Chapter 8 Test 1 TRUE/FALSE Indicate whether the statement is true or false by writing T for True or F for False on the answer sheet. 1. When making payments in cash, you should get a receipt as proof of payment. 2. Paying by check is a difficult and expensive method to use. 3. A cashier s check and a certified check are the same thing; both are issued against bank funds. 4. When you make an electronic payment from your checking account, the bank routing number identifies the bank where you have an account. 5. Automatic payments from your account can save you money, but you must manage the account carefully. 6. With a wire transfer, it typically takes 3 to 5 days for the funds to be transferred. 7. Repaying a debt early is never a wise choice because you will have to pay a prepayment penalty. 8. The purpose of a formal speech can be to convey information, to entertain, or to persuade. 9. Personal loans are typically made for buying a specific item of property, which then serves as collateral. 10. Secured loans may require a cosigner if the borrower does not have property to pledge as security for the loan. 11. A mortgage is a type of unsecured loan. 12. Balloon payments are often used so a mortgage loan will have lower monthly payments. 13. Unused credit cannot hurt your chances of getting more credit. 14. In a consolidated loan, several loans are rolled into a single loan with one payment. 15. When you rent-to-own and decide not to buy the item, no part of the rent payments is returned to you. MULTIPLE CHOICE Write the letter of the choice that best completes the statement or answers the question on the answer sheet. 16. Which of these actions is important for building a good reputation? a. Treat others with courtesy and respect. b. Choose your friends carefully. c. Accept criticism tactfully.
Chapter 8 Test 2 17. A disadvantage of using credit is that a. you can build a solid credit history b. you can borrow at a lower interest rate with good credit c. buying on credit can tie up future income 18. To reduce costs of using credit, you can a. avoid using credit to buy at sale prices b. keep the number of credit cards and accounts you have to a minimum c. carry your cards with you at all times, just in case you need one 19. Credit accounts typically have a billing cycle of about a. 10 days b. 1 week c. 20 days d. 1 month 20. Which of these methods is a traditional payment method? a. paying with cash b. paying by phone c. paying online d. paying with automatic account deductions 21. Which of these methods allows people to make payments by mail when they do not have a checking account? a. electronic withdrawal b. money order c. automatic deduction d. online payment 22. A personal check for which payment is guaranteed is call a(n) a. certified check b. cashier s check c. electronic payment d. telephone transfer 23. Which of these is not a form of electronic payment? a. online payment b. payment by phone c. money order d. online banking 24. At a creditor s Web site, what information is required to make an online payment from your bank account? a. the bank routing number b. your checking account number c. both of the above d. none of the above
Chapter 8 Test 3 25. Payments that are made by transferring money electronically from a checking account to another account every billing period are called a. online banking payments b. telephone payments c. certified check payments d. automatic payments 26. Which of these is a disadvantage to using a wire transfer rather than accepting a paper check? a. You must wait a longer time until your money is available. b. You may be charged a fee of $10 or more for each transfer. c. A wire transfer is more convenient for small sums of cash. 27. When you pay a debt or loan before the agreed-upon time, you may be charged a. a prepayment penalty b. additional loan costs c. a large transfer fee d. a telephone transfer fee 28. A type of installment loan for which you pledge property of value as collateral is called a(n) a. personal loan b. unsecured loan c. secured loan d. grant 29. Which of these costs typically is not part of the closing costs for a loan? a. appraisal fees b. interest on the loan c. credit report fees d. inspection fees 30. A student loan for which interest is paid by the federal government while the borrower attends school at least half-time is called a(n) a. grant b. scholarship c. unsubsidized loan d. subsidized loan
Chapter 8 Test 4 MATCHING Match each term with the correct definition or description below. Write the letter of the term on the answer sheet. a. adjustable rate mortgage b. amortization c. balloon payment d. closing costs e. cosigner f. grace period g. mortgage h. sales finance company i. student loan j. wire transfer 31. A loan that is used to secure financing for the purchase of a house 32. The process of sending money electronically rather than using paper checks 33. The amount of time you have before a credit card company starts charging interest on your new purchases 34. Debt that is used to finance a student s education costs 35. A loan agreement in which the interest rate, payments, and length of the loan can change over time 36. A large payment that is much higher than the other regular payments and that must be paid at a set time, such as 5 years after the loan is made 37. A type of lender that makes loans for the purchase of consumer goods, such as cars or household appliances 38. Expenses a borrower must pay to get a loan, such as recording fees 39. A person who agrees to pay a loan if the borrower fails to pay 40. Repaying a debt by making regular payments of principal and interest over a set period of time
Chapter 8 Test 5 ANSWER SHEET Name TRUE/FALSE MULTIPLE CHOICE MATCHING 1. 16. 31. 2. 17. 32. 3. 18. 33. 4. 19. 34. 5. 20. 35. 6. 21. 36. 7. 22. 37. 8. 23. 38. 9. 24. 39. 10. 25. 40. 11. 26. 12. 27. 13. 28. 14. 29. 15. 30.