less complex X Theme 8 Review - Answer Keypvjauteri.pbworks.com/w/file/fetch/122313627/Theme 8...

Theme 8 Review - Answer Key

1.

1

less complex X more complex simpler less important

Due to technology, the financial world is becoming _______________ each year.

2.

1

X Spending Debt Credit Personal Finance

The term for the act of purchasing goods and services by paying cash or using credit.

3.

1

X True False

A solid understanding of how spending, debt and credit are related will help you to become successful.

4.

1

Debt Credit Income X Expenses

This is the term for money spent by an individual to purchase goods and services.

5.

1

True X False

Many, but not all expenses you have can be classified as 'needs' or 'wants'.

6.

1

X True False

The basic necessities of life are considered 'needs'.

7.

1

Basic Expenses Secondary Expenses Wants X Needs

Expenses affecting your health and welfare are considered ____________.

Theme 8 Review - - Printed: 5/22/2014 of 23Copyright (c) 2010 - 2014 REMTECH, inc. All Rights Reserved.

8.

1

Housing Utilities Food Health Care X All of the above

Which of the following is considered a basic necessity of life?

9.

1

X True False

Expenses affecting the quality of your life are considered 'wants'.

10.

1

Clothing Leisure Education Miscellaneous X All of the above

Which of the following is considered a 'want'?

11.

1

True X False

You are creating savings if you spend more money than you make.

12.

1

X True False

Most individuals do not realize how fast debt accumulates.

13.

1

the elderly only those 50 or older retired people X young adults

Establishing credit is very important for _______________.

14.

1

X True False

Having good credit can help you rent an apartment, buy a car and get a job.

15.

1

X True False

Before 1980, credit was not generally extended to those who did not have the ability to repay debt.


16.

1

Federal Education Department First Education Department X Federal Reserve System Fiscal Exchange Department

What does 'FED' stand for?

17.

1

X True False

Obtaining credit today is not as regulated as it was prior to 1980.

18.

1

True X False

You should only consider the short-term effects on your lifestyle when making financial decisions.

19.

1

True X False

Most young people acquire their knowledge of spending in formal classrooms.

20.

1

X True False

Young people often give in to peer pressure and the urge of instant gratification.

21.

1

Friend Rapport X Peer Pressure Steady Relationship Job Anxiety Ethnic Tolerance

Stress and/or anxiety placed on an individual by their friends to act or respond in a manner generally accepted by their friends is usually called this.

22.

1

True X False

Most major life events you experience will not affect your level of spending.

23.

1

True X False

BLS is an acronym for the Banking Legal Society.


24.

1

Adults 25 -34 Adults 35 - 44 Adults 55 - 74 X Adults 65 -74

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Based on the Consumer Expenditure Survey (CES), which adult age group spends more on health care?

25.

1

True X False

The True cost of spending will always be less than the price of the item you purchase.

26.

1

X True False

Opportunity cost is the cost of making a spending decision compared to the cost of the other financial alternatives.

27.

1

how you will pay the opportunity cost of spending the risk to your credit X All of the above

The True cost of spending depends on ___________________.

28.

1

$ 383 $ 165 X $ 83 $ 41

To the nearest dollar, what would be the opportunity cost associated with spending $300 now rather than purchasing a 5-year CD paying 5% per year?

29.

1

True X False

The future is very simple to predict.

30.

1

True X False

You should make all your spending decisions based on what you think may happen in the future.


31.

1

X easier the same harder riskier

Most people believe it is ____________ to use credit than pay cash for goods and services.

32.

1

X True False

You should always relate the cost of an item to the number of hours you have to work to pay for it.

33.

1

True X False

The number of people with severe debt problems is much smaller today than it was 20 years ago.

34.

1

Debt Interest Net Worth X Credit

This is the term for the process of buying items or borrowing money with the understanding that the individual receiving the item/money will repay the debt plus interest sometime in the near future or over a defined period of time.

35.

1

True X False

It is much harder to obtain credit today than it was 20 years ago.

36.

1

X True False

You have accepted a legal obligation to repay the debt plus interest when you accept credit.

37.

1

bad, worse debit, credit card housing, health care X installment, revolving

Debt can be classified as ____________ or ____________ debt.


38.

1

Regular X Installment Revolving Bad Credit Card

You will make regular and equal payments to repay ____________ debt.

39.

1

X True False

Installment debt is money owed via a long-term loan agreement.

40.

1

True X False

Installment debt is also called open-end debt.

41.

1

Home Mortgage Car Loan X Credit Card Savings Account

A _______________ is an example of revolving debt.

42.

1

X True False

You will be required to make a minimum monthly payment to repay revolving debt.

43.

1

X True False

Revolving debt is also called open-end debt.

44.

1

Liquidation X Bankruptcy Insolvency Estate sale

This is the name for a proceeding in which an individual or business, unable to meet their financial obligations, petitions the court for protection from their collectors.


45.

1

10,000 100,000 X 1,000,000 10,000,000

The number of individuals declaring bankruptcy has averaged _______________ per year since 2000.

46.

1

Low interest rates Internet shopping Easy access to credit College tuition and fees X All of the above

Which of the following do financial experts indicate as the reason the typical consumer has more debt today than in the past?

47.

1

True X False

All debt is bad.

48.

1

True X False

Good debt is debt acquired when purchased assets decrease in value while owned or provide hopeful advantages while the debt is being repaid.

49.

1

True X False

Purchasing items you really want on credit is considered good debt.

50.

1

X True False

Purchasing wasting assets on credit is considered bad debt.

51.

1

True X False

A meal at a fancy restaurant is considered good debt.

52.

1

X True False

You have too much debt when you are unable to pay what you owe during any given period of time.


53.

1

True X False

It is impossible to get out of debt if you don't save at least some of your take home pay each month.

54.

1

True X False

"Keeping up with the Joneses" is the common term for the act or process of never spending more money than you currently have.

55.

1

salary, bonuses budget, assets good debt, bad debt X lifestyle, spending habits

Getting out of debt requires you to adjust your ____________ and ____________ to match your income.

56.

1

short-term long-term needs and wants X big picture None of the above

Getting out of debt involves looking at the ____________ of your life rather than simply the daily events.

57.

1

investments, bad X needs, wants long-term goals, short-term goals goals, impossible None of the above

People typically find that many of their ____________ are really ____________ and can be reduced or eliminated.

58.

1

X True False

Declaring bankruptcy can affect your ability to get a loan, credit or credit card for up to 10 years.

59.

1

X True False

When you declare bankruptcy, the Federal Bankruptcy Court will develop a plan allowing you to eliminate all or some of your debt under the guidance of the court.

60.

True X False

All of your debts are instantly absolved when you declare bankruptcy.


161.

1

Excepted property Excused property X Exempt property Excuse property None of the above

Property that has been identified as essential to starting over and cannot be seized by the Federal Bankruptcy Court.

62.

1

Chapter 5, Chapter 15 X Chapter 7, Chapter 13 Chapter 7, Chapter 33 Chapter 13, Chapter 17 None of the above

Today, the two most predominate types of personal bankruptcy are ____________ and ____________.

63.

1

X Chapter 86 Chapter 13 Chapter 11 Chapter 7 None of the above

Which of the following is not a type of personal bankruptcy?

64.

1

True X False

Chapter 7 bankruptcy is also call reorganization bankruptcy.

65.

1

X True False

Chapter 13 bankruptcy is also called reorganization bankruptcy.

66.

1

X True False

The 3 C's of Credit (Character, Capacity, and Collateral) and determine the amount of credit available to an individual.

67.

1

X True False

The 3 C's of Credit are character, capacity and collateral.

68.

1

X True False

Collateral is something of value that is pledged by the borrower to the lender to secure a loan.

69.

1

True X False

After working hard to establish their credit, young adults can relax and enjoy life.

70.

1

an unlimited an undefined a large X a defined None of the above

Credit is technically ____________ amount money available to you, but held by someone else.

71.

1

increasing doubling X reducing growing None of the above

The amount of credit you use is subtracted from the total amount of credit available to you, thus ____________ the amount of credit available in the future.

72.

1

X True False

Your debt increases by the amount of money you use on credit, plus the interest you must pay.

73.

2

advantages disadvantages X both advantages and disadvantages consequences hidden benefits

There are _______________ to using credit.

74.

2

X True False

Most people would never be able to purchase a vehicle or buy a home without credit.


75.

2

X True False

Businesses reserve their best credit terms and rates for those who use credit responsibly.

76.

2

term fees X interest rate handling None of the above

An increase in the _______________ increases the burden of making payments for borrowers.

77.

2

X True False

Easy access to credit makes it harder for some individuals to make wise spending decisions.

78.

2

True X False

A number of consumer protection laws have been passed by Congress to ensure that a certain number of people in society have access to credit.

79.

2

X To protect one's privacy by defining who's granted access to their credithistory To assure consumers know when their debts are to be paid To encourage consumers to buy more local retail items To provide any person access to another person's credit history None of the above

Why was the Fair Credit Reporting Act (FCRA) enacted?

80.

2

True X False

Your credit history is public information and available to anyone who wants to see it.

81.

2

X True False

Credit makes retail items available to individuals who do not have enough cash to purchase them.

82.

sticker price for the item sales taxes interest X All of the above

When you buy an item on credit, you are paying the ____________.


283.

2

X True False

A credit bureau is a company that collects information relevant to your credit history.

84.

2

Credit Score Report Federal Credit Agency X Consumer Reporting Agency Credit Card Agency

A credit bureau is also called a ____________________.

85.

2

2 X 3 5 7 more than 10

There are _____ major credit bureaus in the United States.

86.

2

X True False

Equifax, Experian and TransUnion are the three major credit bureaus in the U.S.

87.

2

consumers individuals the government X businesses None of the above

A credit bureau does not make credit decisions for _______________.

88.

2

Bureau Report Home Report X Credit Report Debit Report None of the above

This is the term for a formal report of an individual's credit history prepared by one of the major credit bureaus. The report contains an individual's complete payment history and status of all credit accounts.


89.

2

0 X 1 3 6 12

Each year you are entitled to _____ free credit report(s) from each of the major credit bureaus.

90.

2

each month X each year every 3 years every 5 years every 10 years

You should request a credit report _______________ to ensure the information in the report is correct.

91.

2

X True False

A credit report has four major sections.

92.

2

X True False

A credit score is a single number from 300 to 850.

93.

2

X True False

Less than 15% of individuals have a credit score higher than 800.

94.

2

X True False

A credit score indicates how likely you are to repay a debt.

95.

2

True X False

Credit scores make it harder for all individuals to get access to credit.

96.

2

True X False

A credit score is also called a FED score.


97.

2

X True False

It is important to establish credit before you actually need it.

98.

2

X True False

Opening a checking account or savings account with a local bank is a way to begin establishing credit.

99.

2

Parents Credit Bureaus Banks X You None of the above

With whom does the responsibly lie to see that you use credit responsibly?

100.

2

X True False

You should never "max out" any credit card.

101.

2

True X False

Most experts agree it is easier to overcome debt problems than to fully learn to use credit responsibly when you are young.

102.

2

Actively monitor your credit history Never spend more than you make Make a concerted effort to reduce and eliminate your debt Pay all your bills on time X All of the above

Which of the following can be used to help recover from credit problems?

103.

2

True X False

A credit card is issued to consumers by a bank or other financial institution and can be used to borrow money or purchase goods and services up to the amount you have in a savings account.

104.

one in four (25%) X one in three (33%) one in two (50%) two of out three (66%)

The average household has more than 5 credit cards and makes _______________ of their purchases using one of those cards.


2105.

2

X True False

Credit cards were first used in the U.S. during the 1920's.

106.

2

True X False

A debit card represents a line of credit available to the cardholder.

107.

2

credit limit debt asset X loan None of the above

Each time you use a credit card to purchase something, the company issuing the card is making you a(n) ____________.

108.

2

X True False

A Credit Limit refers to the maximum amount of credit available to an individual, as established with their bank or financial institution.

109.

2

more difficult much harder X just as easy far more complex

It is _____________ to misuse a credit card as it is to use one responsibly.

110.

2

problems X advantages and disadvantages cash back guarantees a rewards program None of the above

There are many types of credit cards available and each type has ____________________.

111.

2

the interest rate your grace period for payment the interest calculation method the company's list of fees X All of the above

A credit card's terms and conditions specify _______________.


112.

2

Bank, Travel/Entertainment, and Designer Cards Travel/Entertainment, House, and National Cards X House, Bank, and Travel/Entertainment Cards Bank, Debit, and House Cards Debit, Bank, and Travel/ Entertainment Cards

Which of the following type(s) are major types of credit card classifications?

113.

2

True X False

Bank credit cards are issued by banks to other credit companies.

114.

2

True X False

Bank credit cards are not accepted by most retail stores to make purchases.

115.

2

Typical, Debt and Secured Standard, Debt and Protected X Standard, Debit and Secured Standard, Charge and Safe

Which of the following best describes the three types of bank credit cards?

116.

2

X True False

A standard credit card comes with a fixed line of credit and a fixed or variable APR.

117.

2

X True False

The purchase amount made with a debit card is automatically withdrawn from your checking account.

118.

2

X True False

Debit cards are sometimes called check cards.

119.

2

True X False

A secured credit card allows individuals with bad credit to use a credit card at secure businesses and banks.


120.

2

X True False

A secured credit card can only be used if the holder of the card has enough money in the bank account to cover the purchase.

121.

2

True X False

Travel/Entertainment cards work exactly like debit cards.

122.

2

X Easy expense tracking Custom designer cards Low APR Unlimited credit limit None of the above

Why are Travel/Entertainment Cards popular with business people?

123.

2

banks X retail businesses real estate companies financial houses

House credit cards are issued by _______________.

124.

2

Bank Travel/Entertainment X House All of the above

_______________ credit cards can only be used in the store of the retail business issuing the card.

125.

2

True X False

Most credit card companies will send you a billing statement whenever you owe more than your credit limit.

126.

2

X True False

Statistics show that roughly 1/2 of all credit cardholders pay their accounts in full each month.

127.

2

True X False

A Credit Period is the length of time, after the payment due date, an individual has to pay a credit card balance in full and avoid having to pay interest on the balance.


128.

2

monthly fee minimum interest rate X minimum monthly payment prime lending rate None of the above

The ____________________ is the least amount you can pay on credit card debt each billing period.

129.

2

X Asset Credit Fees Debt Collateral

The term for anything with monetary value owned by an individual or business or is owed to that individual or business.

130.

2

10x greater X much higher a little lower much less None of the above

The interest rate for credit cards is ____________ than the interest rate for regular bank loans.

131.

2

X True False

Credit card debt is not secured by any of your assets.

132.

2

X True False

The APR is the annual interest rate charged when you do not pay your total balance each billing period.

133.

2

less than exactly half X more than None of the above

You should always pay ____________ the minimum monthly payment amount on credit card debt.

134.

2

True X False

If you pay interest charges on a credit card, there are no other fees you can be charged.


135.

2

after you sign up via recorded messages as they occur X in the terms and conditions None of the above

The fees that can charged are explained ____________________ for the card.

136.

2

Annual Fee Late Charge Fee Over-Limit Fee Cash Advance Fee X All of the above

Which of the following is a common fee associated with credit cards?

137.

2

Previous balance method Adjusted balance method Average daily balance method X All of the above

Which of the following methods is used by credit card companies to calculate the amount interest to be charged when the balance is not paid in full each billing period?

138.

2

X True False

Consumer protection laws are designed to protect consumers from unfair and illegal business practices.

139.

2

Equal Credit Card Obtainment Act (ECCOA) Low Credit Card APR Act (LCCAA) X Truth in Lending Act (TILA)

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All of the above

Which of the following is an important consumer protection law?

140.

2

True X False

The Fair Credit Billing Act (FCBA) requires creditors to be fair and polite on the phone, and only call between 9:00 AM and 6:00 PM when they call to collect their money owed.

141.

2

True X False

Few people have ruined their credit either through lack of knowledge or irresponsible use of credit cards. Mostly it is due to factors beyond their control.


142.

2

X True False

Many parents have expressed concern about credit card companies aggressively marketing credit cards to college students.

143.

2

Identity Hacking Character Assassination Character Theft X Identity Theft

This refers to the act of stealing personal information from another individual to illegally obtain credit or commit criminal acts using the stolen information.

144.

2

True X False

Everyone understands that identity theft is a big problem and that it could happen to them at anytime.

145.

2

Less than 10,000 About 100,000 Less than a million X Several million

Approximately how many individuals have their identity stolen each year?

146.

2

obtain a credit card in your name rent an apartment in your name get a job as you X All of the above

Using your personal information, a criminal can pose as you and _______________.

147.

2

X True False

Each person is unique and has personal information that only applies to them.

148.

2

X True False

Your name, Social Security number and bank account numbers are considered personal information.

149.

2

True X False

Thanks to computerized databases, it costs little and takes only a few hours to restore your credit when your identity happens to be stolen.


150.

2

liable for all card expenditures X only liable for the first $50 only liable for the first $250 only liable for the first $500 None of the above

Due to the Fair Credit Reporting Act, you are technically _______________ after notifying the credit card company your card has been stolen.

151.

2

impossible X easier harder time consuming None of the above

Most experts agree it is ____________ to guard your personal information than to repair your credit after a thief has abused it.

152.

2

X True False

Some thieves hack into computers to gain access to personal information.

153.

2

True X False

Identity thieves never steal mail from your mailbox because it is a federal crime and other methods are much less risky.

154.

2

True X False

You should keep all of your personal information in your purse or wallet because you might need it in an emergency.

155.

2

True X False

It is okay to give out your personal information over the phone if you don't know the caller, as long as you don't buy something from them.

156.

2

Sprouting X Spoofing Spinning Phishing

This is the common term for the process of redirecting users from a trusted location to a clone website to steal or illegally obtain personal information.


157.

2

True X False

Identity thieves will not go through your trash to gain access to your personal information, since there are so many other easier (and cleaner) ways to get it.

158.

2

Spamming Hacking Spoofing X Phishing

This is the common term for the process of sending fake emails, complete with stolen logos, to individuals to make them think they are providing their personal information to a company they routinely deal with.

159.

2

X True False

You should be aware of shoulder surfers attempting to invade your space when conducting business transactions.

160.

2

Money Law Enforcement X Knowledge FTC All of the above

What is the key to preventing and recovering from identity theft?

161.

2

Address Phone Number Last Name X Social Security number All of the above

What is the key to all your personal information?

162.

2

X True False

An individual must monitor their credit history and always be looking for credit activity that's not theirs to help prevent identity theft.

163.

2

Guarding your Social Security number Monitor your credit history Monitor your credit card bills Shred all bills and business papers containing personal information X All of the above

Which of the following is a way to prevent someone from gaining access to your personal information?


164.

2

your home mailbox a neighbor's mailbox a different location each time X secure locations None of the above

Mailing all correspondence from _______________ is a way to prevent someone from stealing your personal information.

165.

2

X True False

Time is critical when your identity is stolen.

166.

2

X True False

If your identity is stolen, you need to contact the three major credit bureaus and have them place a fraud alert on your credit history.

167.

2

True X False

If once a victim of identity theft and you notify the Federal Trade Commission, you cannot become a target of identity theft for at least 2 years.


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