Finance 1200 Spring 2016 Chapter 6
TRUE-FALSE
_____1. Credit encourages overspending and ties up future income.
_____2.
With open-end credit, the borrower pays back a onetime loan in a specified
period of time and with a specified number of payments.
_____3.
With closed-end credit, the borrower is permitted to take loans on a continuous
basis and is billed for partial payments periodically .
_____4.
Two general rules of thumb for measuring credit capacity are the debt
payments-to-income ratio and debt-to-equity ratio.
_____5.
Creditors determine credit worthiness on the basis of character, capacity,
capital, collateral, and conditions.
MULTIPLE CHOICE
_____6.
An example of closed-end credit is
a. incidental credit.
b. revolving check credit.
c. credit cards.
d. installment sales credit.
_____7.
An example of open-end credit is
a. installment sales credit.
b. credit cards.
c. mortgage loans.
d. automobile loans.
_____8.
Which one of the following is not one of the five Cs of credit?
a. Conditions
b. Climate
c. Character
d. Capacity
Finance 1200 Spring 2016 Chapter 6
_____9.
Most of the information in your credit file may be reported for only
__________ years.
a. 7
b. 15
c. 20
d. 23
_____10. Which federal law provides specific cost disclosure requirements for the
annual percentage rate and the finance charge as a dollar amount?
a. Truth in Lending Act
b. Fair Credit Reporting Act
c. Fair Credit Billing Act
d. Equal Credit Opportunity Act