GEB 3006 EXAM 3 FINANCIAL LITERACY QUESTIONS WITH VERIFIED
ANSWERS 2025/ 2026 – STUDY GUIDE AND SOLUTIONS
What two factors count for 65% of your FICO score? - CORRECT ANSWER-
Payment history and outstanding debts
Which company has developed the MOST commonly used credit score to
evaluate an individual's credit? - CORRECT ANSWER-Fair Isaac Corporation
You should try to achieve a FICO score of at least ________ in order to receive a
top credit rating. - CORRECT ANSWER-760
What is the debt to credit limit ratio for the following individual?Visa Card
Master Card Credit Limit $10,000 $20,000 Balance Due $2,000 $19,000
Available Credit$8,000$1,000 - CORRECT ANSWER-70%, and decreasing this
ratio will help the credit score
It is possible that canceling an old credit card with no balance due could hurt
your credit score. - CORRECT ANSWER-TRUE
If an individual gets several quotes on a new mortgage within a two week
period, it should not immediately impact their credit score. The credit score
may later be impacted by the size of the mortgage and related monthly
payments. - CORRECT ANSWER-TRUE
A married couple is applying for a mortgage. One spouse has a low FICO score
and one has a high FICO score. What is their best strategy for getting the lowest
interest rate possible? - CORRECT ANSWER-Apply in the name of the spouse
with the highest score
,Which of the following statements is true? - CORRECT ANSWER-The treasury
yield curve is normally upward sloping, with long term rates being higher than
short term rates.
Having mortgage debt is generally considered better than having credit card
debt. - CORRECT ANSWER-True
It is illegal for an employer to review your credit report as part of the
application process. - CORRECT ANSWER-False
Assume you have three credit cards, each having a balance due of $500 for a
total of $1,500. Each card has a different interest rate ranging from 12% to 20%.
The minimum payment on each card is $10. If the minimum payment is not
made, there is a $50 penalty.If you only have $500 to pay on your credit cards
this month, the best way to minimize your interest cost is to pay an equal
amount of money on each card. - CORRECT ANSWER-False
Insurance companies are allowed to review and consider your credit score
before quoting a premium. - CORRECT ANSWER-True
In general, applying for and receiving new credit cards will tend to decrease
your FICO score. - CORRECT ANSWER-True
Assume that your parents have more liabilities than assets as a result of a
$100,000 of credit card debt. In the event of their death, the children will
inherit the credit card debt. - CORRECT ANSWER-False
Interest rates on 30 year fixed rate mortgages tend to follow or correlate with: -
CORRECT ANSWER-The 10 year treasury note rate
, Interest rates paid by corporations and individual are normally derived from
the current: - CORRECT ANSWER-The treasury yield curve
At a given interest rate, extending the term of your auto loan from 36 months
to 60 months will: - CORRECT ANSWER-Decrease your payment and increase
the amount of interest paid over the loan
Interest rates for corporations and individuals are set based on the Treasury
Yield Curve on any given day. The curve represents the cost of borrowing for
the federal government, and - CORRECT ANSWER-Is generally upward sloping,
with short term interest rates being lower than long term interest rates
If we experience a rapid increase in inflation, the Federal Reserve would likely
________ interest rates. - CORRECT ANSWER-Increase
In the event that you had $10,000 to invest in a bank Certificate of Deposit
(CD), what would be your best course of action in the event that you believed
interest rates were likely to increase in the coming years? - CORRECT ANSWER-
Invest in a short term CD and roll it over as it expires to another short term CD
Borrowing on your 401-K plan is generally considered a good financial move. -
CORRECT ANSWER-False
You should always shop for a car loan before seeing the dealer, since the loan
rates offered by dealers can be manipulated against the profit on the car and
the value of the trade-in. - CORRECT ANSWER-True
Assume you are using student loans to pay for college. What is the maximum
recommended level of debt you should incur in order to be conservative and
ANSWERS 2025/ 2026 – STUDY GUIDE AND SOLUTIONS
What two factors count for 65% of your FICO score? - CORRECT ANSWER-
Payment history and outstanding debts
Which company has developed the MOST commonly used credit score to
evaluate an individual's credit? - CORRECT ANSWER-Fair Isaac Corporation
You should try to achieve a FICO score of at least ________ in order to receive a
top credit rating. - CORRECT ANSWER-760
What is the debt to credit limit ratio for the following individual?Visa Card
Master Card Credit Limit $10,000 $20,000 Balance Due $2,000 $19,000
Available Credit$8,000$1,000 - CORRECT ANSWER-70%, and decreasing this
ratio will help the credit score
It is possible that canceling an old credit card with no balance due could hurt
your credit score. - CORRECT ANSWER-TRUE
If an individual gets several quotes on a new mortgage within a two week
period, it should not immediately impact their credit score. The credit score
may later be impacted by the size of the mortgage and related monthly
payments. - CORRECT ANSWER-TRUE
A married couple is applying for a mortgage. One spouse has a low FICO score
and one has a high FICO score. What is their best strategy for getting the lowest
interest rate possible? - CORRECT ANSWER-Apply in the name of the spouse
with the highest score
,Which of the following statements is true? - CORRECT ANSWER-The treasury
yield curve is normally upward sloping, with long term rates being higher than
short term rates.
Having mortgage debt is generally considered better than having credit card
debt. - CORRECT ANSWER-True
It is illegal for an employer to review your credit report as part of the
application process. - CORRECT ANSWER-False
Assume you have three credit cards, each having a balance due of $500 for a
total of $1,500. Each card has a different interest rate ranging from 12% to 20%.
The minimum payment on each card is $10. If the minimum payment is not
made, there is a $50 penalty.If you only have $500 to pay on your credit cards
this month, the best way to minimize your interest cost is to pay an equal
amount of money on each card. - CORRECT ANSWER-False
Insurance companies are allowed to review and consider your credit score
before quoting a premium. - CORRECT ANSWER-True
In general, applying for and receiving new credit cards will tend to decrease
your FICO score. - CORRECT ANSWER-True
Assume that your parents have more liabilities than assets as a result of a
$100,000 of credit card debt. In the event of their death, the children will
inherit the credit card debt. - CORRECT ANSWER-False
Interest rates on 30 year fixed rate mortgages tend to follow or correlate with: -
CORRECT ANSWER-The 10 year treasury note rate
, Interest rates paid by corporations and individual are normally derived from
the current: - CORRECT ANSWER-The treasury yield curve
At a given interest rate, extending the term of your auto loan from 36 months
to 60 months will: - CORRECT ANSWER-Decrease your payment and increase
the amount of interest paid over the loan
Interest rates for corporations and individuals are set based on the Treasury
Yield Curve on any given day. The curve represents the cost of borrowing for
the federal government, and - CORRECT ANSWER-Is generally upward sloping,
with short term interest rates being lower than long term interest rates
If we experience a rapid increase in inflation, the Federal Reserve would likely
________ interest rates. - CORRECT ANSWER-Increase
In the event that you had $10,000 to invest in a bank Certificate of Deposit
(CD), what would be your best course of action in the event that you believed
interest rates were likely to increase in the coming years? - CORRECT ANSWER-
Invest in a short term CD and roll it over as it expires to another short term CD
Borrowing on your 401-K plan is generally considered a good financial move. -
CORRECT ANSWER-False
You should always shop for a car loan before seeing the dealer, since the loan
rates offered by dealers can be manipulated against the profit on the car and
the value of the trade-in. - CORRECT ANSWER-True
Assume you are using student loans to pay for college. What is the maximum
recommended level of debt you should incur in order to be conservative and
