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Exam 6: Choosing a Source Credit: the Costs of Credit Alternatives

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Question 21

True/False

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You want to borrow $100 for a year at an annual rate of 8% compounded semi-annually. The effective annual rate of the loan is 8.04 percent.

A) True
B) False

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Question 22

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There are no costs involved in filing for a bankruptcy or submitting a consumer proposal.

A) True
B) False

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Question 23

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Lines of credit usually charge a variable interest rate, tied to the lender's prime rate.

Credit life insurance provides for the repayment of the loan if the borrower dies.

Most people who are unable to manage their debts are:

If you borrow $100 at 12 percent annual interest and repay it in one lump sum at the end of one year, you will have to pay

The longer the term of the loan the greater the amount of interest charges that must be paid.

Increasingly, the bankruptcy debtor is likely to be female.

What are two key concepts to keep in mind as you shop for credit?

The most inexpensive loans available are provided by finance companies, retailers, and banks through credit cards.

Credit disability insurance can be used when the borrower is unable to pay back a loan in a case of illness or injury.

Credit counselors will aid families by

The most expensive loans available are provided by finance companies, retailers, and banks through credit cards.

Which of the following allows a debtor with a regular income to extinguish his or her debts from future earnings or other property over a period of time?

The Annual Percentage Rate is the percentage cost of credit on a yearly basis.

The most commonly purchased type of credit insurance is credit life insurance.

Over-indebtedness is one of the nation's main family financial problems.

Your only choice in declaring personal bankruptcy is through an assignment in bankruptcy.

Obtaining credit may be easier for people who file a bankruptcy rather than a consumer proposal.

Identify the correct statements. I. Shortening the term of a loan will reduce total interest charges. II. The interest component of each installment loan payment rises over time. III. A credit card holder who pays the minimum balance each month will remain in good standing.