Theme 8 Review - Answer Key

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1 Theme 8 Review - Answer Key. Due to technology, the financial world is becoming each year. less complex X more complex simpler less important. The term for the act of purchasing goods and services by paying cash or using credit. X Spending Debt Credit Personal Finance 3. A solid understanding of how spending, debt and credit are related will help you to become successful. 4. This is the term for money spent by an individual to purchase goods and services. Debt Credit Income X Expenses 5. Many, but not all expenses you have can be classified as 'needs' or 'wants'. X 6. The basic necessities of life are considered 'needs'. 7. Expenses affecting your health and welfare are considered. Basic Expenses Secondary Expenses Wants X Needs Theme 8 Review - - Printed: 5//04 Page of 3 Copyright (c) REMTECH, inc.

2 8. Which of the following is considered a basic necessity of life? Housing Utilities Food Health Care X All of the above 9. Expenses affecting the quality of your life are considered 'wants'. 0. Which of the following is considered a 'want'? Clothing Leisure Education Miscellaneous X All of the above. You are creating savings if you spend more money than you make. X. Most individuals do not realize how fast debt accumulates. 3. Establishing credit is very important for. the elderly only those 50 or older retired people X young adults 4. Having good credit can help you rent an apartment, buy a car and get a job. 5. Before 980, credit was not generally extended to those who did not have the ability to repay debt. Theme 8 Review - - Printed: 5//04 Page of 3 Copyright (c) REMTECH, inc.

3 6. What does 'FED' stand for? Federal Education Department First Education Department X Federal Reserve System Fiscal Exchange Department 7. Obtaining credit today is not as regulated as it was prior to You should only consider the short-term effects on your lifestyle when making financial decisions. X 9. Most young people acquire their knowledge of spending in formal classrooms. X 0. Young people often give in to peer pressure and the urge of instant gratification.. 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. Friend Rapport X Peer Pressure Steady Relationship Job Anxiety Ethnic Tolerance. Most major life events you experience will not affect your level of spending. X 3. BLS is an acronym for the Banking Legal Society. X Theme 8 Review - - Printed: 5//04 Page 3 of 3 Copyright (c) REMTECH, inc.

4 4. Based on the Consumer Expenditure Survey (CES), which adult age group spends more on health care? Adults 5-34 Adults Adults X Adults An error has occurred while processing HtmlTextBox 'HtmlTextBox': An error occurred while parsing EntityName. Line, position The cost of spending will always be less than the price of the item you purchase. X 6. Opportunity cost is the cost of making a spending decision compared to the cost of the other financial alternatives. 7. The cost of spending depends on. how you will pay the opportunity cost of spending the risk to your credit X All of the above 8. 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? $ 383 $ 65 X $ 83 $ 4 9. The future is very simple to predict. X 30. You should make all your spending decisions based on what you think may happen in the future. X Theme 8 Review - - Printed: 5//04 Page 4 of 3 Copyright (c) REMTECH, inc.

5 3. Most people believe it is to use credit than pay cash for goods and services. X easier the same harder riskier 3. You should always relate the cost of an item to the number of hours you have to work to pay for it. 33. The number of people with severe debt problems is much smaller today than it was 0 years ago. X 34. 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. Debt Interest Net Worth X Credit 35. It is much harder to obtain credit today than it was 0 years ago. X 36. You have accepted a legal obligation to repay the debt plus interest when you accept credit. 37. Debt can be classified as or debt. bad, worse debit, credit card housing, health care X installment, revolving Theme 8 Review - - Printed: 5//04 Page 5 of 3 Copyright (c) REMTECH, inc.

6 38. You will make regular and equal payments to repay debt. Regular X Installment Revolving Bad Credit Card 39. Installment debt is money owed via a long-term loan agreement. 40. Installment debt is also called open-end debt. X 4. A is an example of revolving debt. Home Mortgage Car Loan X Credit Card Savings Account 4. You will be required to make a minimum monthly payment to repay revolving debt. 43. Revolving debt is also called open-end debt. 44. 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. Liquidation X Bankruptcy Insolvency Estate sale Theme 8 Review - - Printed: 5//04 Page 6 of 3 Copyright (c) REMTECH, inc.

7 45. The number of individuals declaring bankruptcy has averaged per year since ,000 00,000 X,000,000 0,000, Which of the following do financial experts indicate as the reason the typical consumer has more debt today than in the past? Low interest rates Internet shopping Easy access to credit College tuition and fees X All of the above 47. All debt is bad. X 48. Good debt is debt acquired when purchased assets decrease in value while owned or provide hopeful advantages while the debt is being repaid. X 49. Purchasing items you really want on credit is considered good debt. X 50. Purchasing wasting assets on credit is considered bad debt. 5. A meal at a fancy restaurant is considered good debt. X 5. You have too much debt when you are unable to pay what you owe during any given period of time. Theme 8 Review - - Printed: 5//04 Page 7 of 3 Copyright (c) REMTECH, inc.

8 53. It is impossible to get out of debt if you don't save at least some of your take home pay each month. X 54. "Keeping up with the Joneses" is the common term for the act or process of never spending more money than you currently have. X 55. Getting out of debt requires you to adjust your and to match your income. salary, bonuses budget, assets good debt, bad debt X lifestyle, spending habits 56. Getting out of debt involves looking at the of your life rather than simply the daily events. short-term long-term needs and wants X big picture 57. People typically find that many of their are really and can be reduced or eliminated. investments, bad X needs, wants long-term goals, short-term goals goals, impossible 58. Declaring bankruptcy can affect your ability to get a loan, credit or credit card for up to 0 years. 59. 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. All of your debts are instantly absolved when you declare bankruptcy. X Theme 8 Review - - Printed: 5//04 Page 8 of 3 Copyright (c) REMTECH, inc.

9 6. Property that has been identified as essential to starting over and cannot be seized by the Federal Bankruptcy Court. Excepted property Excused property X Exempt property Excuse property 6. Today, the two most predominate types of personal bankruptcy are and. Chapter 5, Chapter 5 X Chapter 7, Chapter 3 Chapter 7, Chapter 33 Chapter 3, Chapter Which of the following is <span style="text-decoration: underline;">not</span> a type of personal bankruptcy? X Chapter 86 Chapter 3 Chapter Chapter Chapter 7 bankruptcy is also call reorganization bankruptcy. X 65. Chapter 3 bankruptcy is also called reorganization bankruptcy. 66. The 3 C's of Credit (<span style="text-decoration: underline;">c</span>haracter, <span style="text-decoration: underline;">c</span>apacity, and <span style="text-decoration: underline;">c</span>ollateral) and determine the amount of credit available to an individual. 67. The 3 C's of Credit are character, capacity and collateral. Theme 8 Review - - Printed: 5//04 Page 9 of 3 Copyright (c) REMTECH, inc.

10 68. Collateral is something of value that is pledged by the borrower to the lender to secure a loan. 69. After working hard to establish their credit, young adults can relax and enjoy life. X 70. Credit is technically amount money available to you, but held by someone else. an unlimited an undefined a large X a defined 7. 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. increasing doubling X reducing growing 7. Your debt increases by the amount of money you use on credit, plus the interest you must pay. 73. There are to using credit. advantages disadvantages X both advantages and disadvantages consequences hidden benefits 74. Most people would never be able to purchase a vehicle or buy a home without credit. Theme 8 Review - - Printed: 5//04 Page 0 of 3 Copyright (c) REMTECH, inc.

11 75. Businesses reserve their best credit terms and rates for those who use credit responsibly. 76. An increase in the increases the burden of making payments for borrowers. term fees X interest rate handling 77. Easy access to credit makes it harder for some individuals to make wise spending decisions. 78. 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. X 79. Why was the Fair Credit Reporting Act (FCRA) enacted? X To protect one's privacy by defining who's granted access to their credit history 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 80. Your credit history is public information and available to anyone who wants to see it. X 8. Credit makes retail items available to individuals who do not have enough cash to purchase them. 8. When you buy an item on credit, you are paying the. sticker price for the item sales taxes interest X All of the above Theme 8 Review - - Printed: 5//04 Page of 3 Copyright (c) REMTECH, inc.

12 83. A credit bureau is a company that collects information relevant to your credit history. 84. A credit bureau is also called a. Credit Score Report Federal Credit Agency X Consumer Reporting Agency Credit Card Agency 85. There are major credit bureaus in the United States. X more than Equifax, Experian and TransUnion are the three major credit bureaus in the U.S. 87. A credit bureau does not make credit decisions for. consumers individuals the government X businesses 88. 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. Bureau Report Home Report X Credit Report Debit Report Theme 8 Review - - Printed: 5//04 Page of 3 Copyright (c) REMTECH, inc.

13 89. Each year you are entitled to free credit report(s) from each of the major credit bureaus. 0 X You should request a credit report to ensure the information in the report is correct. each month X each year every 3 years every 5 years every 0 years 9. A credit report has four major sections. 9. A credit score is a single number from 300 to Less than 5% of individuals have a credit score higher than A credit score indicates how likely you are to repay a debt. 95. Credit scores make it harder for all individuals to get access to credit. X 96. A credit score is also called a FED score. X Theme 8 Review - - Printed: 5//04 Page 3 of 3 Copyright (c) REMTECH, inc.

14 97. It is important to establish credit before you actually need it. 98. Opening a checking account or savings account with a local bank is a way to begin establishing credit. 99. With whom does the responsibly lie to see that you use credit responsibly? Parents Credit Bureaus Banks X You 00. You should never "max out" any credit card. 0. Most experts agree it is easier to overcome debt problems than to fully learn to use credit responsibly when you are young. X 0. Which of the following can be used to help recover from credit problems? 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 03. 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. X 04. The average household has more than 5 credit cards and makes of their purchases using one of those cards. one in four (5%) X one in three (33%) one in two (50%) two of out three (66%) Theme 8 Review - - Printed: 5//04 Page 4 of 3 Copyright (c) REMTECH, inc.

15 05. Credit cards were first used in the U.S. during the 90's. 06. A debit card represents a line of credit available to the cardholder. X 07. Each time you use a credit card to purchase something, the company issuing the card is making you a(n). credit limit debt asset X loan 08. A Credit Limit refers to the maximum amount of credit available to an individual, as established with their bank or financial institution. 09. It is to misuse a credit card as it is to use one responsibly. more difficult much harder X just as easy far more complex 0. There are many types of credit cards available and each type has. problems X advantages and disadvantages cash back guarantees a rewards program. A credit card's terms and conditions specify. the interest rate your grace period for payment the interest calculation method the company's list of fees X All of the above Theme 8 Review - - Printed: 5//04 Page 5 of 3 Copyright (c) REMTECH, inc.

16 . Which of the following type(s) are major types of credit card classifications? 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 3. Bank credit cards are issued by banks to other credit companies. X 4. Bank credit cards are not accepted by most retail stores to make purchases. X 5. Which of the following best describes the three types of bank credit cards? Typical, Debt and Secured Standard, Debt and Protected X Standard, Debit and Secured Standard, Charge and Safe 6. A standard credit card comes with a fixed line of credit and a fixed or variable APR. 7. The purchase amount made with a debit card is automatically withdrawn from your checking account. 8. Debit cards are sometimes called check cards. 9. A secured credit card allows individuals with bad credit to use a credit card at secure businesses and banks. X Theme 8 Review - - Printed: 5//04 Page 6 of 3 Copyright (c) REMTECH, inc.

17 0. 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.. Travel/Entertainment cards work exactly like debit cards. X. Why are Travel/Entertainment Cards popular with business people? X Easy expense tracking Custom designer cards Low APR Unlimited credit limit 3. House credit cards are issued by. banks X retail businesses real estate companies financial houses 4. credit cards can only be used in the store of the retail business issuing the card. Bank Travel/Entertainment X House All of the above 5. Most credit card companies will send you a billing statement whenever you owe more than your credit limit. X 6. Statistics show that roughly / of all credit cardholders pay their accounts in full each month. 7. 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. X Theme 8 Review - - Printed: 5//04 Page 7 of 3 Copyright (c) REMTECH, inc.

18 8. The is the least amount you can pay on credit card debt each billing period. monthly fee minimum interest rate X minimum monthly payment prime lending rate 9. The term for anything with monetary value owned by an individual or business or is owed to that individual or business. X Asset Credit Fees Debt Collateral 30. The interest rate for credit cards is than the interest rate for regular bank loans. 0x greater X much higher a little lower much less 3. Credit card debt is not secured by any of your assets. 3. The APR is the annual interest rate charged when you do not pay your total balance each billing period. 33. You should always pay the minimum monthly payment amount on credit card debt. less than exactly half X more than 34. If you pay interest charges on a credit card, there are no other fees you can be charged. X Theme 8 Review - - Printed: 5//04 Page 8 of 3 Copyright (c) REMTECH, inc.

19 35. The fees that can charged are explained for the card. after you sign up via recorded messages as they occur X in the terms and conditions 36. Which of the following is a common fee associated with credit cards? Annual Fee Late Charge Fee Over-Limit Fee Cash Advance Fee X All of the above 37. 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? Previous balance method Adjusted balance method Average daily balance method X All of the above 38. Consumer protection laws are designed to protect consumers from unfair and illegal business practices. 39. Which of the following is an important consumer protection law? Equal Credit Card Obtainment Act (ECCOA) Low Credit Card APR Act (LCCAA) X Truth in Lending Act (TILA) An error has occurred while processing HtmlTextBox 'HtmlTextBox': An error occurred while parsing EntityName. Line, position 64. All of the above 40. 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. X 4. 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. X Theme 8 Review - - Printed: 5//04 Page 9 of 3 Copyright (c) REMTECH, inc.

20 4. Many parents have expressed concern about credit card companies aggressively marketing credit cards to college students. 43. This refers to the act of stealing personal information from another individual to illegally obtain credit or commit criminal acts using the stolen information. Identity Hacking Character Assassination Character Theft X Identity Theft 44. Everyone understands that identity theft is a big problem and that it could happen to them at anytime. X 45. Approximately how many individuals have their identity stolen each year? Less than 0,000 About 00,000 Less than a million X Several million 46. Using your personal information, a criminal can pose as you and. obtain a credit card in your name rent an apartment in your name get a job as you X All of the above 47. Each person is unique and has personal information that only applies to them. 48. Your name, Social Security number and bank account numbers are considered personal information. 49. Thanks to computerized databases, it costs little and takes only a few hours to restore your credit when your identity happens to be stolen. X Theme 8 Review - - Printed: 5//04 Page 0 of 3 Copyright (c) REMTECH, inc.

21 50. Due to the Fair Credit Reporting Act, you are technically after notifying the credit card company your card has been stolen. liable for all card expenditures X only liable for the first $50 only liable for the first $50 only liable for the first $ Most experts agree it is to guard your personal information than to repair your credit after a thief has abused it. impossible X easier harder time consuming 5. Some thieves hack into computers to gain access to personal information. 53. Identity thieves never steal mail from your mailbox because it is a federal crime and other methods are much less risky. X 54. You should keep all of your personal information in your purse or wallet because you might need it in an emergency. X 55. 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. X 56. 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. Sprouting X Spoofing Spinning Phishing Theme 8 Review - - Printed: 5//04 Page of 3 Copyright (c) REMTECH, inc.

22 57. 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. X 58. This is the common term for the process of sending fake s, complete with stolen logos, to individuals to make them think they are providing their personal information to a company they routinely deal with. Spamming Hacking Spoofing X Phishing 59. You should be aware of shoulder surfers attempting to invade your space when conducting business transactions. 60. What is the key to preventing and recovering from identity theft? Money Law Enforcement X Knowledge FTC All of the above 6. What is the key to all your personal information? Address Phone Number Last Name X Social Security number All of the above 6. An individual must monitor their credit history and always be looking for credit activity that's not theirs to help prevent identity theft. 63. Which of the following is a way to prevent someone from gaining access to your personal information? 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 Theme 8 Review - - Printed: 5//04 Page of 3 Copyright (c) REMTECH, inc.

23 64. Mailing all correspondence from is a way to prevent someone from stealing your personal information. your home mailbox a neighbor's mailbox a different location each time X secure locations 65. Time is critical when your identity is stolen. 66. 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. 67. 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 years. X Theme 8 Review - - Printed: 5//04 Page 3 of 3 Copyright (c) REMTECH, inc.