AnswersPersonal Finance - EL3403Mortgages and Home Ownership

Mortgages and Home Ownership — Unit test Answers

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21
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Pete is trying to get a loan. He has a credit score of 480. How is Pete’s lender likely to view this credit score?

A
Pete is responsible and will pay the loan back on time.
B
Pete is responsible but will not pay the loan back on time.
C
Pete is irresponsible but will pay the loan back on time.
D
Pete is irresponsible and will not pay the loan back on time.
22
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This year, Mr. Thomas has a higher credit score than he did last year. Which of the following should Mr. Thomas expect with the improved score? Check all that apply.

A
a more difficult time borrowing money to buy a house
B
an easier time getting a car loan
C
an easier time renting an apartment
D
a denial when opening a bank account
E
higher interest rates on credit cards
23

What best explains the relationship between a borrower’s credit score and a down payment requirement?

A
Someone with a high credit score may be required to make a higher down payment.
B
Someone with a high credit score may be required to make a lower down payment.
C
Someone with a low credit score may be required to make a lower down payment.
D
Someone with a low credit score may not have to make a down payment.
24

Terrell has $300 to open a checking account. He plans to use the ATM four times per month at his local branch. He does not overdraft his account. Bank Account Terms and ConditionsWhich checking account would be best for Terrell?

Question illustration
A
Account A
B
Account B
C
Account C
D
Account D
25

The table shows the terms of a fixed-rate mortgage.

Question illustration
A
M = P StartFraction Left-bracket R (1 minus R) Superscript n Baseline Right-bracket Over (1 + R) Superscript n Baseline EndFraction
Option A
B
M = P StartFraction Left-bracket R (1 + R) Superscript n Baseline Right-Bracket Over Left-bracket (1 + R) Superscript n Baseline minus 1 Right-bracket EndFraction
Option B
C
M = P StartFraction R Over left-bracket (1 + R) Superscript n Baseline minus 1 Right-bracket EndFraction
Option C
D
M = P StartFraction Left-bracket R (1 + R) Superscript n Baseline Right-Bracket Over (N + R) EndFraction
Option D
26

A credit score is based in part on

A
employment and race.
B
income and location.
C
employment and trust.
D
payment history and total debt.
27

The type of credit people are most likely to use for small purchases during their lifetime is

A
a credit card.
B
a personal loan.
C
an auto loan.
D
a mortgage.
28

Irma has $500 to open a checking account. She wants an account with the lowest fees. She plans to use only her bank’s ATM to deposit her paychecks and withdraw cash. Bank Account Terms and ConditionsWhich checking account would be best for Irma?

Question illustration
A
Account A
B
Account B
C
Account C
D
Account D
29

[BLANK]

A
principal borrowed
B
outstanding balance
C
projected balance
30

Which describes the difference between simple and compound interest?

A
Simple interest is paid on small, short-term loans, while compound interest is paid on large, long-term loans.
B
Simple interest is paid on the principal, while compound interest is paid on the principal and interest accrued.
C
Simple interest is paid on large, long-term loans, while compound interest is paid on small, short-term loans.
D
Simple interest is paid on the principal and interest accrued, while compound interest is paid only on the principal.
31

Kanya has a credit card that gives a 6% discount on every purchase and free shipping when used online. The annual percentage rate on the credit card is 12%. Kanya wants to buy a laptop that costs $420. Which statement about the cost of the laptop is true?

A
If Kanya uses the credit card and pays the full balance during the billing cycle, she will spend $25.20 more than paying cash for the laptop.
B
If Kanya uses the credit card and pays the full balance during the billing cycle, she will spend $50.40 more than paying cash for the laptop.
C
If Kanya uses the credit card and pays the full balance during the billing cycle, she will spend $50.40 less than paying cash for the laptop.
D
If Kanya uses the credit card and pays the full balance during the billing cycle, she will spend $25.20 less than paying cash for the laptop.
32

The chart shows the costs associated with the purchase of a new home.

Question illustration
A
cost of making repairs to the new home.
B
fees that must be paid to local schools.
C
costs associated with obtaining the loan.
D
fees assessed by the state or local government.
33

Open-end credit is

a
a loan given for a short period of time that is not dependent on credit history.
p
pledged to a company as security for a loan repayment.
a
an amount of time during which a loan can be repaid without interest.
a
an agreement with an institution on a certain amount that can be repeatedly borrowed.
34

Sarah transferred $450.00 from her savings account to her checking account. She’ll use the check register to record her transaction. What will be her new balance?$

Question illustration
Answer not available
35

Quincy wanted his credit report. Which list could Quincy have obtained?

A
previous address, current address, bankruptcy, car loan payment history
B
current address, monthly income, car loan payment history, date of birth
C
previous address, current address, schools attended, bankruptcy
D
current address, monthly income, car loan payment history, schools attended
36

Tyler is using a credit card to purchase a television. Which of the following should Tyler expect? Check all that apply.

A
to have the full amount available in his bank account right away
B
to receive a bill at a later date
C
to be able to pay for it over time
D
to write a check
E
to pay interest if he does not pay in full by a certain date
37

The table shows a schedule of Inga’s payment plan for a car. Inga’s Payment Plan for the First 3 YearsYearBalanceMonthly PaymentEnd of YearBalance1$19,691.28$273.49$16,409.402$16,409.40$273.49$13,127.523$13,127.52$273.49$9,845.64 How many more years will it take Inga to pay off the loan?

2
2 years.
3
3 years
4
4 years
6
6 years
38

Consumers who pay more than the minimum payment on credit cards

A
pay less interest in the long run.
B
are able to buy more things.
C
see their credit scores decrease.
D
qualify for mortgages.
39

The table shows a schedule of Evita’s payment plan for a used car. Evita’s Payment Plan for the First Three YearsYearBalanceMonthly PaymentEnd of YearBalance1 $356.82 2 $356.82 3 $356.82$8,563.39Evita paid $2,408.91 in interest. What was the selling price of the car?

A
$12,845.52
B
$17,127.07
C
$19,000.00
D
$21,408.91
40

People most likely need to take out a mortgage when they

A
have bad credit.
B
are making a large purchase.
C
are spending less than $1,000.
D
have legal problems.

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