Level 14 Review Role of Individuals in Financial Markets, Person

The amount of money you are borrowing is known as the:

• interest

• principal

• term

• none of the above

Someone who takes on the responsibility of repayment of a loan is known as a:

• 
  principal

• co-signer

• parent

• loan officer

each of the following represents an installment loan EXCEPT

• 
  Home mortgage

• Auto loan

• Student loan

• Credit card

Why might someone consider choosing a loan with the lowest monthly payment?

• 
  Low payments fit better with their monthly budget

• Low payments indicate a lower interest rate

• Low payments eventually lead to lower total interest paid

• Low payments help you pay off your loan more quickly

what's an advantage of paying your credit card balance in full each month?

• 
  you will incur only a small 'paid in full' fee on your next credit card statement

• you pay only a small amount of interest

• you have less of your credit limit available, therefore less temptation to spend

• you avoid paying any interest and fees

What is an outstanding balance?

• The amount you paid in your minimum payment

• the amount you spent in total

• the amount you still owe after you've made your most recent payment

• the amount you have oaid.

Why is it more difficult to get out of debt when only paying the minimum payment?

• your entire minimum payment goes toward principal and the interest continues to compound

• your credit limit always resets, so you have a lot of spending power each month

  None of the above

• the majority of your minimum payment is going toward interest and finance charges and only a small amount toward the principal

• none of these

What are the possible consequences of making a late payment?

• 
  You'll be charged a fee

  Your Annual Percentage

• Rate may be increased

• All of the above

Which statement is true about both credit cards AND debit cards?

• Both can trap you in a cycle of debt if you're not careful

• both allow you to make purchases in a store or online

• Both typically have interest rates between 10-30%

• Both require you pay a minimum monthly payment when your bill arrives

What term describes the amount you must pay in order to be 'up to date' with your credit card payments?

• APR

• Interest rate

• Minimum payment

• Closing balance