UGBA 135 FINAL Exam 2026 Questions
and Answers
What is "good debt"? - Correct answer-Taking out loans in order to pay off a car, a
mortgage or an education or starting a business
What is considered "bad debt"? - Correct answer-- Borrowing money to support a
lifestyle of living beyond one's means
What is the definition of a Modern Day Millionaire? - Correct answer-- Financially
independent, no government assistance, living the life they want to lead
What is a credit card? - Correct answer-- An unsecured line of credit
- based on good faith and credit history
- this is a risk for a bank
What is a debit card? - Correct answer-- A secured line of credit
- the bank is taking no risk in issuing one of these
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,What is a charge card? - Correct answer-- Issued by a retailer allowing you to
charge purchases made only with their store
- store credit usually carries high rates or interest as high as 20 - 30% on unpaid
balances
What is prepaid card? - Correct answer-- Offered by banks and non- banks - not
linked to one's bank account
- entails high fees and interest
What is a payday loan? - Correct answer-- A high interest short term cash loan that
is intended to be repaid by future paychecks
What is installment debt? - Correct answer-- Money that is borrowed to purchase
large items such as a car or furniture paid over time
- borrower purchases the item and pays for it at regular intervals until the loan is
paid back in full
What is a deferred interest plan - Correct answer-A plan that enables a consumer to
purchase big - ticket items paying no interest or a low "teaser" rate of interest over
a promotional period.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,What are Gift Cards? - Correct answer-- Stored value cards, usually for use at a
specific retailer or merchant
What is a cashier's check? - Correct answer-- A check purchased by you from a
bank, payable to a third party designated by you.
What is a certified Check? - Correct answer-- A personal check the bank
guarantees as being supported by funds in your account
What is credit? - Correct answer-The amount of money a lender is willing to lend
subject to repayment terms and conditions such as interest, fees and penalties
What is Debt? - Correct answer-- The state of owing something such as money
What is a Debtor (or borrower)? - Correct answer-- A person or entity with debt
which owes or has the obligations to repay the debt
What is principle? - Correct answer-- The amount of money that is borrowed or
loaned
What is interest - Correct answer-THE COST OF MONEY
- paid by the borrower to obtain the used of the principal or received by the lender
for providing the principal - expressed as APR (annual percentage rate)
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, What is the Fixed Rate of Interest? - Correct answer-- A loan with an interest rate
that will remain at a predetermined or "fixed" rate for the life or term of the loan -
the rate does not fluctuate.
What is an adjustable Rate of interest? - Correct answer-- A loan where the rate of
interest is not fixed but may change at various specified times
- most commonly foun din homes where the interest rate is established for a few
years and is then changed to a new rate for the balance of the loan
What is the "go - to" rate? - Correct answer-- The interest rate you are charged on
upaid credit card balances, in addition to the variable rate to determine the total
rate of interest on your account
What is revolving credit? - Correct answer-- credit or funds made available to you
for use at any time - subject to the terms of repayment - you can use your credit
line over and over again up to its limit - it revolves
What is the default rate? - Correct answer-- an accelerated rate of interest, typically
28 - 35% charged on your credit balance as a penalty - didn't make minimum
payment on due date - or payment isn't honored by the bank such as a bounced
check
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
and Answers
What is "good debt"? - Correct answer-Taking out loans in order to pay off a car, a
mortgage or an education or starting a business
What is considered "bad debt"? - Correct answer-- Borrowing money to support a
lifestyle of living beyond one's means
What is the definition of a Modern Day Millionaire? - Correct answer-- Financially
independent, no government assistance, living the life they want to lead
What is a credit card? - Correct answer-- An unsecured line of credit
- based on good faith and credit history
- this is a risk for a bank
What is a debit card? - Correct answer-- A secured line of credit
- the bank is taking no risk in issuing one of these
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,What is a charge card? - Correct answer-- Issued by a retailer allowing you to
charge purchases made only with their store
- store credit usually carries high rates or interest as high as 20 - 30% on unpaid
balances
What is prepaid card? - Correct answer-- Offered by banks and non- banks - not
linked to one's bank account
- entails high fees and interest
What is a payday loan? - Correct answer-- A high interest short term cash loan that
is intended to be repaid by future paychecks
What is installment debt? - Correct answer-- Money that is borrowed to purchase
large items such as a car or furniture paid over time
- borrower purchases the item and pays for it at regular intervals until the loan is
paid back in full
What is a deferred interest plan - Correct answer-A plan that enables a consumer to
purchase big - ticket items paying no interest or a low "teaser" rate of interest over
a promotional period.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,What are Gift Cards? - Correct answer-- Stored value cards, usually for use at a
specific retailer or merchant
What is a cashier's check? - Correct answer-- A check purchased by you from a
bank, payable to a third party designated by you.
What is a certified Check? - Correct answer-- A personal check the bank
guarantees as being supported by funds in your account
What is credit? - Correct answer-The amount of money a lender is willing to lend
subject to repayment terms and conditions such as interest, fees and penalties
What is Debt? - Correct answer-- The state of owing something such as money
What is a Debtor (or borrower)? - Correct answer-- A person or entity with debt
which owes or has the obligations to repay the debt
What is principle? - Correct answer-- The amount of money that is borrowed or
loaned
What is interest - Correct answer-THE COST OF MONEY
- paid by the borrower to obtain the used of the principal or received by the lender
for providing the principal - expressed as APR (annual percentage rate)
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, What is the Fixed Rate of Interest? - Correct answer-- A loan with an interest rate
that will remain at a predetermined or "fixed" rate for the life or term of the loan -
the rate does not fluctuate.
What is an adjustable Rate of interest? - Correct answer-- A loan where the rate of
interest is not fixed but may change at various specified times
- most commonly foun din homes where the interest rate is established for a few
years and is then changed to a new rate for the balance of the loan
What is the "go - to" rate? - Correct answer-- The interest rate you are charged on
upaid credit card balances, in addition to the variable rate to determine the total
rate of interest on your account
What is revolving credit? - Correct answer-- credit or funds made available to you
for use at any time - subject to the terms of repayment - you can use your credit
line over and over again up to its limit - it revolves
What is the default rate? - Correct answer-- an accelerated rate of interest, typically
28 - 35% charged on your credit balance as a penalty - didn't make minimum
payment on due date - or payment isn't honored by the bank such as a bounced
check
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
