AnswersPersonal Finance - EL3403Credit and Loans

Credit and Loans — Unit test Answers

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good credita bank accounttax returns

A
good credit
B
a bank account
C
tax returns
2
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Read the scenario.Casey has been saving for a new car and is ready to make a purchase. Having a substantial amount to put down as a down payment, Casey approaches the car dealership. The salesperson and the loan officer view Casey's willingness to make a high down payment positively.Why would Casey be considered a lower risk by the lender for planning to make a high down payment?

A
It shows that Casey prefers a high-interest rate.
B
It shows that Casey is committed to paying off the loan.
C
It shows that Casey may not need a loan at all.
D
It shows that Casey might refinance the loan soon.
3

principal borrowedoutstanding balanceprojected balance

A
principal borrowed
B
outstanding balance
C
projected balance
4

What is the compound interest on a three-year, $100.00 loan at a 10 percent annual interest rate?

A
$10.00
B
$21.00
C
$33.10
D
$46.41
5

Which best describes a way people can use personal loans?

A
to buy a house
B
to buy a car
C
to pay for college
D
to pay for groceries
6

The simple interest on a loan of $200 at 10 percent interest per year is

A
$10 per year until the loan is paid off.
B
$15 per year until the loan is paid off.
C
$20 per year until the loan is paid off.
D
$25 per year until the loan is paid off.
7

Which describes the difference between secured and unsecured credit?

A
Secured credit is backed by an asset equal to the value of a loan, while unsecured credit is not guaranteed by a material object.
B
Unsecured credit is backed by an asset equal to the value of a loan, while secured credit is not guaranteed by a material object.
C
Secured credit is risky because banks cannot seize assets, while unsecured credit is less risky because it is backed by material objects.
D
Unsecured credit enables lenders to seize an asset if a loan is not paid, while secured credit prohibits lenders from taking material objects.

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