Q.1 Which of the following is true? A lender can legally discriminate in granting credit based upon:

A. the likelihood that the borrower will become pregnant, and thus unable to work, while the loan is still outstanding.

B. the likelihood that the borrower is likely to die from old age while the loan is outstanding.

C. marital status

D. the lenders perception of the likelihood of losing money by lending money to a particular borrower.

Q.2 Vickie wants to borrow $5,000 for 6 years. She will repay the debt, plus the finance charges in one lump sum at the end of the 6 year period. If the lender charges her 8% simple interest, how much will Vickie pay in finance charges? (No dollar signs, commas or decimal points).

Q3. Which of the following is not an example of "open ended" credit?

A. a home mortgage

B. a line of credit from a bank

C. overdraft protection on a checking account

D. a credit card

Q.4 When the declining balance method is used to calculate interest on an installment loan, the periodic interest rate is applied to the:

A. the beginning balance for that period.

B. the total value of the original loan.

C. the ending balance for that period.

D. the total value of the original loan divided by the terms (i.e., number of years)

Q.5 The APR for an add-on loan will be __________ the interest used to calculate finance charges.

A. lower than

B. either equal to or smaller than, but definitely not greater than.

C. greater than

D. equal to

Q.6 The APR for a declining balance loan will be ___________ the rate used to calculate finance charges (assuming there are no other fees or charges).

A. equal to

B. lower than

C. greater than

Personal and family Finance