Question 1

Errors on credit reports can occur. If there is an error on your report,

Accepted Answer

A)  it is your responsibility to review it once a year for accuracy and inform about any errors.
B)  your dispute will result in the credit agency being charged under the Fair Credit Reporting Act.
C)  the creditor reporting to the agency must correct it at your request.
D)  you must inform the Better Business Bureau to take your case to the authorities.

Question 2

Paying an annual membership fee to a credit company is a good idea

Accepted Answer

A)  because it will likely be a prestige card.
B)  if it includes benefits that are worth the fee.
C)  for the creditor who wishes to carry a balance on the card.
D)  because these cards always improve your credit score.

Question 3

Contacting the credit bureau to notify them of identity theft is not necessary.

Accepted Answer

A) True 
 B)False

Question 4

When applying for a credit card, you will be asked to provide the following information except

Accepted Answer

A)  monthly income.
B)  expenses.
C)  credit history.
D)  tax refund.

Question 5

Explain how use of a credit card can affect the successful implementation of a financial plan. Note that you will be able to find both constructive and damaging uses of credit cards in the financial planning process.

Accepted Answer

Supplement cash flow in times of need.
M...

Question 6

Your credit score is calculated using

Accepted Answer

A)  your credit payment history.
B)  your income history.
C)  your cash flow.
D)  all of the above.

Question 7

A large number of credit inquiries means

Accepted Answer

A)  you have a high BEACON score.
B)  you are seeking credit from several institutions.
C)  you have a good rating with many financial institutions.
D)  you are very diligent on tracking your credit information.

Question 8

Which BEACON score is the lowest that would normally gain you easy approval for credit?

Accepted Answer

A)  300
B)  500
C)  700
D)  900

Question 9

A credit card charges 18 percent annual interest and you have a balance due on the statement date of $750. You are able to make only the minimum payment of $18. What will be the interest charge for the next 30 days assuming the credit card uses the previous balance method?

Accepted Answer

A)  $11.10
B)  $13.50
C)  $10.83
D)  $12.92

Question 10

A credit card usually gives a "grace period" during which you are not charged any interest on your purchase for

Accepted Answer

A)  15 days.
B)  20 days.
C)  25 days.
D)  30 days.

Question 11

You can begin to build a credit history by applying for a credit card.

Accepted Answer

A) True 
 B)False

Question 12

Creditor insurance

Accepted Answer

A)  is a free benefit on most credit cards.
B)  can be used to pay off all debt when a creditor becomes unemployed.
C)  is a good substitute for health and disability insurance.
D)  can cover monthly credit repayments if a consumer cannot work.

Question 13

The item that receives the most weight in the BEACON credit scoring system is

Accepted Answer

A)  the amount of credit used each month.
B)  credit payment history.
C)  credit use.
D)  debt to equity ratio.

Question 14

If you had a major payment problem with your credit card in 2009, you expect that a credit report will still highlight this problem

Accepted Answer

A)  up to 2013.
B)  up to 2014.
C)  up to 2015.
D)  up to 2016.

Question 15

You have the cash available to pay off a $6500 loan that will cost you $450 in interest this year and you are deciding whether to pay it off or make an investment. If you are in a 30 percent tax bracket, how much interest would you have to earn to make the investment a better decision?

Accepted Answer

A)  More than $450.
B)  More than $580.
C)  The investment should have a return of 8 percent.
D)  The loan rate is 6.9 percent, so the investment should earn a better rate.

Question 16

Revolving credit means

Accepted Answer

A)  the loan balance will fluctuate based on the amount used from time to time.
B)  the interest rate will revolve above the prime rate.
C)  payments against the loan balance will always be the same amount.
D)  the loan has a final maturity date.

Question 17

Shredding documents or statements might be a way to help prevent identity theft.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following statements is true regarding a review of your credit agency report?

Accepted Answer

A)  You will not have authority to make corrections, as the information must come from a financial institution.
B)  It will help determine if there are credit cards you should apply for to improve your credit standing.
C)  It will reveal if you have sufficient income to carry the new debt payments.
D)  It will reveal deficiencies that you can work on to improve your credit rating.

Question 19

Use of Financial Calculator TI BA-Plus required. Your credit card balance was $900 and you made a $500 payment. What would be the finance charge at 2 percent monthly if your company used the previous balance method?

Accepted Answer

A)  $18
B)  $8
C)  $10
D)  Insufficient information

Question 20

Revolving open-end credit means that credit will be provided up to a specified maximum and

Accepted Answer

A)  interest is charged each month on the outstanding balance.
B)  the consumer has to pay the entire amount borrowed each month.
C)  interest is charged each month on the specified maximum amount.
D)  the consumer must pay interest and three percent of principal each month.

Exam 6: Managing Your Liquidity - Assessing, Managing, and Securing Your Credit

Paying an annual membership fee to a credit company is a good idea

Correct AnswerverifiedShow Answer

Contacting the credit bureau to notify them of identity theft is not necessary.

Correct AnswerverifiedShow Answer

If you had a major payment problem with your credit card in 2009, you expect that a credit report will still highlight this problem

Correct AnswerverifiedShow Answer

Explain how use of a credit card can affect the successful implementation of a financial plan. Note that you will be able to find both constructive and damaging uses of credit cards in the financial planning process.

Correct AnswerverifiedSupplement cash flow in times of need.M...View AnswerShow Answer

The item that receives the most weight in the BEACON credit scoring system is

Correct AnswerverifiedShow Answer

A large number of credit inquiries means

Correct AnswerverifiedShow Answer

Shredding documents or statements might be a way to help prevent identity theft.

Correct AnswerverifiedShow Answer

A credit card charges 18 percent annual interest and you have a balance due on the statement date of $750. You are able to make only the minimum payment of $18. What will be the interest charge for the next 30 days assuming the credit card uses the previous balance method?

Correct AnswerverifiedShow Answer

Revolving credit means

Correct AnswerverifiedShow Answer

Creditor insurance

Correct AnswerverifiedShow Answer

Which BEACON score is the lowest that would normally gain you easy approval for credit?

Correct AnswerverifiedShow Answer

A credit card usually gives a "grace period" during which you are not charged any interest on your purchase for

Correct AnswerverifiedShow Answer

Errors on credit reports can occur. If there is an error on your report,

Correct AnswerverifiedShow Answer

You can begin to build a credit history by applying for a credit card.

Correct AnswerverifiedShow Answer

Use of Financial Calculator TI BA-Plus required. Your credit card balance was $900 and you made a $500 payment. What would be the finance charge at 2 percent monthly if your company used the previous balance method?

Correct AnswerverifiedShow Answer

Which of the following statements is true regarding a review of your credit agency report?

Correct AnswerverifiedShow Answer

You have the cash available to pay off a $6500 loan that will cost you $450 in interest this year and you are deciding whether to pay it off or make an investment. If you are in a 30 percent tax bracket, how much interest would you have to earn to make the investment a better decision?

Correct AnswerverifiedShow Answer

Your credit score is calculated using

Correct AnswerverifiedShow Answer

Revolving open-end credit means that credit will be provided up to a specified maximum and

Correct AnswerverifiedShow Answer

When applying for a credit card, you will be asked to provide the following information except

Correct AnswerverifiedShow Answer

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Supplement cash flow in times of need.
M...
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