Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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The law that gives consumers the right to see their own credit records is
the
a. | Fair Credit Reporting Act. | c. | Truth-in-Lending
Law. | b. | Fair Credit Billing Act. | d. | Equal Credit Opportunity Act. |
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2.
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Special insurance that repays the balance owed if the borrower dies or becomes
disabled is
a. | Credit Insurance | c. | Lenders’ Insurance | b. | Borrower’s
Guaranty | d. | Financial
Insurance |
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3.
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Which of the following are part of service fees for credit?
a. | Cost of investigating credit histories. | b. | Cost of processing
loans or charge accounts. | c. | Cost of keeping records of payments and
balances. | d. | All of the above. |
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4.
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Which of the following is a correct statement regarding the calculating of
interest?
a. | The interest rate must be expressed in the form of a decimal or a
fraction. | b. | Interest is charged for each dollar or part of a dollar. | c. | The interest rate is
based on a one-year time period. | d. | All of the
above. |
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5.
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Which of the following can be used as credit references?
a. | Banks where you have checking and/or savings accounts. | b. | Former
employers. | c. | Other creditors where you have account balances. | d. | All of the
above. |
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6.
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Which of the following is true about APR?
a. | It includes only interest charges. | b. | It is a disclosure required by
law. | c. | It states the percentage cost of credit on a monthly basis. | d. | None of the
above. |
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7.
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A two-month loan made on March 10 would be due on
a. | April 10 | c. | May 10 | b. | April 11 | d. | May 11 |
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8.
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What law requires that you be told the cost of a credit purchase in writing
before you sign a credit agreement?
a. | the Fair Credit Reporting Act | c. | the Truth-in-Lending
Law | b. | the Fair Credit Billing Act | d. | Equal Credit Opportunity Act |
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9.
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A credit bureau is
a. | a credit reporting agency. | c. | a credit granting
agency. | b. | a credit rating agency. | d. | all of the above. |
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10.
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The law that requires prompt correction of billing errors after they have been
reported to a creditor is the
a. | Fair Credit Reporting Act. | c. | Truth-in-Lending
Law. | b. | Fair Credit Billing Act. | d. | Equal Credit Opportunity Act. |
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11.
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What is the major purpose of having the APR stated?
a. | To increase the cost of lending money. | b. | To make it easier to compare the cost of
credit. | c. | To make it easier for consumers to get loans. | d. | None of the
above. |
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12.
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A 60-day loan made on March 10 would be due on
a. | April 9 | c. | May 10 | b. | April 10 | d. | May 9 |
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13.
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An agreement developed cooperatively by a creditor and a debtor to reduce
monthly payments to a more manageable level is called
a. | a truth-in-lending plan. | c. | a debtor ripoff
plan. | b. | a debt-repayment plan. | d. | none of the above. |
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14.
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Which of the following should be checked when getting a loan?
a. | The annual percentage rate. | b. | The amount of the monthly
payments. | c. | The finance charge. | d. | All of the
above. |
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15.
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Which of the following is the correct formula for determining simple
interest?
a. | I = P + R + T | c. | I = P x R x T | b. | I = P x R / T | d. | None of the
above |
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16.
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A record of your transactions completed during a billing period is called
a
a. | statement of account. | c. | credit memorandum. | b. | receipt. | d. | credit check. |
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