FP 100T Week 3 WileyPLUS Weekly Exam

In this graded assignment, you are assessed on the content covered in this weeks’ readings, activities, and assignments. To help you prepare, it is recommended that you first complete this week’s Learning Path and Self-Test Learning Activities prior to completing this exam.

Complete the Week 3 WileyPLUS Weekly Exam covering this week’s assigned readings:

• “Chapter 5: Managing Credit: Credit Cards and Consumer Loans”
• “Chapter 6: Making Automobile and Housing Decisions”

Note: Work submitted in WileyPLUS does not count toward attendance. Be sure to post at least two times each week in the online classroom to avoid being auto-dropped from the course.

Question 1

Your answer is correct.

In calculating the annual percentage rate on a credit card account, the total annual finance charges includes interest and

late payment charges

all fees and charges assessed on the account

mandatory annual fee

overlimit charges

Question 2

The purpose of an amortization table is to

estimate the average monthly balance

calculate monthly payments on a mortgage

show the breakdown of monthly payments into interest paid on the outstanding balance and principal repayment over the life of a loan

identify when the loan will be paid in full

Question 3

Your answer is correct.

The legal document that specifies the terms and conditions of a consumer loan is the

trust agreement

lien

promissory note

judgement

Question 4

Your answer is correct.

When real property is used as collateral to secure a loan, the lender records a __________ against the property.

deed

mortgage

judgement

lien

Question 5

Your answer is correct.

In assessing a person’s creditworthiness using the Five Cs of Credit, which of the following is applicable in the category of “capacity”?

the income of the person applying for credit

the value of the asset that will secure the loan

the amount of other debt the applicant already owes

the credit score of the person applying for credit

Question 6

Your answer is correct.

Which type of bankruptcy requires the liquidation of most of your assets?

Chapter 13

Chapter 5

Chapter 7

Chapter 11

Question 7

Your answer is correct.

Which of the following statements is true concerning home equity loans?

Home equity loans cannot be used to pay for college costs.

Home equity loan proceeds are generally restricted as to purpose.

Home equity loans are generally installment loans with a 1-5 year term.

Home equity loan interest is tax-deductible up to a maximum of $100,000.

Question 8

Your answer is correct.

Payday lenders are controversial because they

charge very high rates of interest.

make it easier for undocumented workers to stay in the job market.

are in competition with traditional lenders.

allow people cash their paychecks even when they do not have a bank account.

Question 9

Your answer is correct.

Which of the following statements concerning the add-on interest method is true?

The lender subtracts the interest due from the principal before the borrower receives the loan proceeds.

It results in a lower APR than the simple interest method.

It usually results in a higher APR than the discount interest method.

Interest is added to the amount borrowed before the payments are calculated.

Question 10

Your answer is correct.

Which of the following is not one of the situations that can defer student loan payments?

Peace Corps service

Change in citizenship

Postsecondary study

Economic hardship

Question 11

Your answer is correct.

When lenders evaluate your sources of income and your expenses, they are considering your

Capacity

Capital

Collateral

Character

Question 12

Your answer is correct.

When real property is used as collateral to secure a loan, the lender records a __________ against the property.

mortgage

lien

deed

judgement

Question 13

Your answer is correct.

The method most commonly used by financial institutions to determine finance charges on consumer loans is the

discount interest method

compound interest method

simple interest method

add-on interest method

Question 14

Your answer is correct.

Michael is considering getting a closed-end lease on a car for 48 months. The car dealer quotes him a monthly payment of $349. If Michael were to buy the car with the same down payment, his monthly payment would be $465 a month. Michael’s lease payment is lower because

car dealers make a lower profit on leased cars.

leased cars do not come with a manufacturer’s warranty.

he is not paying for the residual value of the car at the end of four years.

he is paying finance charges only on the amount of the car that will be depreciated over four years.

Question 15

Your answer is correct.

Which of the following is a mortgage loan that has a fixed rate, a fixed term, and fixed payments?

growing equity mortgage

conventional mortgage

reverse annuity mortgage

ARM

Question 16

Which of the following statements is true of adjustable-rate mortgages?

There is no limit as the amount of payment change on an ARM.

The interest rate changes on ARMs are limited per year and per lifetime.

They generally carry higher initial interest rates than conventional mortgages.

They cannot be converted to fixed-rate loans.

Question 17

Your answer is correct.

When considering spending on housing needs, if a person is heavily immersed in credit card debt,

it would be a good idea to save money by cutting on housing expenditures and paying down credit card debt first.

credit card debt and housing needs are separate and should not be interlinked.

the individual should continue to borrow against credit cards to maintain a roof over their head.

the person should first satisfy housing needs and then focus on paying down credit card debt.

Question 18

Your answer is correct.

Gross capitalized cost in an automobile lease is equivalent to ___________ in a new car purchase.

depreciation

a down payment

a finance charge

a negotiated purchase price

Question 19

Your answer is correct.

An account held by the mortgage lender and used to cover property taxes and homeowner’s insurance is known as a(n):

assessed account.

reserve account.

tax account.

escrow account.

Question 20

Your answer is correct.

Mike is applying for a home loan and wants to buy a house worth $150,000 in a neighborhood close to his work. However, he only has $15,000 toward the down payment. Mike may be required by the lender to

buy a cheaper house further away from his work.

get a cosigner to the loan.

wait a few years before he can save a 20% down payment.

carry mortgage insurance and pay the premium.

Question 21

Your answer is correct.

Which of the following is a variable operating expense of an automobile?

taxes

insurance premiums

finance charges

toll fees

Question 22

Your answer is correct.

In a home purchase, what are discount points?

A reduction in the annual interest rate of the mortgage loan because the buyer made a higher-than-required down payment.

Interest paid up front to the lender in return for a reduced monthly mortgage payment.

Interest paid up front by the buyer to the lender in return for a reduced annual interest rate.

A reduction in the closing costs due to the fact the buyer put up a large amount of earnest money.

Question 23

Your answer is correct.

An interest rate cap is likely to be associated with a(n) ________ mortgage.

adjustable rate

fixed rate

balloon

growing equity

Question 24

If all else is equal, which of the following is LEAST likely to increase the price of the house you can afford to buy?

increasing mortgage rates

longer mortgage term

improvement in your credit rating

increase in your gross monthly salary

________________________________________

Question 25

Your answer is correct.

Closing costs on the purchase of a house

reduce the amount of cash available for the down payment.

increase the amount of cash available for the down payment.

increase the mortgage insurance premium.

are paid by the lender.