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Chapter 25 Test

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
 

 1. 

An advantage to federal student loans is
a.
low intrest rates.
b.
that loans can be deferred while the borrower is still in school.
c.
graduated payment programs.
d.
all of the above
 

 2. 

Overdraft protection available to customers with a good credit history provides for
a.
payment of checks written over the amount of the balance in the account.
b.
electronic funds transfer at ATM machines.
c.
interest-free checking.
d.
none of the above
 

 3. 

A stop payment order is used to prevent thieves from being able to use a person’s stolen
a.
ATM card.
c.
checks.
b.
debit card.
d.
traveler’s checks.
 

 4. 

Amy lost her wallet in which she had her credit card. Her liability for the stolen credit card is
a.
the amount that the thieves charge.
b.
$50 regardless of when she discovers the loss.
c.
$50 only if she notifies the bank that issued the credit card within two business days of discovering the stolen credit card.
d.
none of the above
 

 5. 

Usury is the
a.
interest rates above the legal limit.
c.
legal limit for interest rates on credit.
b.
annual fee charged for a credit card.
d.
service fee on checking accounts.
 

Completion
Complete each sentence or statement.
 
 
Complete each of the following statements with the appropriate choice below.  Some choices are not used.
balloon payment
garnishment
bankruptcy
loan sharking
credit discrimination
truth in lending
default
usury
 

 6. 

A credit arrangement in which people lend money at high, often illegal, rates of interest is ____________________.
 

 

 7. 

Requirement in a credit arrangement that the last payment is much larger than the monthly payment is a ____________________.
 

 

 8. 

____________________ requires creditors to give consumers basic information about the cost of buying on credit.
 

 

 9. 

A person denied credit because they are single and not married is the victim of ____________________.
 

 

 10. 

A consumer who is unable to pay a debt is in ____________________.
 

 

Matching
 
 
Match each item with the correct statement below. Some items will not be used.
a.
acceleration clause
e.
debtors
b.
annual percentage rate
f.
interest
c.
collateral
g.
secured credit
d.
credit sales
h.
unsecured credit
 

 11. 

interest rate paid per year on borrowed money
 

 12. 

credit term that requires entire balance to be paid in full if a payment is missed or late
 

 13. 

credit based on a promise by the debtors to repay and to give up their property if the loan is not repaid
 

 14. 

the cost of borrowing money
 

 15. 

property put up by the debtor as a security for money borrowed
 

Short Answer
 
 
chap25_files/i0220000.jpg
 

 16. 

What is the total credit limit that John Q. Consumer is able to use?
 

 17. 

How much credit is available now for John Q. Consumer to use? Why?
 

 18. 

How much money does John Q. Consumer have to pay to avoid all finance charges? What is his minimum payment?
 



 
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