CSR 103 Exam 2 (Mike Roe)

As inflation rises interest rates offered to savers usually increase

true

In determining the purchase price of a new car, a trade-in vehicle should not be mentioned until the cost of the new car has been settled

true

Service contracts on vehicles usually are wise financial decisions

false

Abigail checked out brand name prices of blue jeans at several stores, she was impulse buying

false

Liquidity and rate of return are the same thing

false

Risk-based pricing charges lower rates to riskier customers

false

Closed-end credit is used for a specific purchase and involves a specific amount

true

Consumer credit payments should not exceed 20% of your net income

true

It is important to shop for credit

true

You should determine the financial services you need before choosing a financial institution

true

Bankruptcy should be the last resort because of its damage to your credit rating

true

APR is the percentage cost of credit on a yearly basis

true

The more new cars sold, the more used cars there are for Salem keeping the prices down

true

You should avoid lowballing when price bargaining for a new car, but highballing is okay

false

An asset management account is an all in one account that is also called a cash management account

true

Open end credit consists of loans made on a consistent basis for periodic payment

true

Fico and vantage score are used by creditors to predict if you will repay a loan

true

A loan from a pawn shop will be more expensive than one from a bank

true

Money market fund not covered by Federal Deposit Insurance

true

Closed end credit is used for specific purposes and involves a specific amount

true

During problem identification, a clear statement of a problem is: I need to have a car

false

Long term stability is achieved by spending your entire current income

false

A lease on a car is usually 3-5 years

true

what do we also call a demand deposit?

checking account

Asset management account (cash statement account) is an all in one account

true

what's another name for a regular savings account?

passbook savings or statement accounts

which of the following is a valid reason to use credit?

all of the following

what are 4 common money management mistakes?

overspending, insufficient liquid assets, using savings to pay for current expenses, & failing to put unneeded funds in an interest bearing savings account

what are 2 sources of quick cash that reduce net worth?

liquidate savings and borrow

what is the rate banks charge large corporations called?

prime rate

what are 3 questions to ask before choosing a financial institution?

where can I get the best return? how can I minimize costs? will I be able to borrow?

what are the 5 C's of credit?

character, capacity, capital, collateral, and conditions

what do you call an agency that collects information on how promptly people and businesses pay their bills?

credit bureaus

what are the 4 steps to research-based buying?

pre-shopping activities, evaluating alternatives, selection and purchase, and post-purchase activities

what is a money factor also called?

interest rate

what is the invoice price also called?

dealer's cost

what is the term for when your car is worth less than the amount still owed on the loan?

upside down equity

What type of company provides loans for home purchases

mortgage company

Which of following is not a valid reason for borrowing

paying for everyday living expenses

Greatest disadvantage of credit

temptation to overspend

Standard measurement for comparing cost

unit pricing

Insurance of used car can be deceptive what should you always do

test drive and have trusted mechanic of your choice check it out

When misused credit can result in

all of the above (default, bankruptcy, loss of credit worthiness, and a less satisfying life)

What do we call property or savings that we use to secure a loan?

collateral

Sally had a major problem with her car and thinks many other have had the same problem. What is the best way to solve the problem?

class action law suit (court)

The ability to turn your investment into cash

liquidity

Fair Credit Reporting Act places limits on who can view your credit report

true

a legal aid society provides free legal aid to low-income individuals with funds passed through the state welfare department from the U.S. Department of Health and Human Services

true

Thomas bought and returned a vehicle, refused to accept return because it was sold "as is." this is an example of a limited warranty.

false

Justin needs access to money in 5 months. He needs a fairly liquid investment so he would want to put that in a money market account

true

Mortgage is a:

close-ended credit

Home equity is an:

open-ended credit