Quiz 2: Paying For College, Credit Cards, Credit Scores And Investing
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- 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
- 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
- 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
- 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
- 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
- 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
- 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?
- 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
- 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
- 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.
- 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
- 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
- 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
- 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
- 15.Which of the following is NOT an example of credit?
- A.
Home mortgage
- B.
Auto loan
- C.
Student loan
- D.
Debit card
- 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
- 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.
- 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
- 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
- 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
- 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)
- 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
- 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
- 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
- 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.
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