Test Bank For Personal Finance 12th Edition by E. Thomas Garman
$19.99
Test Bank For Personal Finance 12th Edition by E. Thomas Garman
1. Credit is a term used to describe any situation in which goods, services, or money is received in exchange for a promise to repay at a future date.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Explain reasons for and against using credit
NATIONAL STANDARDS: United States – BB_2 – Industry
KEYWORDS: Bloom’s: Remembering
OTHER: Analytic
NOTES: 6.1
2. The most commonly used forms of credit by consumers are loans and credit cards.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Explain reasons for and against using credit
NATIONAL STANDARDS: United States – BB_2 – Industry
KEYWORDS: Bloom’s: Understanding
OTHER: Analytic
NOTES: 6.1
3. Loans generally require equal payments over a set period of time.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Explain reasons for and against using credit
NATIONAL STANDARDS: United States – BB_2 – Industry
KEYWORDS: Bloom’s: Understanding
OTHER: Analytic
NOTES: 6.1
4. Convenience use of credit is common.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Explain reasons for and against using credit
NATIONAL STANDARDS: United States – BB_2 – Industry
KEYWORDS: Bloom’s: Understanding
OTHER: Analytic
NOTES: 6.1
5. Credit cards allow repeated use of credit as long as you make the minimum monthly payment.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Explain reasons for and against using credit
NATIONAL STANDARDS: United States – BB_2 – Industry
KEYWORDS: Bloom’s: Understanding
OTHER: Analytic
NOTES: 6.1
6. Credit cards allow repeated use of credit as long as equal monthly payments are maintained over a set period of time.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Explain reasons for and against using credit
NATIONAL STANDARDS: United States – BB_2 – Industry
KEYWORDS: Bloom’s: Understanding
OTHER: Analytic
NOTES: 6.1
the payments will vary according to the balance of the debt on the account.
7. Credit cannot be used to own expensive products sooner.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Explain reasons for and against using credit
NATIONAL STANDARDS: United States – BB_2 – Industry
KEYWORDS: Bloom’s: Understanding
OTHER: Analytic
NOTES: 6.1
this is why most people use credit
8. Credit card blocking is the process whereby the merchant may notify the credit card issuer to put a hold on your account for the anticipated total amount of the charge.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Explain reasons for and against using credit
NATIONAL STANDARDS: United States – BB_2 – Industry
KEYWORDS: Bloom’s: Understanding
OTHER: Analytic
NOTES: 6.1
9. Advantages of credit use include increased protection against rip-offs and frauds.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Explain reasons for and against using credit
NATIONAL STANDARDS: United States – BB_2 – Industry
KEYWORDS: Bloom’s: Understanding
OTHER: Analytic
NOTES: 6.1
10. People can use credit to take advantage of “free” credit.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Explain reasons for and against using credit
NATIONAL STANDARDS: United States – BB_2 – Industry
KEYWORDS: Bloom’s: Understanding
OTHER: Analytic
NOTES: 6.1
11. Taking on excessive debts early in life may compromise your goal of being financially successful.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Explain reasons for and against using credit
NATIONAL STANDARDS: United States – BB_2 – Industry
KEYWORDS: Bloom’s: Understanding
OTHER: Analytic
NOTES: 6.1
12. Convenience use of a credit card is justified only if the card balance is paid in full by the end of the year.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Explain reasons for and against using credit
NATIONAL STANDARDS: United States – BB_2 – Industry
KEYWORDS: Bloom’s: Understanding
OTHER: Analytic
NOTES: 6.1
convenience usage should be paid off monthly.
13. Credit use increases future buying power.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Explain reasons for and against using credit
NATIONAL STANDARDS: United States – BB_2 – Industry
KEYWORDS: Bloom’s: Understanding
OTHER: Analytic
NOTES: 6.1
it decreases future buying power.
14. A principal problem with using credit is the opportunity cost of being less able to save and invest.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Explain reasons for and against using credit
NATIONAL STANDARDS: United States – BB_2 – Industry
KEYWORDS: Bloom’s: Understanding
OTHER: Analytic
NOTES: 6.1
15. Interest is the price of credit.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Explain reasons for and against using credit
NATIONAL STANDARDS: United States – BB_2 – Industry
KEYWORDS: Bloom’s: Remembering
OTHER: Analytic
NOTES: 6.1
16. The lower the annual percentage rate of interest (APR), the higher the cost of credit.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Explain reasons for and against using credit
NATIONAL STANDARDS: United States – BB_2 – Industry
KEYWORDS: Bloom’s: Understanding
OTHER: Analytic
NOTES: 6.1
the lower the APR the lower the cost of credit.
17. The APR can be used to compare credit contracts with different time periods, finance charges, repayment schedules, and amounts borrowed.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Explain reasons for and against using credit
NATIONAL STANDARDS: United States – BB_2 – Industry
KEYWORDS: Bloom’s: Understanding
OTHER: Analytic
NOTES: 6.1
18. The Truth in Lending Act requires lenders to state the finance charge both in dollars and as an annual percentage rate (APR).
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Explain reasons for and against using credit
NATIONAL STANDARDS: United States – BB_1 – Legal
KEYWORDS: Bloom’s: Remembering
OTHER: Analytic
NOTES: 6.1
19. The APR expresses the cost of credit on a monthly basis as a percentage rate.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Explain reasons for and against using credit
NATIONAL STANDARDS: United States – BB_2 – Industry
KEYWORDS: Bloom’s: Understanding
OTHER: Analytic
NOTES: 6.1
the APR expresses the cost of credit on a yearly basis as a percentage rate.
20. When comparing loans from two or more sources you want to focus on the lowest monthly payment.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Explain reasons for and against using credit
NATIONAL STANDARDS: United States – BB_2 – Industry
KEYWORDS: Bloom’s: Understanding
OTHER: Analytic
NOTES: 6.1
you should focus on the lowest APR.
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