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Question 1
The impact of credit __________ saving and __________ spending.
A. decreases; increases
B. increases; decreases
C. decreases; decreases
D. Credit has no relationship on saving and spending.
Question 2
Which of the following is NOT true regarding certificates of deposit (CDs)?
A. The investment of large amounts will pay higher interest than lower amounts.
B. The longer the term, the higher the interest rate paid.
C. Early withdrawals of money are subject to a penalty.
D. All banks offer the same rates on CDs.
Question 3
Your great aunt Mary passed away and left you and inheritance of $5,000. Since you don’t have a need for the money in the near future, which of the following would be the best place to put the $5,000?
A. A savings account earning 1% interest
B. A checking account
C. High risk stock in a producer of natural gas that is predicted to triple in the next year
D. A five-year CD paying 4.38% annually
Question 4
APR means:
A. annual percentage rate.
B. actual percentage rate.
C. applied percentage rate.
D. all-banks percentage rate.
Question 5
Which of the following may result in much of your personal financial information becoming part of the public record?
A. Marriage
B. Applying for financial aid at a college
C. Divorce
D. Purchasing a house with a mortgage
Question 6
The relationship between risk and return:
A. is inverse.
B. is negative.
C. has no correlation.
D. is positive.
Question 7
The following money market securities are insulated from credit risk with the exception of:
A. commercial paper.
B. treasury securities.
C. bank deposits.
D. CDs.
Question 8
The item that receives the most weight in the FICO credit scoring system is:
A. credit payment history.
B. credit utilization.
C. credit inquiries.
D. the amount of credit used each month.
Question 9
Which of the following is true with regards to rising interest rates?
A. Use long-term loans to take advantage of current low rates.
B. The term of the loan option is not impacted by rising interest rates.
C. Use short-term loans to take advantage of low interest rates.
D. Select long-term savings options to lock in current interest rates.
Question 10
Which of the following statements is NOT true regarding reviewing your credit report?
A. Will reveal deficiencies that you can work to eliminate that will improve your credit rating.
B. It will help determine if there are credit cards that you should apply for to improve your credit standing.
C. It will reveal the kind of information that lenders will consider when making a decision to extend credit.
D. You will be able to determine if any errors have been made so they can be corrected.

Question 11
Compute the new balance on a credit card assuming that:
•Beginning balance = $450
•Purchases during the month = $300
•Payments made within the grace period = $250
•Interest rate = 18%
A. $516
B. $550
C. $503
D. $1,000
Question 12
Identity thieves that obtain your information from the magnetic strip on your credit card are using a technique known as:
A. shoulder surfing.
B. dumpster diving.
C. pretexting.
D. skimming.
Question 13
Risk management of money market investments involves all of the following EXCEPT:
A. interest rate risk.
B. potential for default when backed by the federal government.
C. liquidity risk.
D. credit risk.
Question 14
The law that prohibits denying credit due to gender, age, race, natural origin, religion, or marital status is:
A. Equal Credit Opportunity Act.
B. Fair Treatment of Borrowers Act.
C. Fair Labor Standards Act.
D. the Fair Isaac Act.
Question 15
Some credit card companies will waive the annual fee on a credit card if:
A. you pay your bills in a timely manner.
B. you carry a large balance from month to month.
C. you use the card infrequently.
D. Credit card companies never waive annual fees.
Question 16
Credit cards have all of the following advantages EXCEPT:
A. itemized monthly statement.
B. they allow you to borrow cash interest free for 60 days.
C. obtain free financing until the bill is due.
D. make purchases without carrying cash.
Question 17
The Identity Theft and Assumption Deterrence Act has designated which federal agency as the central clearinghouse for all identity theft complaints?
A. FBI
B. FTC
C. CIA
D. WPA
Question 18
A one-year CD has a __________ return and __________ liquidity than a checking account.
A. lower; higher
B. lower; lower
C. higher; higher
D. higher; lower
Question 19
A(n) __________ card allows you to pay for a purchase at a later time when the bill arrives.
A. debit
B. ATM
C. credit
D. expense
Question 20
The interest rate is composed of the __________ and the __________.
A. risk-free rate; risk discount
B. risk-free rate; risk premium
C. risk-free rate; default risk premium
D. None of the above