GEB 3006 EXAM 3 FINANCIAL LITERACY QUESTIONS
What two factors count for 65% of your FICO score? - Answer -Payment history and
outstanding debts
Which company has developed the MOST commonly used credit score to evaluate an
individual's credit? - Answer -Fair Isaac Corporation
You should try to achieve a FICO score of at least ________ in order to receive a top
credit rating. - 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 - 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. - 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. - 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? - Answer -Apply in the name of the spouse with the highest score
Which of the following statements is true? - 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. -
Answer -True
It is illegal for an employer to review your credit report as part of the application process.
- 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. - Answer
-False
Insurance companies are allowed to review and consider your credit score before
quoting a premium. - Answer -True
, In general, applying for and receiving new credit cards will tend to decrease your FICO
score. - 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. -
Answer -False
Interest rates on 30 year fixed rate mortgages tend to follow or correlate with: - Answer
-The 10 year treasury note rate
Interest rates paid by corporations and individual are normally derived from the current:
- Answer -The treasury yield curve
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. - 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 ensure that
you can afford the debt payments after graduation? - Answer -No more than half of
your anticipated starting salary.
Debit cards have fewer protections if lost compared to credit cards, but credit cards can
result in significant financial difficulties for individuals who misuse the card and incur
credit card debt. - Answer -True
Assume you are borrowing $10,000 per year to cover all costs of attending UCF. If it
takes you 5 years to graduate instead of 4, then the cost of attending UCF is: - Answer
-50,000
Which of the following is NOT a major credit monitoring company? - Answer -
Transpacific
Who sets monetary policy in the United States? - Answer -The Federal Reserve
A flat or inverted yield curve often signals a recession. - Answer -True
It is generally a good idea to co-sign a loan for another individual in the event they do
not qualify for a loan. - Answer -False
Consumers are allowed by law to receive a free copy of their credit report twice a year
from each of the three credit reporting agencies. - Answer -False
Most experts recommend that consumers "freeze" their credit files as a result of recent
data leaks at Equifax. - Answer -True
What two factors count for 65% of your FICO score? - Answer -Payment history and
outstanding debts
Which company has developed the MOST commonly used credit score to evaluate an
individual's credit? - Answer -Fair Isaac Corporation
You should try to achieve a FICO score of at least ________ in order to receive a top
credit rating. - 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 - 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. - 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. - 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? - Answer -Apply in the name of the spouse with the highest score
Which of the following statements is true? - 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. -
Answer -True
It is illegal for an employer to review your credit report as part of the application process.
- 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. - Answer
-False
Insurance companies are allowed to review and consider your credit score before
quoting a premium. - Answer -True
, In general, applying for and receiving new credit cards will tend to decrease your FICO
score. - 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. -
Answer -False
Interest rates on 30 year fixed rate mortgages tend to follow or correlate with: - Answer
-The 10 year treasury note rate
Interest rates paid by corporations and individual are normally derived from the current:
- Answer -The treasury yield curve
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. - 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 ensure that
you can afford the debt payments after graduation? - Answer -No more than half of
your anticipated starting salary.
Debit cards have fewer protections if lost compared to credit cards, but credit cards can
result in significant financial difficulties for individuals who misuse the card and incur
credit card debt. - Answer -True
Assume you are borrowing $10,000 per year to cover all costs of attending UCF. If it
takes you 5 years to graduate instead of 4, then the cost of attending UCF is: - Answer
-50,000
Which of the following is NOT a major credit monitoring company? - Answer -
Transpacific
Who sets monetary policy in the United States? - Answer -The Federal Reserve
A flat or inverted yield curve often signals a recession. - Answer -True
It is generally a good idea to co-sign a loan for another individual in the event they do
not qualify for a loan. - Answer -False
Consumers are allowed by law to receive a free copy of their credit report twice a year
from each of the three credit reporting agencies. - Answer -False
Most experts recommend that consumers "freeze" their credit files as a result of recent
data leaks at Equifax. - Answer -True
