Chapter 4 Review

What does APR stand for in financial terms?

• Annual Percentage Rate

• Automated Payment Requirement

• Asset Procurement Ratio

• Annual Payback Rate

What is a balloon payment?

• A small initial payment on a loan

• The last large payment on some loans

• A regular installment payment

• A refundable deposit on a loan

Which of the following best describes 'collateral'?

• A fee charged for late payment

• Security that insures a loan will be paid

• The total amount of money borrowed

• The interest rate of a loan

What is the primary function of a credit reporting agency?

• To provide loans to individuals

• To collect and compile credit histories

• To issue credit cards

• To set interest rates for banks

What does the term 'available credit' refer to?

• The total amount of credit a person has ever had

• The unused portion of credit against the maximum limit

• The interest rate on the current debt

• The minimum payment due on a credit card

What is a cubic function?

• A function or equation raised to an exponent of three.

• A linear equation used to determine interest rates.

• A statistical method used in finance.

• A calculation for determining credit scores.

What does the Fair Credit Billing Act protect consumers from?

• Unauthorized use of their debit cards.

• Being responsible for disputed amounts on finance charges until errors are cleared up.

• Interest rates on loans.

• Penalties from late payments.

What is the primary purpose of the Fair Debt Collection Practices Act?

• To protect consumers from unfair means of debt collection.

• To regulate the use of credit cards.

• To define the terms of installment plans.

• To set standards for lending institutions.

Which of the following best describes a debtor?

• An organization or person who extends credit.

• An organization or person who uses credit.

• A law that protects against unauthorized credit card use.

• A method of payment over time.

What is impulse buying?

• A method of payment for services over time.

• The interest charged on a purchase.

• Purchasing something suddenly without prior intention.

• The penalty for late payment from the previous month.