Quiz 2: Paying For College, Credit Cards, Credit Scores And Investing
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Questions and Answers
- 1.
What strategy (ies) do credit card companies use to market their product and to make them more appealing?
- A.
Use professional athletes or other celebrities in their commercials
- B.
Highlight the fees and costs of using their cards
- C.
Discuss the dangers of carrying too much credit card debt
- D.
All of the above
Correct Answer
A. Use professional athletes or other celebrities in their commercialsExplanation
Credit card companies often use professional athletes or other celebrities in their commercials as a marketing strategy. This is because these individuals are seen as influential and aspirational figures, and their endorsement can help create a positive image for the credit card brand. By associating their product with well-known personalities, credit card companies aim to make their cards more appealing and increase their customer base. This strategy leverages the popularity and credibility of celebrities to attract potential customers and build brand recognition.Rate this question:
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- 2.
When selecting a credit card, which of the factors listed below SHOULD NOT be considered?
- A.
Interest rate
- B.
Penalties/Fees
- C.
Rewards or incentives
- D.
FDIC-insured
Correct Answer
D. FDIC-insuredExplanation
When selecting a credit card, one should not consider whether the card is FDIC-insured. This is because FDIC insurance is relevant for bank deposits, not credit cards. FDIC insurance protects depositors in the event of a bank failure, ensuring that their deposits up to a certain limit are safe. However, credit cards are not deposits, so FDIC insurance does not apply to them. Therefore, it is not a factor to be considered when choosing a credit card.Rate this question:
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- 3.
True or False. Two of the benefits that a borrower with a very high credit score (e.g., over 800) might include a higher likelihood of having their credit application approved as well as the potential for borrowing at lower interest rates.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
A borrower with a very high credit score (over 800) is likely to have a higher likelihood of having their credit application approved because they have demonstrated a strong credit history and responsible borrowing behavior. Lenders are more willing to lend to individuals with high credit scores as they are seen as less risky. Additionally, borrowers with high credit scores may also be able to borrow at lower interest rates because they are considered less likely to default on their loans. Lenders offer lower interest rates to borrowers with high credit scores as a reward for their responsible financial behavior.Rate this question:
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- 4.
Indicate all the possible consequences of making a late payment on your credit card.
- A.
Charged a late payment fee of $35
- B.
Increase in interest rate to the Penalty APR rate, which will be significantly higher
- C.
Increase in rewards offered to cardholder
- D.
Credit score may go down as a result of poor payment history
- E.
A, B and D
Correct Answer
E. A, B and DExplanation
Making a late payment on your credit card can have several consequences. Firstly, you will be charged a late payment fee of $35. Additionally, your credit card company may increase your interest rate to the Penalty APR rate, which is significantly higher than your current rate. This can result in higher interest charges on your outstanding balance. Moreover, your credit score may go down as a result of the poor payment history, which can make it harder for you to obtain credit in the future. Therefore, the possible consequences of making a late payment on your credit card are A, B, and D.Rate this question:
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- 5.
A cash advance:
- A.
Occurs when a credit cardholder uses their credit card at an ATM to withdraw cash
- B.
Usually results in interest being charged immediately when the withdrawal is made since there is no grace period
- C.
Usually incurs a higher interest rate than standard purchases using a credit card
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
A cash advance refers to the act of using a credit card at an ATM to withdraw cash. It typically incurs immediate interest charges without any grace period. Additionally, cash advances usually have higher interest rates compared to regular credit card purchases. Therefore, the correct answer is "All of the above."Rate this question:
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- 6.
If you plan to pay off your credit card every month and will not be a revolver, which factor will be most important to you in selecting a credit card:
- A.
Interest rate
- B.
Rewards or incentives offered by credit card company
- C.
Quality of credit card commercials
- D.
Location of company headquarters
Correct Answer
B. Rewards or incentives offered by credit card companyExplanation
If you plan to pay off your credit card every month and will not be a revolver, the most important factor to consider in selecting a credit card would be the rewards or incentives offered by the credit card company. Since you will not be carrying a balance and incurring interest charges, the interest rate becomes less relevant. Instead, you can focus on maximizing the benefits you can receive from the credit card, such as cashback, travel rewards, or other incentives. The quality of credit card commercials and the location of the company headquarters are not significant factors in this scenario.Rate this question:
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- 7.
SELECT TWO ANSWERS. Bank of America VISA is offering an introductory rate of 0% APR and 3% cash back on all purchases. What are the TWO best questions the savvy consumer should ask when evaluating this program?
- A.
How long will this introductory offer last?
- B.
Can I get two credit cards for my account?
- C.
What will the APR and the cashback rewards be after the introductory period?
- D.
Does Bank of America VISA allow online transactions?
Correct Answer(s)
A. How long will this introductory offer last?
C. What will the APR and the cashback rewards be after the introductory period?Explanation
The savvy consumer should ask how long the introductory offer will last to determine the duration of the benefits. They should also inquire about the APR and cashback rewards after the introductory period to understand the long-term value of the program.Rate this question:
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- 8.
Holders of the same credit card brand (for example, the Wells Fargo VISA card), all pay the same interest rate regardless of their creditworthiness.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The given statement is false. Holders of the same credit card brand do not necessarily pay the same interest rate regardless of their creditworthiness. Credit card companies typically determine the interest rate based on the individual's credit history, credit score, and other factors. Therefore, two individuals with the same credit card brand may have different interest rates depending on their creditworthiness.Rate this question:
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- 9.
Which website provides consumers with free credit reports from each of the three credit bureaus on an annual basis?
- A.
Freecreditreports.com
- B.
Freescores.com
- C.
Freecredit.com
- D.
Annualcreditreport.com
Correct Answer
D. Annualcreditreport.comExplanation
annualcreditreport.com is the correct answer because it is the only website mentioned that provides consumers with free credit reports from each of the three credit bureaus on an annual basis. The other websites mentioned may provide credit reports or scores, but they do not specify that they offer reports from all three bureaus or on an annual basis.Rate this question:
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- 10.
Indicate which of the statements below is TRUE?
- A.
Your credit report includes information about your salary in it.
- B.
Your credit score is based on the information found in your credit report.
- C.
If you find an error in your credit report, there is no way to correct it.
- D.
Your credit report does not include information about your payment history.
Correct Answer
B. Your credit score is based on the information found in your credit report.Explanation
The correct answer is "Your credit score is based on the information found in your credit report." This statement is true because credit scores are calculated based on the information in your credit report, such as your payment history, credit utilization, length of credit history, and types of credit used. Lenders and financial institutions use credit scores to assess an individual's creditworthiness and determine their likelihood of repaying debts. Therefore, it is crucial to maintain a good credit score by managing your credit report effectively.Rate this question:
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- 11.
SELECT TWO ANSWERS. The two MOST important factors in determining your credit score are:
- A.
Amounts owed
- B.
Length of credit history
- C.
Types of credit used
- D.
Payment history
Correct Answer(s)
A. Amounts owed
D. Payment historyExplanation
The two most important factors in determining your credit score are the amounts owed and payment history. The amounts owed refer to the total amount of debt you have, including credit card balances and loans. This factor is important because it shows how much credit you are currently using and how well you manage your debt. Payment history is also crucial as it reflects your ability to make timely payments on your debts. Lenders consider this factor to assess your reliability and trustworthiness in repaying borrowed money.Rate this question:
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- 12.
How long does negative information (for example, late payments or collection accounts) stay on your credit report?
- A.
1 year
- B.
3 years
- C.
7 years
- D.
15 years
Correct Answer
C. 7 yearsExplanation
Negative information such as late payments or collection accounts stays on your credit report for a period of 7 years. This means that lenders and creditors can see this negative information when evaluating your creditworthiness for that duration. It is important to maintain a good credit history and make timely payments to avoid negative impacts on your credit report.Rate this question:
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- 13.
What is the range of FICO (credit) scores that a consumer can have?
- A.
100 to 900
- B.
250 to 1000
- C.
300 to 850
- D.
600 to 1000
Correct Answer
C. 300 to 850Explanation
The range of FICO (credit) scores that a consumer can have is 300 to 850. This means that the lowest possible score a consumer can have is 300, while the highest possible score is 850.Rate this question:
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- 14.
True or False. The higher the FICO score, the less likely the consumer will default (or not pay back) on their loan. This is why this borrower is likely to get a lower interest rate on their loan.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
A higher FICO score indicates a better credit history and financial responsibility. Lenders consider borrowers with higher credit scores to be less risky and more likely to repay their loans on time. As a result, borrowers with higher FICO scores are more likely to qualify for lower interest rates on their loans. This is because lenders are willing to offer better terms to borrowers who are perceived as less likely to default on their loan payments.Rate this question:
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- 15.
Which of the following is NOT an example of credit?
- A.
Home mortgage
- B.
Auto loan
- C.
Student loan
- D.
Debit card
Correct Answer
D. Debit cardExplanation
A debit card is not an example of credit because it does not involve borrowing money. When a debit card is used, the funds are immediately withdrawn from the cardholder's bank account, rather than being borrowed and paid back over time like a home mortgage, auto loan, or student loan. Debit cards are linked directly to the cardholder's own funds and are used for making purchases or withdrawing cash.Rate this question:
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- 16.
The higher interest rate (APR) that most credit card companies charge to a cardholder after a late payment:
- A.
Balance transfer APR
- B.
Penalty APR
- C.
Penalty fee
- D.
Cashback reward APR
- E.
Purchases APR
Correct Answer
B. Penalty APRExplanation
Penalty APR refers to the higher interest rate that credit card companies charge to a cardholder after a late payment. This penalty is imposed as a consequence for not making payments on time and serves as a deterrent for future late payments. It is a way for credit card companies to compensate for the increased risk they face when customers do not meet their payment obligations.Rate this question:
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- 17.
Investing in your college education makes sense because:
- A.
Workers with college degrees make more money and have higher unemployment rates than those with high school degrees.
- B.
Workers with college degrees make less money but have lower unemployment rates than high school graduates.
- C.
Workers with college degrees make more money and more likely to have a job than a worker with just a high school degree.
Correct Answer
C. Workers with college degrees make more money and more likely to have a job than a worker with just a high school degree.Explanation
Investing in a college education makes sense because workers with college degrees tend to earn higher salaries and are more likely to secure employment compared to those with only a high school degree. This suggests that obtaining a college degree can lead to better job prospects and financial stability.Rate this question:
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- 18.
True or False. When considering which college will cost you and your family more money, the "net price" is more important to consider than the "sticker price."
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The explanation for the given correct answer is that the "net price" is the actual amount that a student and their family will have to pay for college after taking into account any financial aid or scholarships they may receive. On the other hand, the "sticker price" is the published cost of attendance before any financial aid is considered. Therefore, the net price is more important to consider as it reflects the actual out-of-pocket expenses for the student and their family.Rate this question:
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- 19.
Which of the following factors should be considered when selecting a college?
- A.
The "net price" of the college/university
- B.
Graduation rates
- C.
Whether college offers the field of study you are interested in
- D.
Quality of the student body based on test scores, GPA and selectivity of admissions
- E.
All of the above
Correct Answer
E. All of the aboveExplanation
When selecting a college, it is important to consider multiple factors. The "net price" of the college/university is important as it determines the affordability and financial burden. Graduation rates indicate the success and effectiveness of the college in helping students complete their degree. The availability of the field of study you are interested in is crucial to ensure that the college offers the right academic program. Lastly, the quality of the student body based on test scores, GPA, and selectivity of admissions reflects the overall academic environment and competitiveness of the college. Considering all of these factors is essential for making an informed decision.Rate this question:
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- 20.
In order to qualify for financial aid, prospective college students must file the:
- A.
Financial Aid Letter
- B.
FAFSA
- C.
Credit Report
- D.
Magna Carta
Correct Answer
B. FAFSAExplanation
To qualify for financial aid, prospective college students must file the FAFSA. FAFSA stands for Free Application for Federal Student Aid. This application is used to determine a student's eligibility for federal grants, loans, and work-study programs. It collects information about the student's and their family's income, assets, and other factors to assess their financial need. By filing the FAFSA, students can access various forms of financial assistance to help cover the costs of their education.Rate this question:
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- 21.
The gains from an investment in a company's stock that trades on a public exchange might include these two components:
- A.
Dividend and share price appreciation (rise in the stock price)
- B.
Return of principal and coupon
- C.
Dividend and coupon
- D.
Coupon and share price appreciation (rise in the stock price)
Correct Answer
A. Dividend and share price appreciation (rise in the stock price)Explanation
An investment in a company's stock that trades on a public exchange can provide gains in the form of dividends and share price appreciation. Dividends are periodic payments made by the company to its shareholders, usually out of its profits. Share price appreciation refers to an increase in the stock price over time, which can result in capital gains if the investor sells the shares at a higher price than they were purchased for. Both dividends and share price appreciation contribute to the overall returns from investing in a company's stock.Rate this question:
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- 22.
The gains from an investment in a bond would include these two components:
- A.
Dividend and Capital Appreciation
- B.
Coupon and Return of Principal
- C.
Return of Principal and Dividend
- D.
Profits and Losses
Correct Answer
B. Coupon and Return of PrincipalExplanation
The gains from an investment in a bond would include the coupon, which is the interest payment received periodically, and the return of principal, which is the repayment of the initial investment amount at maturity. These two components represent the income and the return of the invested capital, respectively, making them the correct answer.Rate this question:
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- 23.
Ten years ago, an investor bought 100 shares of Home Depot for $20.00 per share. Today, the investor still owns these same 100 shares of Home Depot and the share price has gone up to $35.00 per share. The appreciation in the stock price has provided the investor with an overall CAPITAL GAIN "on paper" of:
- A.
$20.00
- B.
$500.00
- C.
$1,500.00
- D.
$3,500.00
Correct Answer
C. $1,500.00Explanation
Ten years ago, the investor bought 100 shares of Home Depot for $20.00 per share, resulting in a total investment of $2,000. Today, the share price has increased to $35.00 per share. Therefore, the current value of the investor's 100 shares is $3,500. The capital gain "on paper" is the difference between the current value of the shares and the initial investment, which is $3,500 - $2,000 = $1,500.Rate this question:
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- 24.
While the stock market has higher risk than a savings account, the good news is that the long-term returns of the market average are higher and average about 8% per year. The other positive about the stock market is this 8% annual return is fixed and can be counted on returning that amount every year with little to no variation.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The explanation for the given answer, False, is that the statement is incorrect. The stock market does not guarantee a fixed 8% annual return that can be counted on every year with little to no variation. The stock market is known for its volatility, and returns can vary significantly year to year. While the long-term average returns of the market may be around 8%, it is important to note that this is an average and not a fixed return.Rate this question:
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- 25.
Which of the following is NOT a characteristic of the "new school" of retirement planning?
- A.
Most popular plans are 401k plans in which your employer may make a matching contribution
- B.
Value of retirement plans determined by decisions made by employee
- C.
There is a risk of a retiree outliving their retirement funds
- D.
Retirement plans stay with the company so if the employee leaves, they lose those funds.
Correct Answer
D. Retirement plans stay with the company so if the employee leaves, they lose those funds.Explanation
The "new school" of retirement planning emphasizes that retirement plans stay with the employee even if they leave the company, so they do not lose those funds. This characteristic is not associated with the "new school" of retirement planning.Rate this question:
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- 26.
What psychological tactics did you see on display with the short video we saw with Vin Diesel convincing a doctor to make an investment in the movie "Boiler Room?"
- A.
People don't like to see others around them getting wealthy and will take risks to try and keep up with their peers.
- B.
It is human nature to want something (for example, a stock) that is in demand and where there might some urgency to take advantage of an opportunity (recall how Vin got his trading floor to make a lot of noise).
- C.
Investors are willing to rely on "experts" who can sound extremely confident about a financial product they are "selling."
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
The given correct answer suggests that all of the mentioned psychological tactics were seen in the video. The video portrayed the psychological tactic of people feeling compelled to keep up with their peers and take risks to achieve wealth. It also showed the human nature of wanting something that is in demand and creating a sense of urgency. Additionally, the video highlighted the willingness of investors to trust confident "experts" who are selling a financial product.Rate this question:
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- 27.
Which of the items below is NOT a rule for creating wealth for the long-term?
- A.
Start early
- B.
Buy and hold
- C.
Invest all of your money in a bank savings account
- D.
Diversify
Correct Answer
C. Invest all of your money in a bank savings accountExplanation
Investing all of your money in a bank savings account is not a rule for creating wealth for the long-term because savings accounts typically offer low interest rates, which means that the growth of your money will be slow. To create wealth for the long-term, it is important to invest in a diversified portfolio of assets that have the potential for higher returns, such as stocks, bonds, real estate, or mutual funds. Diversification helps to spread out risk and increase the chances of earning higher returns over time.Rate this question:
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- 28.
Which of the following investments would provide an investor with diversification?
- A.
Investing in a single company’s stock
- B.
Investing in a single company’s bonds
- C.
Putting your money in a savings account
- D.
Buying a mutual fund that holds the stock in fifty companies
Correct Answer
D. Buying a mutual fund that holds the stock in fifty companiesExplanation
Buying a mutual fund that holds the stock in fifty companies would provide an investor with diversification. Diversification refers to spreading investments across different assets or securities to reduce risk. By investing in a mutual fund that holds the stock in fifty companies, the investor's money is spread across a diverse range of companies and industries. This helps to mitigate the risk associated with investing in a single company's stock or bonds, or putting all the money in a savings account, which offers limited diversification.Rate this question:
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- 29.
If you plan to be a revolver on your credit card and not pay your balance off every month, which factor will be most important to you in selecting a credit card?
- A.
Rewards
- B.
Interest Rate
- C.
Commercial quality
- D.
Location of bank branch
Correct Answer
B. Interest RateExplanation
If you plan to carry a balance on your credit card and not pay it off every month, the most important factor for you in selecting a credit card would be the interest rate. This is because the interest rate determines how much you will be charged for carrying a balance on your card. A higher interest rate means you will be paying more in interest charges, while a lower interest rate will save you money in the long run. Therefore, selecting a credit card with a low interest rate would be the most beneficial option for someone who plans to carry a balance.Rate this question:
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- 30.
Which of the statements below that are TRUE about 401K plans?
- A.
It pays to start saving immediately in a 401k plan because of the impact of compounding over a long period of time.
- B.
Company’s will often provide a matching contribution to what an employee contributes to their 401K plan (e.g., if an employee contributes $200, the employer could provide a $100 matching contribution)
- C.
A 401K plan is portable in that it stays with the employee even after they have left their company
- D.
A 401K is a retirement savings plan that an investor makes contributions to through deductions from their payroll at the company they work for.
- E.
All of the above
Correct Answer
E. All of the aboveExplanation
All of the statements provided are true about 401K plans. It is beneficial to start saving immediately in a 401K plan due to the compounding effect over time. Many companies offer a matching contribution to employees' 401K plans. A 401K plan is portable and remains with the employee even after leaving the company. Additionally, a 401K plan is a retirement savings plan that individuals contribute to through deductions from their payroll.Rate this question:
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- 31.
What was ONE lesson learned in the ten period Investment Game that we played in class (the game involving the dice)?
- A.
It is easy to predict the future direction of the market just as it is easy to predict a dice roll
- B.
The pain of losses is felt more deeply than the joy of gains.
- C.
It is easy to be emotionally stable in period where the stock market rises or falls a significant percentage
- D.
Investing does not involve any risk
Correct Answer
B. The pain of losses is felt more deeply than the joy of gains.Explanation
The answer suggests that the lesson learned in the Investment Game is that people tend to feel the negative impact of losses more strongly than the positive impact of gains. This implies that individuals are more risk-averse and are more likely to avoid losses rather than seek out potential gains.Rate this question:
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- 32.
Because education is considered an investment in your future, taking on a manageable amount of student loan debt is OK. A good rule of thumb is not to borrow more than one times your expected first year salary for the job you get after you graduate.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Taking on a manageable amount of student loan debt is considered acceptable because education is seen as an investment in one's future. The statement suggests that it is generally advisable not to borrow more than one times your expected first-year salary for the job you get after graduating. This implies that borrowing within this limit is reasonable and can be a responsible decision. Therefore, the answer "True" aligns with the explanation provided.Rate this question:
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- 33.
School A has sticker price of $52,000 and net price of $6,000 for families with income of less than $30,000. Meanwhile, School B has sticker price of $22,000 and net price of $11,000 for families with income of less than $30,000. Which school offers more financial aid to students to help lower the cost of education?
- A.
School A
- B.
School B
- C.
They offer the same amount of financial aid
Correct Answer
A. School AExplanation
School A offers more financial aid to students to help lower the cost of education because its net price for families with income less than $30,000 is $6,000, which is lower than School B's net price of $11,000.Rate this question:
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- 34.
Private student loans offer better payment terms and lower interest rates than federal student loans.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Private student loans typically have higher interest rates and less flexible repayment options compared to federal student loans. Federal student loans often have fixed interest rates and offer various repayment plans, including income-driven options. Additionally, federal loans may provide loan forgiveness or discharge options in certain situations. Therefore, the statement that private student loans offer better payment terms and lower interest rates than federal student loans is false.Rate this question:
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- 35.
School A admits 64% of students who apply while School B admits 7%. Which school would be considered more selective based on their acceptance rates?
- A.
School A
- B.
School B
- C.
About the same
Correct Answer
B. School BExplanation
School B would be considered more selective based on their acceptance rates. With an admission rate of only 7%, School B is much more exclusive and harder to get into compared to School A, which admits 64% of students who apply. This means that School B has a more rigorous selection process and is more likely to have higher academic standards and stricter admission criteria.Rate this question:
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- 36.
You are excited about the opportunity to attend State U after you graduate from Eastside. You had a relative attend the school, have heard that their graduates get great jobs and also that it is a fun place to go. Their TV ads brag about all the great careers their students enjoy because of their State U degree. While researching the school on College Navigator, you discover that the school's net price is $32,000/year, that their graduation rate within 4 years is 20% and that their loan default rate is over 30%. What would you do?
- A.
Be sure to apply to State U. Those statistics should make you even more excited about attending.
- B.
Immediately research additional schools as you decide based on the statistics that State U is definitely not the place you want to study after all
- C.
Not sure
Correct Answer
B. Immediately research additional schools as you decide based on the statistics that State U is definitely not the place you want to study after allExplanation
Based on the given information, it is clear that State U has a high net price, a low graduation rate within 4 years, and a high loan default rate. These statistics indicate that State U may not be a good choice for higher education. Therefore, it would be wise to immediately research additional schools and consider other options rather than applying to State U.Rate this question:
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- 37.
How can you improve your credit score?
- A.
Borrow more money on each of your credit cards
- B.
Get more credit cards
- C.
Pay all of your bills on-time
- D.
None of the above
Correct Answer
C. Pay all of your bills on-timeExplanation
Paying all of your bills on-time can improve your credit score because payment history is a significant factor in determining creditworthiness. Lenders and credit bureaus consider whether you make your payments on time, as late or missed payments can negatively impact your credit score. By consistently paying your bills on-time, you demonstrate responsible financial behavior and reliability, which can positively impact your creditworthiness and improve your credit score over time.Rate this question:
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- 38.
The three credit reporting agencies (bureaus) are:
- A.
Goldman Sachs, Merrill Lynch and Bank of America
- B.
Equifax, TransUnion and Experian
- C.
FICO, Smiths and Credit Analytics
- D.
Johnson, Friedrich and Credit Strategies
Correct Answer
B. Equifax, TransUnion and ExperianExplanation
The correct answer is Equifax, TransUnion, and Experian. These three companies are credit reporting agencies that collect and maintain credit information on individuals and businesses. They gather data from various sources such as lenders, creditors, and public records, and use this information to generate credit reports and credit scores. These reports and scores are then used by lenders, landlords, and other entities to assess an individual's creditworthiness and make decisions regarding loans, credit cards, and other financial transactions.Rate this question:
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- 39.
True or False. When comparing savings accounts or credit cards, fees can often be an important factor in deciding which product is best for you.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
When comparing savings accounts or credit cards, fees can often be an important factor in deciding which product is best for you. This is because fees can significantly impact the overall cost and benefits of the product. For example, high fees on a savings account can eat into the interest earned, reducing the potential savings. Similarly, high fees on a credit card can increase the cost of borrowing and make it less favorable compared to other options. Therefore, considering fees is crucial in determining the best product for one's financial needs.Rate this question:
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- 40.
Which of the following strategies will result in you paying the LARGEST amount of interest to the credit card company?
- A.
Paying off your credit card balance each month
- B.
Paying 20% of your credit card balance every month
- C.
Making the minimum payment (2% of your credit card balance) every month
Correct Answer
C. Making the minimum payment (2% of your credit card balance) every monthExplanation
Making the minimum payment (2% of your credit card balance) every month will result in paying the largest amount of interest to the credit card company. This is because by only paying the minimum amount, the remaining balance will continue to accrue interest over time. As a result, it will take a longer time to pay off the debt, and the interest will accumulate, leading to a higher overall payment to the credit card company.Rate this question:
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- 41.
The Wells Fargo VISA credit card discloses an interest rate of Prime Rate + 5.74% to Prime Rate + 22.74%. Since you know that Prime Rate is currently 3.25%, what is the range of interest rates that Wells Fargo VISA cardholders would have?
- A.
2.49% to 19.49%
- B.
5.74% to 22.74%
- C.
8.99% to 25.99%
- D.
5.74% to 27.25%
Correct Answer
C. 8.99% to 25.99%Explanation
The range of interest rates that Wells Fargo VISA cardholders would have is 8.99% to 25.99%. This is because the interest rate is calculated by adding the Prime Rate (currently 3.25%) to the range of percentages disclosed, which is 5.74% to 22.74%. Therefore, the lowest possible interest rate would be 3.25% + 5.74% = 8.99% and the highest possible interest rate would be 3.25% + 22.74% = 25.99%.Rate this question:
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- 42.
True or False. If you hire a financial advisor to manage your money, you don't have to pay attention to your results since you know that they will always act in your best interest.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Hiring a financial advisor does not absolve individuals from paying attention to their financial results. While financial advisors are expected to act in their clients' best interest, it is still important for individuals to stay informed and involved in their financial matters. They should regularly review their investment portfolio, understand the fees and charges associated with their advisor's services, and ensure that their financial goals align with the strategies being implemented. Ultimately, individuals are responsible for their own financial well-being and should actively participate in the management of their money.Rate this question:
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- 43.
Which of these organizations can see your credit report?
- A.
Lenders you are borrowing from
- B.
Utility companies
- C.
Employers
- D.
Landlords who you want to rent an apartment from
- E.
All of the above
Correct Answer
E. All of the aboveExplanation
All of the organizations mentioned in the options can see your credit report. Lenders, utility companies, employers, and landlords who you want to rent an apartment from can access your credit report to assess your financial responsibility and creditworthiness. They use this information to make decisions regarding lending money, providing services, offering employment, or renting property.Rate this question:
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- 44.
Which of the following are "free money" sources that can help you pay for college that never need to be repaid?
- A.
Pell Grants
- B.
Cal Grants (for California students who stay in-state)
- C.
Scholarships
- D.
Institutional Grants
- E.
All of the above
Correct Answer
E. All of the aboveExplanation
Pell Grants, Cal Grants (for California students who stay in-state), scholarships, and institutional grants are all sources of "free money" that can help pay for college and do not need to be repaid. These sources provide financial assistance to students without the expectation of repayment, making them valuable resources for funding higher education.Rate this question:
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- 45.
Which one do you like?
- A.
Option 1
- B.
Option 2
- C.
Option 3
- D.
Option 4
Correct Answer
A. Option 1 -
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Current Version
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Mar 19, 2023Quiz Edited by
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Jul 15, 2013Quiz Created by
Tranzetta
Shree Sant Gajanan Maharaj College of Engineering,Shegaon,MH(444203)
Shree Sant Gajanan Maharaj College of Engineering,Shegaon,MH(444203)
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