was $1200 and your average daily balance was $900. The APR on the card is 18 percent. What was the finance charge for the month?

a. $13.50

b. $18.00

c. $16.20

d. $21.60

7.

Charging interest periodically over the course of a loan based upon the unpaid balance each period is referred to as the ______ ______ method.

a. discount interest

b. add-on interest

c. declining-balance

d. simple interest

8.

The APR for a charge account divided by the number of billing periods per year is the

a. monthly percentage rate (MPR).

b. average daily balance.

c. monthly finance charge.

d. periodic rate.

9.You can continue to make use of an open-ended credit account as long as

a. the amount owed is below your credit limit.

b. you can afford the monthly repayments.

c. the amount owed is equal to or below your credit limit.

d. your payments are on time.

10.What is the monthly payment for a $20,000, three-year, 10-percent loan with the interest calculated using the add-on method?

a. $167

b. $556

c. $611

d. $722

A lender whose primary business is financing the sales of its parent company such as a vehicle manufacturer is called a

a. sales finance company.

b. credit union.

c. consumer finance company.

d. pawnshop.

12.

Financial institutions that offer a variety of consumer loans from funds obtained primarily from depositors are called

a. consumer finance companies.

b. depository institutions.

c. commercial banks.

d. mutual funds.

13.With ______ credit, the borrower must repay the amount owed plus interest in a specific number of equal payments, usually monthly.

a. revolving

b. open-ended

c. installment

d. periodic