Finance Quiz

What is credit?

• Money exchanged in a bartering and trading society

• Money saved for emergencies

• Money used to purchase items at a general store

• Money borrowed to buy something now, with the agreement to pay for it later

What was one of the earliest forms of credit?

• Taking out loans from creditors

• Using credit cards

• Buying things on account at a general store

• Borrowing money from banks

What is capital in the context of credit?

• The property pledged to assure repayment of a loan

• The total dollar amount of all interest and fees paid for the use of credit

• The property possessed that is worth more than debts

• The ability to repay a loan

What is a credit score used for?

• Determining the minimum payment required on a loan

• Determining the credit limit on a credit card

• Determining the interest rate charged to a borrower

• Determining the amount of money a borrower can borrow

What is the annual percentage rate (APR)?

• The actual yearly cost of funds over the term of a loan or income earned on an investment

• The yearly interest generated by a sum charged to borrowers or paid to investors

• The total dollar amount of all interest and fees paid for the use of credit

• The cost of credit expressed as a yearly percentage

What is collateral in the context of credit?

• The ability to repay a loan

• The total dollar amount of all interest and fees paid for the use of credit

• The property pledged to assure repayment of a loan

• The property possessed that is worth more than debts

What is the balance due in a credit purchase?

• The amount borrowed plus the interest for the time the loan is held

• The amount owed to the creditor once the credit purchase is completed

• The total dollar amount of all interest and fees paid for the use of credit

• The minimum payment required each month under the credit agreement

What is an advantage of credit?

• Credit card purchases cost less than cash purchases

• Purchases made on credit cost less over time due to finance charges

• Credit can expand your purchasing potential and raise your standard of living

• Carrying large amounts of cash is safer than carrying a credit card

What is an example of open-ended credit?

• Telephone bill

• Furniture

• Cars

• Credit cards

What is an example of closed-end credit?

• Credit cards

• Cars

• Furniture

• Telephone bill