Which represents using credit within safe boundaries:

Total amnt $ borrowed-not incl house-under 20% of net income

Which statement would explain the importance of understanding the process of borrowing money?

When you are borrowing, you are spending future income.

the cost of using someone else’s property

The equity that you build by making mortgage payments is:

the value of the home after the mortgage debt is subtracted

What is an example of an unbiased source for product reviews?

A product review from an independent company

Edward wants to develop a positive credit history. How should he do this?

Maintain reasonable amounts of available credit

How can you LEGALLY avoid paying interest when using a credit card?

pay credit card balance in full every month before due date

Which is a general rule to minimize identity theft when dealing with credit reports?

Check each credit report at least once per year.

Which strategy would be most effective to minimize risk of fraudulent use of credit cards?

Only enter credit card # into website w/https & URL lock

David earns $5000/month at job.He has loan payment of $120, car loan of $300. Which is true?

His credit pmts are w/i safe range for someone w/his income.

What would you recommend a person do to begin to build a positive credit history?

One should obtain a secured credit card.

Paying the minimum payment on a credit card every month will:

make final amount paid more than amount initially charged

What should be considered first in the planned buying process for a car?

Evaluate opportunity cost and trade‐offs to purchasing car

Which of the following is NOT something an identity thief might realistically do with this info

Take a college admissions exam in victim’s name.

Melissa needs a vehicle and is considering leasing one. This means:

Rent vehicle by making pmts-title stay with lease grantor.

What do you do when you no longer want to use a credit card?

Close account by phone and in writing, then destroy the card

What does it mean to be the beneficiary of a life insurance policy?

Beneficiary receives money if insured dies

Sarah will turn 18 next month. She plans to apply for a credit card. Which statement is true?

Can obtain credit card if have co‐signer/proof of income

When may a person view his/her credit report for free?

1x/year, from each of the 3 main credit reporting agencies

Which tip would maximize satisfaction when shopping online?

Review shipping/return policies

How is closed-end credit different from open-end?

= payments required on regular basis until loan is repaid.

What is the difference between property and liability insurance?

Property pays loss to insured; liability pays loss to others

When does liability auto insurance help a driver?

You have an accident and cause $5000 damage to another car

Which of the following is an act of identity theft?

Wrongfully acquiring & using other's personal identification

What is true about open-end credit?

Credit given in advance so don't apply for credit each time

What is a benefit to having insurance?

When combined w/emergency savings, it provides peace of mind

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PF 6.0 Spending and Borrowing

50 termsStudBud Administration81 plays

Personal Finance

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Questions 50

Answers

1
Which represents using credit within safe boundaries:
Total amnt $ borrowed-not incl house-under 40% of net income
Keep total amount borrowed under 40%
Keep total amount borrowed under 20%
Total amnt $ borrowed-not incl house-under 20% of net income
2
Which statement would explain the importance of understanding the process of borrowing money?
Builds credit history b/c it requires filing credit report
Borrowing affects present self w/ less impact on future self
When you are borrowing, you are spending future income.
Borrowing is an important part responsible financial plan.
3
Which expense WOULD NOT be considered part of the total transportation expenses?
depreciation
fuel
parking
Car payment
4
Why might you have to pay the first $500 of your auto damage bill?
the cost of the repairs is higher than policy covers
you will be reimbursed by the insurance company later
$500 deductible
you didn't call agent and report the accident quickly enough
5
If I want to spend less on food, which factor would be least important to consider:
The nutritional value of the foods I purchase.
My personal preferences
How much time I have available to prepare food.
The skills I have acquired for preparing meals
6
Which of the following is NOT included in an individual’s credit report?
Account balances
Bankruptcies and foreclosures
Current and past addresses
Medical information
7
Who is responsible for purchasing renter’s insurance?
You don't need renter's insurance
The renters
The renter's parents
The property manager
8
Rent is defined as:
the purchase price of a housing unit
an advance payment for costs beyond normal wear and tear
the cost of using someone else’s property
the fee charged for performing property management tasks
9
What is a safety tip to follow when she is shopping online?
Use a debit card
Black out bank acct # on credit card bill b4 returning w/pmt
Use a credit card
Shred sales receipts as soon as item purchased is received
10
The equity that you build by making mortgage payments is:
a home loan where the real estate is collateral
the value of the home after the mortgage debt is subtracted
purchasing a housing unit as rental property
the amount of money paid on the home at the time of purchase
11
Who was the identity thief in our class lesson on Protecting Your Identity from Fraud?
Miss Scarlet
Mrs. White
Professor Plum
Mr. Green
12
What is an example of an unbiased source for product reviews?
A product review from an independent company
Product review from an individual making money from the sale
A product review that is five years old
Product review from a seller
13
Edward wants to develop a positive credit history. How should he do this?
Have one type of credit account
Maintain reasonable amounts of available credit
Open credit accounts in his parents’ names
Pay cash for the majority of purchases
14
What can trigger a penalty APR?
Forget to send in payment
Introductory rate has expired
You don't use your credit card
Paid credit card bill in full last 3 months
15
Ins policy has $500 deductible & 20% co‐ins, How much will insured pay for $1000 bill?
$0
$500
$600
$700
16
How can you LEGALLY avoid paying interest when using a credit card?
pay credit card balance in full every month before due date
pays the minimum balance every month before the due date
Not possible: use of credit card requires paying interest.
limit the use of credit cards to balance transfers only
17
When you owe more on the vehicle than it is worth, this situation is referred to as:
depreciation
a hidden cost
being upside down on the loan
leasing
18
Which is a general rule to minimize identity theft when dealing with credit reports?
Wait 60 days before disputing any wrong information found
Report error to 1 credit reporting agency,they'll tell other
Check each credit report at least once per year.
Keep credit reports in an easily accessible location
19
Which strategy would be most effective to minimize risk of fraudulent use of credit cards?
Only enter credit card # into website w/https & URL lock
Giving account numbers over internet rather than over phone
Carry all cards in wallet so they don't get lost
Use credit card for all purchases so only pay 1 bill/month
20
Which is NOT an example of a data furnisher?
credit card company
medical provider
Landlord
utility company
21
David earns $5000/month at job.He has loan payment of $120, car loan of $300. Which is true?
One loan pmt must be subtracted from other to see if he's ok
David’s loan payment is w/i safe range but car loan is not
David’s total credit payments are higher than recommended
His credit pmts are w/i safe range for someone w/his income.
22
What would you recommend a person do to begin to build a positive credit history?
Apply for a different type of credit
Apply for credit and include a letter of recommendation
Get several credit cards to establish one can manage them.
One should obtain a secured credit card.
23
Paying the minimum payment on a credit card every month will:
help the cardholder create a plan for paying off credit card
allow the cardholder to avoid paying any interest charges
make final amount paid more than amount initially charged
pay a large percentage of the total balance owed every month
24
What should be considered first in the planned buying process for a car?
Rank product features in order of importance
Calculate cost of ownership
Research sellers & decide where to buy
Evaluate opportunity cost and trade‐offs to purchasing car
25
Which of the following is NOT something an identity thief might realistically do with this info
Use victim's name during an arrest
Take a college admissions exam in victim’s name.
Make purchases with victim's credit card
Rent an apartment under victim's name
26
Melissa needs a vehicle and is considering leasing one. This means:
Her depreciation costs will likely be higher
Rent vehicle by making pmts-title stay with lease grantor.
Need to pay more down payment to offset lease agreement fees
Purchasing the vehicle by making payments over time.
27
Which personal information is LEAST LIKELY to be used by scammers?
Phone numbers
Social Security number
Bank account numbers
Credit card numbers
28
What do you do when you no longer want to use a credit card?
File the credit card away for use at a later time
Close account by phone and in writing, then destroy the card
Let a family member take over the credit account.
Keep credit card in wallet in case you need proof of ID
29
Why is investing in product research an important part of the planned buying process?
Research enhances satisfaction
Research decreases satisfaction
Research is only for big ticket purchases
Research is too time consuming
30
What is a fee to cover any potential damages that might occur while you live in an apartment?
rental agreement
amenities
security deposit
down payment
31
Which of the following actions will NOT make an individual vulnerable to identity theft?
Throwing mail in the garbage
Paying cash for a movie ticket
Responding to an email from your depository institution
Using a computer without updated spyware
32
When access to insurance is provided in addition to regular salary, this is known as:
household production
employee benefits
government programs
coverage
33
It is recommended that life insurance be purchased when the:
You have dependents
You turn 50
You get your first job
You fly in an airplane
34
What does it mean to be the beneficiary of a life insurance policy?
Required to be Beneficiary if you're executor of estate
Beneficiary receives money if insured dies
Beneficiary must pay premium
Beneficiary gets commission from policy sold
35
What is NOT an example of a durable good?
iphone
food
Car
clothes
36
Sarah will turn 18 next month. She plans to apply for a credit card. Which statement is true?
Sarah can get credit card when she turns 18.
Sarah cannot obtain a credit card until she turns 21
Sarah has to use a special application since she's under 25
Can obtain credit card if have co‐signer/proof of income
37
The monthly payment for health insurance is known as:
Moral hazard
Deductible
Premium
Co-insurance
38
When may a person view his/her credit report for free?
At any time and an unlimited number of times
If a person has sufficient financial resources
1x/year, from each of the 3 main credit reporting agencies
A person may not review his/her credit report
39
When making food decisions, which of the following is most likely to be least expensive?
Full service restaurant
Convenience
Fast food
Ready-to-eat food
40
Insurance can be purchased to protect one from which of the following losses?
Healthcare expenses
Stock market losses
Maintaining the price of your home
Car maintenance
41
Which tip would maximize satisfaction when shopping online?
Always go with the lowest price
Review shipping/return policies
Purchase a warranty
Use a debit card
42
In which scenario below should renters insurance be considered?
You are living in your parents basement
You have bought a house
You are a landlord of several rental properties
You have rented an apartment
43
How is closed-end credit different from open-end?
Interest rates vary depending on the repayment history
= payments required on regular basis until loan is repaid.
Credit limits vary depending on the loan balance.
Continuous loan borrower must repay with a revolving balance
44
What is the difference between property and liability insurance?
Property pays loss to insured; liability pays loss to others
It depends on whether it is auto, home or rental
It depends on policy purchased
Property pays loss to others; liability pays loss to insured
45
When does liability auto insurance help a driver?
An uninsured driver hits you and causes $5000 damage to you
You have an accident and cause $5000 damage to another car
$5000 damage from hail
You hit a deer and cause $5000 damage to your car
46
What will it mean for you if your credit score is low?
Loan rates will be lower
Interest rates will be higher
Monthly payments will be lower
Purchase price will be higher
47
Which of the following is an act of identity theft?
Wrongfully acquiring & using other's personal identification
Receiving permission to use parent’s Visa for school clothes
Taking identity of another as inspiration for costume
Having the same name as another person
48
A rental agreement is often referred to as:
amenity
renter's insurance
lease
mortgage
49
What is true about open-end credit?
A down payment must be made before receiving a loan.
Credit given in advance so don't apply for credit each time
Payments are equal and required to be paid on regular basis.
You can borrow unlimited amount of $ as long as repaid
50
What is a benefit to having insurance?
When combined w/emergency savings, it provides peace of mind
You don't have to worry about any losses from accident
It's required to purchase insurance
You may be richer if you have an accident

PF 6.0 Spending and Borrowing Flashcards | StudBud