Question 1

Most companies calculate the finance charge on credit card accounts as a percentage of the:

Accepted Answer

A)  Daily balance
B)  Weekly balance
C)  Average daily balance
D)  Average weekly balance
E)  None of theseF) All of the above
G) A) and B)

Question 2

Jen purchased a condo in Naples, Florida, for $699,000. She put 20% down and financed the rest at 5% for 35 years. What are Jen's total finance charges?

Accepted Answer

A)  $457,425.60
B)  $606,823.20
C)  $626,863.20
D)  $600,000.00
E)  None of theseF) A) and B)
G) C) and D)

Question 3

The monthly payment is calculated by totaling the finance charge and amount financed and dividing that by the number of payments of the loan.

Accepted Answer

A) True 
 B)False  True

Question 4

Amortization is not a payment process.

Accepted Answer

A) True 
 B)False

Question 5

The cost of credit reports would be included in the amount financed.

Accepted Answer

A) True 
 B)False

Question 6

John Sullivan bought a new Brunswick boat for $17,000. He made a $2,500 down payment on it. The bank's loan was for 60 months. Finance charges totaled $4,900. His monthly payment is:

Accepted Answer

A)  $313.33
B)  $323.33
C)  $332.33
D)  $232.33
E)  None of theseF) C) and D)
G) D) and E) B

Question 7

The Fair Credit and Charge Card Disclosure Act of 1988 is optional advice to credit card companies.

Accepted Answer

A) True 
 B)False

Question 8

The average daily balance is equal to the sum of daily balances:

Accepted Answer

A)  Plus number of days in billing cycle
B)  Minus number of days in billing cycle
C)  Divided by number of days in billing cycle
D)  Multiplied by number of days in billing cycle
E)  None of theseF) C) and E)
G) None of the above

Question 9

Finance charge equals total of all monthly payments minus amount financed.

Accepted Answer

A) True 
 B)False

Question 10

Revolving charge accounts must be paid off completely by the end of the month.

Accepted Answer

A) True 
 B)False

Question 11

The Truth in Lending Act requires that the APR be stated accurately to the nearest 1/4 of 1%.

Accepted Answer

A) True 
 B)False

Question 12

In calculating the daily balance, cash advances are:

Accepted Answer

A)  Added in
B)  Subtracted out
C)  Sometimes added in
D)  Sometimes subtracted out
E)  None of theseF) B) and C)
G) B) and D)

Question 13

Amount financed is equal to:

Accepted Answer

A)  Cash price times down payment
B)  Cash price plus down payment
C)  Cash price minus down payment
D)  Cash price divided by down payment
E)  None of theseF) A) and B)
G) A) and E)

Question 14

Which one of the following statements is incorrect?

Accepted Answer

A)  The Truth in Lending Act was passed in 1969
B)  APR is the true effective annual interest charged by sellers
C)  The Truth in Lending Act regulates interest charges
D)  APR represents the true effective rate annual rate of interest
E)  None of theseF) C) and E)
G) A) and E)

Question 15

Given the following:  The average daily balance is:

Accepted Answer

A)  $910.34
B)  $755.17
C)  $810.43
D)  $755.71
E)  None of theseF) A) and B)
G) C) and D)

Question 16

Mia Lane bought a high-definition television for $7,500. Based on her income, she could afford to pay back only $600 per month. There is 1 ½% monthly interest charge on the unpaid balance. The U.S. Rule is used in the calculation. At the end of month 1, the balance outstanding is:

Accepted Answer

A)  $6,012.50
B)  $5,012.50
C)  $4,012.50
D)  $3,012.50
E)  None of theseF) B) and E)
G) A) and E) E

Question 17

Ed Sloan bought a new Explorer for $22,000. He put down $7,000 and paid $290 for 60 months. The total finance charge to Ed is:

Accepted Answer

A)  $15,000
B)  $17,400
C)  $2,400
D)  $4,200
E)  None of theseF) C) and E)
G) B) and E)

Question 18

Today most companies calculate the finance charge on their credit card accounts as a percentage of the yearly balance.

Accepted Answer

A) True 
 B)False

Question 19

The U.S. Rule can be applied to open credit payments.

Accepted Answer

A) True 
 B)False

Question 20

Amanda Chin purchased a home for $296,000; she put 20% down with a mortgage rate of 6% for 30 years. What is Amanda's monthly payment?

Accepted Answer

A)  $1,776
B)  $1,402
C)  $1,240.80
D)  $1,420.80
E)  None of theseF) A) and E)
G) B) and D)

Exam 14: Installment Buying

Most companies calculate the finance charge on credit card accounts as a percentage of the:

Correct AnswerverifiedShow Answer

Jen purchased a condo in Naples, Florida, for $699,000. She put 20% down and financed the rest at 5% for 35 years. What are Jen's total finance charges?

Correct AnswerverifiedShow Answer

The monthly payment is calculated by totaling the finance charge and amount financed and dividing that by the number of payments of the loan.

Correct AnswerverifiedTrue

Amortization is not a payment process.

Correct AnswerverifiedShow Answer

The cost of credit reports would be included in the amount financed.

Correct AnswerverifiedShow Answer

John Sullivan bought a new Brunswick boat for $17,000. He made a $2,500 down payment on it. The bank's loan was for 60 months. Finance charges totaled $4,900. His monthly payment is:

Correct AnswerverifiedB

The Fair Credit and Charge Card Disclosure Act of 1988 is optional advice to credit card companies.

Correct AnswerverifiedShow Answer

The average daily balance is equal to the sum of daily balances:

Correct AnswerverifiedShow Answer

Finance charge equals total of all monthly payments minus amount financed.

Correct AnswerverifiedShow Answer

Revolving charge accounts must be paid off completely by the end of the month.

Correct AnswerverifiedShow Answer

The Truth in Lending Act requires that the APR be stated accurately to the nearest 1/4 of 1%.

Correct AnswerverifiedShow Answer

In calculating the daily balance, cash advances are:

Correct AnswerverifiedShow Answer

Amount financed is equal to:

Correct AnswerverifiedShow Answer

Which one of the following statements is incorrect?

Correct AnswerverifiedShow Answer

Given the following: The average daily balance is:

Correct AnswerverifiedShow Answer

Mia Lane bought a high-definition television for $7,500. Based on her income, she could afford to pay back only $600 per month. There is 1 ½% monthly interest charge on the unpaid balance. The U.S. Rule is used in the calculation. At the end of month 1, the balance outstanding is:

Correct AnswerverifiedE

Ed Sloan bought a new Explorer for $22,000. He put down $7,000 and paid $290 for 60 months. The total finance charge to Ed is:

Correct AnswerverifiedShow Answer

Today most companies calculate the finance charge on their credit card accounts as a percentage of the yearly balance.

Correct AnswerverifiedShow Answer

The U.S. Rule can be applied to open credit payments.

Correct AnswerverifiedShow Answer

Amanda Chin purchased a home for $296,000; she put 20% down with a mortgage rate of 6% for 30 years. What is Amanda's monthly payment?

Correct AnswerverifiedShow Answer

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E

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