Exam Prep Ch5 Checking Accounts, Credit Scores, And Credit

Introduction to Personal Finance, 1e (Grable)

Chapter 5 Checking Accounts, Credit Scores, and Credit Cards

1) A(n) ________ is simply your written order to your bank to pay a third party.

A) check

B) receipt

C) invoice

D) endorsement

Diff: 1

LO: 5.1, Section 5.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

2) Around what time period were checks introduced into the banking system in Europe?

A) ad 800.

B) ad 1000.

C) ad 1200.

D) ad 1400.

Diff: 1

LO: 5.1, Section 5.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

3) A personal check issued by a bank that guarantees the amount will be paid is what type of check?

A) Traveler's check.

B) Cashier's check.

C) Certified check.

D) Money order.

Diff: 1

LO: 5.1, Section 5.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

4) The following is an example of what type of endorsement?

For Deposit Only (1357902468) Oconee City Bank Mary Timberly

A) Blank endorsement.

B) Special endorsement.

C) Restricted endorsement.

D) Deposit endorsement.

Diff: 2

LO: 5.1, Section 5.1

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

5) The following is an example of what type of endorsement?

Pay to cash. Signed Mary Timberly.

A) Blank endorsement.

B) Special endorsement.

C) Restricted endorsement.

D) Certified endorsement.

Diff: 2

LO: 5.1, Section 5.1

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

6) The following is an example of what type of endorsement?

Pay to the Order of Mike Smith, Mary Timberly.

A) Blank endorsement.

B) Special endorsement.

C) Restricted endorsement.

D) Payee endorsement.

Diff: 2

LO: 5.1, Section 5.1

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

7) The Federal Deposit Insurance Corporation (FDIC) insures accounts in

A) commercial banks.

B) credit unions.

C) brokerage companies.

D) commercial banks and credit unions.

Diff: 1

LO: 5.1, Section 5.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

8) Mark and Betty want to keep $339,200 in cash equivalents that are FDIC insured. They could accomplish this by

A) investing $74,200 in a money market mutual fund and $265,000 in a federally insured credit union.

B) dividing it equally into three different joint accounts in the same federally insured bank.

C) dividing it equally into two different joint accounts in two different credit unions.

D) dividing it equally into two individual accounts at the same bank.

Diff: 3

LO: 5.1, Section 5.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

9) How much does the Federal Deposit Insurance Corporation (FDIC) currently insure against loss per person in an individual account at any one institution?

A) $50,000.

B) $100,000.

C) $250,000.

D) $500,000.

Diff: 2

LO: 5.1, Section 5.1

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

10) What is the end balance for the following check register?

A) $1,899.25.

B) $1,201.25.

C) $2,599.25.

D) $2,700.25.

Diff: 3

LO: 5.1, Section 5.1

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

11) A check drawn on a financial institution, backed by the financial institution's finances, and made out to a specific payee is called a

A) certified check.

B) money order.

C) cashier's check.

D) traveler's check.

Diff: 2

LO: 5.1, Section 5.1

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

12) Which of the following could incur fees and penalties on a checking account?

A) The account holder uses an ATM not owned by the financial institution.

B) A customer asks the financial institution to not honor a particular check.

C) The account balance falls below a set minimum amount.

D) All of these answer choices are correct.

Diff: 2

LO: 5.1, Section 5.1

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

13) Which of the following is generally required when you write a check?

A) The name of the person or company that will get the money.

B) The date.

C) The amount to be paid.

D) All of these answer choices are correct.

Diff: 2

LO: 5.1, Section 5.1

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

14) Which of the following acts as a payment trail for transferred funds?

A) The check number and the account number.

B) The account number, only.

C) The bank routing number, only.

D) The account number and the bank routing number.

Diff: 2

LO: 5.1, Section 5.1

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

15) How quickly you can access cash is referred to as

A) liquidity.

B) insurance.

C) overdraft.

D) reconciliation.

Diff: 1

LO: 5.1, Section 5.1

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

16) What type of card allows you to make a payment using money that was loaded onto the card in advance?

A) Prepaid card.

B) Debit card with PIN.

C) Debit card with signature.

D) Credit card.

Diff: 1

LO: 5.2, Section 5.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

17) What type of hybrid method immediately converts paper check payments at the point-of-sale terminal to an electronic form of payment?

A) Check-to-electronic conversion.

B) Automated Clearing House.

C) Peer-to-peer payments.

D) Prepaid card.

Diff: 3

LO: 5.2, Section 5.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

18) Mohammed had $750 in his checking account when his debit card was stolen. Assuming the thief made $525 in purchases with the card, how much could Mohammed save by reporting the stolen ATM card within 2 business days rather than waiting more than 2 business days (but less than 60 days) before reporting the theft?

A) $50.

B) $525.

C) $475.

D) $500.

Diff: 3

LO: 5.2, Section 5.2

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

19) Amara lost his debit card on May 1st. He reported it missing the next day; however, $600 had already been purchased with the card without the use of his PIN number. How much of this $600 loss is Amara responsible for?

A) $0.

B) $50.

C) $500.

D) $600.

Diff: 2

LO: 5.2, Section 5.2

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

20) Macario received a $500 prepaid card for graduation. He lost the card on his way home. What is his maximum liability, given the fraud protection offered by prepaid cards?

A) $0.

B) $50.

C) $250.

D) $500.

Diff: 2

LO: 5.2, Section 5.2

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

21) Fees may be incurred on what payment methods?

A) Checking account.

B) Debit card.

C) Prepaid card.

D) All of these answer choices are correct.

Diff: 1

LO: 5.2, Section 5.2

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

22) Traditional methods of payment include

A) cash.

B) coins.

C) checks.

D) All of these answer choices are correct.

Diff: 1

LO: 5.2, Section 5.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

23) What type of payment can be made electronically without a debit card?

A) Direct debit.

B) Debit card with PIN.

C) Debit card with signature.

D) Prepaid card.

Diff: 1

LO: 5.2, Section 5.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

24) Tips to minimize the possibility of someone using your cards in a fraudulent manner include

A) reconciling statements monthly.

B) making copies of receipts.

C) sharing your account number over the phone.

D) filing statements in a bank safe.

Diff: 1

LO: 5.2, Section 5.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

25) How are most goods and services purchased and money transfers done today?

A) Electronic transactions.

B) Coins.

C) Traditional checks.

D) Cash.

Diff: 1

LO: 5.2, Section 5.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

26) What types of fees may be incurred for prepaid cards?

A) Low account balances.

B) Overdrafts.

C) Out-of-network transactions.

D) Load and reload of funds.

Diff: 1

LO: 5.2, Section 5.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

27) What types of fees may be incurred for debit cards?

A) Card balance inquiries.

B) Load and reload of funds.

C) Monthly maintenance.

D) Monthly maintenance and lost card.

Diff: 1

LO: 5.2, Section 5.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

28) Maarku lost his debit card. He reported it immediately before any unauthorized withdrawals were made. How much is Maarku responsible for?

A) $0.

B) $50.

C) $500.

D) $600.

Diff: 2

LO: 5.2, Section 5.2

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

29) Which of the following forms of payment allows a consumer to make purchases over the Internet?

A) Cash.

B) Checks.

C) Prepaid cards.

D) Money orders.

Diff: 1

LO: 5.2, Section 5.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

30) In what time frame are the funds transferred from your account to the merchant account when using your debit card?

A) Immediately.

B) The next day.

C) The next business day.

D) In 2 business days.

Diff: 1

LO: 5.2, Section 5.2

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

31) Mainstream financial service providers include

A) payday lenders.

B) check cashers.

C) money order providers.

D) banks.

Diff: 1

LO: 5.3, Section 5.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

32) A loan consists of what elements?

A) Principal.

B) Interest.

C) Loan fees.

D) All of these answer choices are correct.

Diff: 1

LO: 5.3, Section 5.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

33) A finance charge represents that total amount of what elements?

A) Interest and principal.

B) Fees and principal.

C) Interest and fees.

D) Interest, fees, and principal.

Diff: 1

LO: 5.3, Section 5.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

34) How are finance charges generally stated?

A) Percentage.

B) As interest.

C) Absolute dollars.

D) Percentage and dollars.

Diff: 1

LO: 5.3, Section 5.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

35) Ladonna borrowed $2,000 to purchase a used car. The total amount she will need to pay includes the $2,000 she borrowed, $200 interest, and $75 loan fees. What is the finance charge on Ladonna's loan?

A) $75.

B) $200.

C) $275.

D) $2,275.

Diff: 2

LO: 5.3, Section 5.3

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

36) Sachi borrowed $7,000 to purchase a used car. The total amount she will need to pay includes the $7,000 she borrowed, $2,400 interest, and $250 loan fees. What is the finance charge on Sachi's loan?

A) $250.

B) $2,400.

C) $2,650.

D) $9,650.

Diff: 2

LO: 5.3, Section 5.3

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

37) On January 1, Pablo borrows $5,000 with a fixed interest rate on the loan of 10% and a loan term of 2 years. He will be making monthly payments of $230.72. How much of Pablo's first loan payment on February 1 would be principal?

A) $189.05.

B) $190.63.

C) $225.50.

D) $250.28.

Diff: 3

LO: 5.3, Section 5.3

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

38) On January 1, Pablo borrows $5,000 with a fixed interest rate on the loan of 10% and a loan term of 2 years. He will be making monthly payments of $230.72. How much of Pablo's first loan payment would be interest charged for January, the first month of the loan?

A) $40.09.

B) $41.67.

C) $42.98.

D) $43.67.

Diff: 3

LO: 5.3, Section 5.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

39) On January 1, Pablo borrows $5,000 with a fixed interest rate on the loan of 10% and a loan term of 2 years. He will be making monthly payments of $230.72. How much of Pablo's second loan payment would be interest charged?

A) $41.67.

B) $40.09.

C) $38.50.

D) $36.90.

Diff: 3

LO: 5.3, Section 5.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

40) On January 1, Pablo borrows $5,000 with a fixed interest rate on the loan of 10% and a loan term of 2 years. He will be making monthly payments of $230.72. How much of Pablo's fifth loan payment would be interest charged?

A) $38.50.

B) $36.90.

C) $35.29.

D) $33.36.

Diff: 3

LO: 5.3, Section 5.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

41) On January 1, Pablo borrows $5,000 with a fixed interest rate on the loan of 10% and a loan term of 2 years. He will be making monthly payments of $230.72. How much of Pablo's fifth loan payment would be principal?

A) $190.63.

B) $192.22.

C) $193.82.

D) $195.43.

Diff: 3

LO: 5.3, Section 5.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

42) ________ represents something of monetary value that can be sold in the event that loan payments are not made by the borrower.

A) Collateral

B) Credit

C) Signature

D) Future earnings

Diff: 1

LO: 5.3, Section 5.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

43) Thomas failed to make his loan payments, and the court ordered his employer to pay his wages directly to his creditor. What does this example represent?

A) Credit.

B) A loan.

C) Garnish wages.

D) A fee.

Diff: 1

LO: 5.3, Section 5.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

44) What should installment loan lenders disclose to credit applicants?

A) The interest rate expressed as an annual percentage rate (APR), only.

B) The finance charge expressed in dollars, only.

C) The interest rate (as an APR) and the finance charge (in dollars).

D) Neither the interest rate (as an APR) nor the finance charge (in dollars).

Diff: 1

LO: 5.3, Section 5.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

45) What type of loan has an interest rate that fluctuates?

A) Fixed installment loan.

B) Variable installment loan.

C) Personal loan.

D) All loans have a fixed interest rate.

Diff: 1

LO: 5.3, Section 5.3

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

46) A credit report is a summarized account of your

A) work history.

B) leasing history.

C) education.

D) credit history.

Diff: 1

LO: 5.4, Section 5.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

47) Which event can have a negative effect on your credit report?

A) Owning stock in a company that declares bankruptcy.

B) Taking out a student loan.

C) Losing a home to foreclosure.

D) All of these answer choices are correct.

Diff: 1

LO: 5.4, Section 5.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

48) Which event can have a positive effect on your credit report?

A) Declared bankruptcy.

B) Taking out a student loan.

C) Losing a home to foreclosure.

D) Both declared bankruptcy and losing a home to foreclosure.

Diff: 1

LO: 5.4, Section 5.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

49) Which of the following is a national credit bureau?

A) Equifax.

B) TransUnion.

C) Experian.

D) All of these answer choices are correct.

Diff: 1

LO: 5.4, Section 5.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

50) Which company maintains housing and credit files on consumers?

A) Credit bureau.

B) Bank.

C) Credit union.

D) Payday lender.

Diff: 1

LO: 5.4, Section 5.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

51) What information is included in your credit report?

A) Educational history.

B) Checking account balance.

C) Current employment status.

D) Inquiry history.

Diff: 1

LO: 5.4, Section 5.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

52) Your credit report may be viewed for what purpose?

A) Underwriting of life insurance.

B) Determining voter eligibility.

C) Gaining college admittance.

D) Applying for a marriage license.

Diff: 1

LO: 5.4, Section 5.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

53) Credit reporting agencies can maintain bankruptcy information on your report

A) for up to 7 years.

B) for up to 10 years.

C) for up to 15 years.

D) forever.

Diff: 1

LO: 5.4, Section 5.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

54) How many years can credit reporting agencies maintain negative information (excluding a bankruptcy) on your report?

A) 7.

B) 10.

C) 15.

D) Forever.

Diff: 1

LO: 5.4, Section 5.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

55) What information can stay in your credit report forever?

A) Bankruptcy.

B) Failure to pay a utility bill.

C) Failure to pay a phone bill.

D) Borrowing more than $150,000.

Diff: 1

LO: 5.4, Section 5.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

56) What personal information will you need to provide when requesting your credit report?

A) Parents' names.

B) Marital status.

C) Address(es) for the past 2 years.

D) The high school you graduated from.

Diff: 1

LO: 5.4, Section 5.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

57) How many days do the credit bureaus have to investigate fraud once you notify them in writing that their information is inaccurate?

A) 10.

B) 20.

C) 30.

D) 60.

Diff: 1

LO: 5.4, Section 5.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

58) Negative items on your credit report include which of the following?

A) Accounts sent to collections.

B) Inquiries resulting from a transaction you initiate.

C) Your request to review your own credit report.

D) Low checking account balances.

Diff: 1

LO: 5.4, Section 5.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

59) The Fair Credit Reporting Act (FCRA) requires Equifax, Experian, and TransUnion to provide you with a free copy of your report once every how many months?

A) 6.

B) 12.

C) 18.

D) 24.

Diff: 1

LO: 5.5, Section 5.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

60) Who decides to grant or deny your credit application?

A) Lender.

B) Credit bureau.

C) Credit reporting agency.

D) Federal Trade Commission.

Diff: 1

LO: 5.4, Section 5.4

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

61) What provides a summary of a person's credit risk?

A) Credit score.

B) Leasing history.

C) Credit application.

D) Credit history.

Diff: 1

LO: 5.5, Section 5.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

62) What is the range for FICO scores?

A) 200−600.

B) 250−650.

C) 300−750.

D) 300−850.

Diff: 1

LO: 5.5, Section 5.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

63) Having a credit score around 500 means you have a ________ risk of having a new credit application rejected.

A) low

B) moderate

C) high

D) The answer depends on how the credit score was calculated.

Diff: 1

LO: 5.5, Section 5.5

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

64) The most widely used credit score is referred to as a

A) FICO score.

B) risk score.

C) payment score.

D) borrowing score.

Diff: 1

LO: 5.5, Section 5.5

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

65) Your credit score is built, in part, using what input(s)?

A) Amount of credit.

B) Payment history.

C) Types of credit.

D) All of these answer choices are correct.

Diff: 1

LO: 5.5, Section 5.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

66) Types of credit represent what score input when calculating your FICO score?

A) 35%.

B) 30%.

C) 20%.

D) 10%.

Diff: 1

LO: 5.5, Section 5.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

67) What input makes up the largest portion of your FICO score?

A) Amount of credit.

B) Payment history.

C) New credit.

D) Length of credit history.

Diff: 1

LO: 5.5, Section 5.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

68) The longer you have had an account, the ________ your FICO score.

A) better

B) lower

C) more accurate

D) less accurate

Diff: 1

LO: 5.5, Section 5.5

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

69) An example of revolving credit includes

A) MasterCard.

B) student loans.

C) mortgage loan.

D) car loan.

Diff: 1

LO: 5.6, Section 5.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

70) An example of installment credit includes

A) MasterCard.

B) student loans.

C) Visa.

D) a home equity line of credit.

Diff: 1

LO: 5.6, Section 5.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

71) What impacts your credit score?

A) Race.

B) Marital status.

C) Payment history.

D) Nationality.

Diff: 1

LO: 5.6, Section 5.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

72) How will having a credit score of 400 affect your application for new credit?

A) You will likely be approved for new credit.

B) You will likely be rejected for new credit.

C) It will not affect your application.

D) You will likely be approved but charged a high interest rate.

Diff: 1

LO: 5.6, Section 5.6

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

73) How will having a credit score of 575 impact your application for new credit?

A) You will likely be approved for new credit.

B) You will likely be rejected for new credit.

C) It will not affect your application.

D) You may be approved but charged a high interest rate.

Diff: 2

LO: 5.5, Section 5.5

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

74) How will having a credit score of 775 impact your application for new credit?

A) You will likely be approved for new credit.

B) You will likely be rejected for new credit.

C) It will not affect your application.

D) You will likely be approved and receive the best borrowing terms.

Diff: 2

LO: 5.5, Section 5.5

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

75) What represents the total amount of credit lines available compared to how much is used?

A) Credit usage ratio.

B) Debt-to-income ratio.

C) Debt-to-asset ratio.

D) Liquidity ratio.

Diff: 2

LO: 5.5, Section 5.5

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

76) Which of the following is a loan that can be used at the borrower's discretion and convenience and has flexible repayment options?

A) Credit card.

B) Promissory note.

C) Amortized loan.

D) Mortgage.

Diff: 1

LO: 5.6, Section 5.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

77) Some people refer to credit cards as ________ loans.

A) amortized

B) mortgage

C) personal

D) revolving

Diff: 1

LO: 5.6, Section 5.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

78) Credit card costs can include

A) annual fees.

B) interest.

C) transaction fees.

D) All of these answer choices are correct.

Diff: 1

LO: 5.6, Section 5.6

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

79) Amar owes $2,000 on his credit card with a minimum percentage of 4% or a minimum payment of $60, whichever is higher. How much is the minimum payment due?

A) $60.

B) $80.

C) $140.

D) $2,000.

Diff: 2

LO: 5.6, Section 5.6

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

80) Josiah owes $3,500 on his credit card with a minimum percentage of 3% or a minimum payment of $100, whichever is higher. How much is the minimum payment due?

A) $100.

B) $105.

C) $200.

D) $3,500.

Diff: 2

LO: 5.6, Section 5.6

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 2

81) Travel and entertainment cards use which of the following payment networks?

A) MasterCard.

B) Visa.

C) American Express.

D) All of these answer choices are correct.

Diff: 1

LO: 5.6, Section 5.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

82) Which of the following is an individual, in addition to the borrower, who will be held responsible for repayment of the debt?

A) Originator.

B) Co-signer.

C) Lender.

D) Loan officer.

Diff: 1

LO: 5.6, Section 5.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

83) A ________ requires the borrower to deposit the full amount of the line of credit at the bank as collateral before the credit card is issued.

A) home equity line of credit

B) debit card

C) prepaid debit card

D) secured credit card

Diff: 1

LO: 5.6, Section 5.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

84) ________ provide their owners with benefits linked to how much they purchase with their card.

A) Secured credit cards

B) Prepaid debit cards

C) Reward credit cards

D) Amortized loans

Diff: 1

LO: 5.6, Section 5.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

85) Annual percentage rates (APRs) associated with a credit card can include

A) introductory APR.

B) balance transfer APR.

C) cash advance APR.

D) All of these answer choices are correct.

Diff: 1

LO: 5.6, Section 5.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

86) ________ is the amount of time allowed to pay a bill without incurring interest.

A) A grace period

B) Three months

C) An introductory period

D) Two months

Diff: 1

LO: 5.6, Section 5.6

Bloom: K

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

87) If you have no credit card and want to get a credit card, you could

A) apply for a rewards credit card.

B) ask your bank to convert your debit card into a credit card.

C) have a co-signer for the credit card account.

D) None of these answer choices are correct.

Diff: 2

LO: 5.6, Section 5.6

Bloom: C

AACSB / IMA: none; none

AICPA: FC: none

Min: 1

88) It's April and Tamela's credit card has a balance of $1,200. The minimum payment due is $36. The APR is 24%. How much interest will she pay this month?

A) $21.89.

B) $22.48.

C) $23.16.

D) $23.76.

Diff: 3

LO: 5.6, Section 5.6

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

89) It's June and Miles's credit card has a balance of $2,200. The minimum payment due is $88. The APR is 21%. How much interest will he pay this month?

A) $38.28.

B) $40.26.

C) $40.76.

D) $41.96.

Diff: 3

LO: 5.6, Section 5.6

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

90) It's November and Mia's credit card has a balance of $7,500. The minimum payment due is $300. The APR is 23%. If she pays only the minimum payment this month, how much of the payment will go toward principal?

A) $141.75.

B) $146.85.

C) $158.25.

D) $161.65.

Diff: 3

LO: 5.6, Section 5.6

Bloom: A

AACSB / IMA: none; none

AICPA: FC: none

Min: 3

______________________________________________________________________________

© 2019 John Wiley & Sons Canada, Ltd. All rights reserved. Instructors who are authorized users of this course are permitted to download these materials and use them in connection with the course. Except as permitted herein or by law, no part of these materials should be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise.