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Solved: Credit Repayment Questions

Question

Sara would like to open a bank account. What will she need to do this? Choose three answers.

A. Identification card

B. High school diploma

C. Money to start the account

D. Birth certificate

E. Proof of address

Answer:

A, C and E

Question

Which of the following is most likely to represent a fixed rate, secured debt?

A. A student loan

B. A credit card

C. A loan from a friend

D. A dealer-financed auto loan

Answer:

D. A dealer-financed auto loan

Question

Which of the following types of credits would best describes home equity loans?

A. Closed and secured

B. Closed and unsecured

C. Open and secured

D. Open and unsecured

Answer:

A. Closed and secured

Question

Which of the following is not true if you default on a student loan?

A. You will have your passport taken away.

B. You may be taken to court and have to pay all fees.

C. Your tax refund may be withheld.

D. You may not be eligible for additional financial aid for future studies.

Answer:

A. You will have your passport taken away.

Question

Many checking accounts offer multiple ways of accessing money in addition to checks. Which of these can be used to access money in a checking account?

A. Debit card

B. Credit card

C. Certificate of deposit

D. Passbook

Answer:

A. Debit card

Question

The simple interest on a loan of $200 at 10 percent interest per year is

A. $10 per year until the loan is paid off

B. $15 per year until the loan is paid off

C. $20 per year until the loan is paid off

D. $25 per year until the loan is paid off.

Answer:

C. $20 per year until the loan is paid off

Question

Which of these is an advantage of checking accounts?

A. Checking accounts prevent the customer from having overdraft fees.

B. Checking accounts allow convenient ways to deposit or withdraw funds.

C. Checking accounts are processed immediately so customer and bank records always match.

D. Checking accounts offer limited checks but offer higher rates of interest.

Answer:

B. Checking accounts allow convenient ways to deposit or withdraw funds.

Question

Compare the entries in Lupe’s records with the entries on the bank statement. What other mistake did Lupe make?

A. She recorded a transaction twice.

B. She forgot to record a transaction.

C. She wrote the wrong amount for a transaction.

D. She made a math error when calculating her balance.

Answer:

B. She forgot to record a transaction.

Question

Interest rates on credit cards

A. Can be paid annually

B. Change with the balance

C. Decrease with early payment

D. Can vary widely

Answer:

D. Can vary widely

Question

Sofia has saved $10,000. She wants to be sure that she is earning interest on her money and can add to her savings. She also wants to be able to access her money if the need should arise. Which type of account is most suitable for Sofia’s needs?

A. A money market account

B. A certificate of deposit

C. A savings bond

D. A checking account

Answer:

A. A money market account

Question

What is a closed line of credit?

A. A line of credit with a set maximum credit limit.

B. A line of credit with no interest rate.

C. A line of credit with a fixed total amount.

D. A line of credit with a legally mandated repayment schedule.

Answer:

C. A line of credit with a fixed total amount.

Question

In which situation would a savings bond be the best investment to earn interest?

A. If you need access to your cash quickly

B. If you are saving each month for a new car

C. If you are putting aside a chunk of money to purchase a house in five years

D. Saving to pay a tax bill in four months

Answer:

C. If you are putting aside a chunk of money to purchase a house in five years

Question

What is the major difference between a nationwide bank and a community bank?

A. The community bank offers more services.

B. The nationwide bank services only local customers.

C. The nationwide bank has fewer branches.

D. The community bank services only local customers.

Answer:

D. The community bank services only local customers.

Question

Taking care of your _____ first is a good budgeting strategy that includes covering your loan payments.

Answer:

Needs

Question

Which describes the difference between secured and unsecured credit?

A. Secured credit is backed by an asset equal to the value of a loan, while unsecured credit is not guaranteed by a material object.

B. Unsecured credit is backed by an asset equal to the value of a loan, while secured credit is not guaranteed by a material object.

C. Secured credit is risky because banks cannot seize assets, while unsecured credit is less risky because it is backed by material objects.

D. Unsecured credit enables lenders to seize an asset if a loan is not paid, while secured credit prohibits lenders from taking material objects.

Answer:

A. Secured credit is backed by an asset equal to the value of a loan, while unsecured credit is not guaranteed by a material object.

Question

If Emmett wants to pay off his student loan by making monthly payments for 10 years, what type of repayment plan is best for him?

Answer:

Standard repayment plan

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