Finance Final Exam: 150 Questions with
complete and correct answers |A+ Grade
Which of the following best defines a promissory note?
written agreement to repay a loan
consumer-protection law
type of product warranty
report summarizing credit history
- Answer- written agreement to repay a loan
Which of the following is an example of open-end credit?
mortgage
car loan
credit card
student loan
- Answer- credit card
Which type of credit is used for a one-time loan for a specific purpose, such as the
purchase of a car, and must be repaid by a certain date?
open-end credit
closed-end credit
revolving credit
trade credit
- Answer- closed-end credit
, Finance Final Exam: 150 Questions with
complete and correct answers |A+ Grade
If Ned pays for a new refrigerator using an installment plan, which best describes
the method of payment?
He makes a series of payments over time.
He pays in full with a single payment in the future.
He pays in full using cash at the time of purchase.
He pays in full using a check at the time of installation.
- Answer- He makes a series of payments over time.
Which term describes an asset that is used to secure a loan?
credit
mortgage
down payment
collateral - Answer- collateral
Which of the following statements concerning credit is false?
Credit is a major economic force in the United States.
Credit involves creating a debt that must be repaid.
Credit is used by consumers and businesses but not by governments.
Credit is used to obtain items when we do not have cash to pay for them. –
Answer- Credit is used by consumers and businesses but not by governments.
, Finance Final Exam: 150 Questions with
complete and correct answers |A+ Grade
Which term denotes someone who has obtained a loan to purchase a small fishing
boat?
creditor
debtor
lender
drawer
- Answer- debtor
Which of the following is an advantage of credit cards?
They consolidate bills to allow for making a single payment on debts.
Because they are not cash, they discourage overspending and impulse purchasing.
Their users generally do not incur interest or fees on unpaid balances.
They discourage their users from making purchases that cannot be afforded. –
Answer- They consolidate bills to allow for making a single payment on debts.
Which best describes the purpose of the 20-10 Rule?
to decide whether an individual can afford a loan
to evaluate financial institutions when choosing a bank
to calculate the interest rate and fees on a credit card
to set the amount of time provided for a short-term loan
- Answer- to decide whether an individual can afford a loan
, Finance Final Exam: 150 Questions with
complete and correct answers |A+ Grade
Which is not an advisable action to take when deciding whether to buy an item on
credit?
Be careful of attempts by a lender to make a payment seem smaller than it is.
Consider the opportunity costs and trade-offs of using credit to buy an item.
Before making a purchase using credit, shop for similar items that cost less.
Avoid reviewing personal budgets, because they must be adjusted too often. -
Answer- Avoid reviewing personal budgets, because they must be adjusted too
often.
Melinda has obtained a $10,000 loan to buy a used car. She is considering 12-, 24-,
and 48-month loans, all of which carry an annual interest rate of 6%. Which of the
following statements is true?
A shorter loan period means she will pay more total interest.
A longer loan period means her monthly payments will be higher.
A longer loan period means she will pay more total interest.
A shorter loan period means her monthly payments will be lower.
- Answer- A longer loan period means she will pay more total interest.
When deciding whether to obtain a loan from a bank, which of the following is not
relevant?
down payment
annual percentage rate
complete and correct answers |A+ Grade
Which of the following best defines a promissory note?
written agreement to repay a loan
consumer-protection law
type of product warranty
report summarizing credit history
- Answer- written agreement to repay a loan
Which of the following is an example of open-end credit?
mortgage
car loan
credit card
student loan
- Answer- credit card
Which type of credit is used for a one-time loan for a specific purpose, such as the
purchase of a car, and must be repaid by a certain date?
open-end credit
closed-end credit
revolving credit
trade credit
- Answer- closed-end credit
, Finance Final Exam: 150 Questions with
complete and correct answers |A+ Grade
If Ned pays for a new refrigerator using an installment plan, which best describes
the method of payment?
He makes a series of payments over time.
He pays in full with a single payment in the future.
He pays in full using cash at the time of purchase.
He pays in full using a check at the time of installation.
- Answer- He makes a series of payments over time.
Which term describes an asset that is used to secure a loan?
credit
mortgage
down payment
collateral - Answer- collateral
Which of the following statements concerning credit is false?
Credit is a major economic force in the United States.
Credit involves creating a debt that must be repaid.
Credit is used by consumers and businesses but not by governments.
Credit is used to obtain items when we do not have cash to pay for them. –
Answer- Credit is used by consumers and businesses but not by governments.
, Finance Final Exam: 150 Questions with
complete and correct answers |A+ Grade
Which term denotes someone who has obtained a loan to purchase a small fishing
boat?
creditor
debtor
lender
drawer
- Answer- debtor
Which of the following is an advantage of credit cards?
They consolidate bills to allow for making a single payment on debts.
Because they are not cash, they discourage overspending and impulse purchasing.
Their users generally do not incur interest or fees on unpaid balances.
They discourage their users from making purchases that cannot be afforded. –
Answer- They consolidate bills to allow for making a single payment on debts.
Which best describes the purpose of the 20-10 Rule?
to decide whether an individual can afford a loan
to evaluate financial institutions when choosing a bank
to calculate the interest rate and fees on a credit card
to set the amount of time provided for a short-term loan
- Answer- to decide whether an individual can afford a loan
, Finance Final Exam: 150 Questions with
complete and correct answers |A+ Grade
Which is not an advisable action to take when deciding whether to buy an item on
credit?
Be careful of attempts by a lender to make a payment seem smaller than it is.
Consider the opportunity costs and trade-offs of using credit to buy an item.
Before making a purchase using credit, shop for similar items that cost less.
Avoid reviewing personal budgets, because they must be adjusted too often. -
Answer- Avoid reviewing personal budgets, because they must be adjusted too
often.
Melinda has obtained a $10,000 loan to buy a used car. She is considering 12-, 24-,
and 48-month loans, all of which carry an annual interest rate of 6%. Which of the
following statements is true?
A shorter loan period means she will pay more total interest.
A longer loan period means her monthly payments will be higher.
A longer loan period means she will pay more total interest.
A shorter loan period means her monthly payments will be lower.
- Answer- A longer loan period means she will pay more total interest.
When deciding whether to obtain a loan from a bank, which of the following is not
relevant?
down payment
annual percentage rate
