Question 1

A loan officer is examining your income and the amount of your existing debt payments to help in the decision to make a loan to you today. Which aspect of the Five Cs of lending is the loan officer most likely looking at?

Accepted Answer

A)   Character
B)   Capacity
C)   Capital
D)   Collateral
E)   ConditionsF) C) and D)
G) None of the above B

Question 2

If your debt-to-equity ratio is about 1, you have probably reached the upper limit of debt obligations.

Accepted Answer

A) True 
 B)False

Question 3

How can you protect yourself against credit/debit card fraud?

Accepted Answer

Here are the ways to protect yourself fr...

Question 4

A personal line of credit is a pre-arranged loan for a specified amount that you can use by writing a special check.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following agencies can produce for a subscribing creditor, almost instantaneously, a report about your past and present credit activity?

Accepted Answer

A)   The Bank of Canada
B)   The Canada Customs and Revenue Agency
C)   Your financial institution
D)   A debit bureau
E)   A credit bureauF) A) and E)
G) A) and B) E

Question 6

Interest is a periodic charge for the use of credit, or other finance charges.

Accepted Answer

A) True 
 B)False

Question 7

What percentage of Canadian households carry 1 or more credit cards

Accepted Answer

A)   20%
B)   30%
C)   50%
D)   70%
E)   more than 80%F) A) and E)
G) D) and E)

Question 8

The 25-to 44-age group currently represents about 30 percent of the population but holds nearly ____________ percent of the debt outstanding.

Accepted Answer

A)   80
B)   70
C)   60
D)   50
E)   40F) B) and E)
G) All of the above

Question 9

Incidental credit is a credit arrangement that has no extra costs and no specific repayment plan.

Accepted Answer

A) True 
 B)False

Question 10

What are the two basic types of credit? Give examples of both.

Accepted Answer

Consumer loans and revolving credit. Con...

Question 11

A credit card cash withdrawal always incurs interest from the moment of withdrawal.

Accepted Answer

A) True 
 B)False

Question 12

If you cosign a loan,

Accepted Answer

A)   you are not being asked to guarantee the debt.
B)   it is not your legal responsibility to pay the debt.
C)   you'll have to pay up to the full amount of the debt if the borrower does not pay.
D)   the creditor must first try to collect from the borrower.
E)   the creditor cannot garnish your wages.F) A) and E)
G) D) and E) C

Question 13

By paying cash for a purchase, you

Accepted Answer

A)   forgo the opportunity to keep the cash in an interest-bearing account.
B)   always get a cash discount.
C)   can build a better credit rating.
D)   get better personal service from store employees.
E)   have a better selection of goods than if you use credit.F) C) and E)
G) B) and C)

Question 14

Some studies show that as many as three out of four cosigners are asked to repay the loan.

Accepted Answer

A) True 
 B)False

Question 15

There are _________ main credit bureaus in Canada

Accepted Answer

A)   1
B)   2
C)   3
D)   5
E)   8F) D) and E)
G) None of the above

Question 16

Generally, most of the information in your credit file may be reported for only ______ years.

Accepted Answer

A)   7
B)   9
C)   11
D)   13
E)   15F) C) and D)
G) A) and B)

Question 17

What can be included in your credit report?

Accepted Answer

A)   race
B)   nationality
C)   sex
D)   employer
E)   religionF) All of the above
G) C) and D)

Question 18

Valid reasons for using credit include all of the following except

Accepted Answer

A)   medical emergency
B)   acquiring a car to return to the workforce
C)   borrowing for a higher education
D)   borrow for everyday living expenses
E)   buying an item now will cost less than in the futureF) B) and E)
G) A) and D)

Question 19

Briefly list and discuss the benefits associated with credit cards

Accepted Answer

If you use the right credit card, and us...

Question 20

Questions you should consider before you decide how and when to make a major purchase include all except

Accepted Answer

A)   do I have the cash I need for a down payment
B)   do I want to use my savings for this purchase
C)   could I postpone this purchase
D)   what are the psychological costs of using credit (being in debt and responsible for monthly payments) 
E)   all these questions should be consideredF) A) and E)
G) A) and B)

Exam 5: Introduction to Consumer Credit

A loan officer is examining your income and the amount of your existing debt payments to help in the decision to make a loan to you today. Which aspect of the Five Cs of lending is the loan officer most likely looking at?

Correct AnswerverifiedB

If your debt-to-equity ratio is about 1, you have probably reached the upper limit of debt obligations.

Correct AnswerverifiedShow Answer

How can you protect yourself against credit/debit card fraud?

Correct AnswerverifiedHere are the ways to protect yourself fr...View AnswerShow Answer

A personal line of credit is a pre-arranged loan for a specified amount that you can use by writing a special check.

Correct AnswerverifiedShow Answer

Which of the following agencies can produce for a subscribing creditor, almost instantaneously, a report about your past and present credit activity?

Correct AnswerverifiedE

Interest is a periodic charge for the use of credit, or other finance charges.

Correct AnswerverifiedShow Answer

What percentage of Canadian households carry 1 or more credit cards

Correct AnswerverifiedShow Answer

The 25-to 44-age group currently represents about 30 percent of the population but holds nearly ____________ percent of the debt outstanding.

Correct AnswerverifiedShow Answer

Incidental credit is a credit arrangement that has no extra costs and no specific repayment plan.

Correct AnswerverifiedShow Answer

What are the two basic types of credit? Give examples of both.

Correct AnswerverifiedConsumer loans and revolving credit. Con...View AnswerShow Answer

A credit card cash withdrawal always incurs interest from the moment of withdrawal.

Correct AnswerverifiedShow Answer

If you cosign a loan,

Correct AnswerverifiedC

By paying cash for a purchase, you

Correct AnswerverifiedShow Answer

Some studies show that as many as three out of four cosigners are asked to repay the loan.

Correct AnswerverifiedShow Answer

There are _________ main credit bureaus in Canada

Correct AnswerverifiedShow Answer

Generally, most of the information in your credit file may be reported for only ______ years.

Correct AnswerverifiedShow Answer

What can be included in your credit report?

Correct AnswerverifiedShow Answer

Valid reasons for using credit include all of the following except

Correct AnswerverifiedShow Answer

Briefly list and discuss the benefits associated with credit cards

Correct AnswerverifiedIf you use the right credit card, and us...View AnswerShow Answer

Questions you should consider before you decide how and when to make a major purchase include all except

Correct AnswerverifiedShow Answer

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B

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Here are the ways to protect yourself fr...
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E

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Consumer loans and revolving credit. Con...
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C

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If you use the right credit card, and us...
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