Choose wisely. There is only one correct answer to each question.
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1.
Which type of goods usually become worth less over time?
Consumer goods. Consumer goods are bought to be used up. Investment goods are bought to provide income or appreciation of value.
2.
Which of the following is true about bankruptcy?
It should be your last resort to resolve debt problems. Chapter 7 is liquidation bankruptcy, while Chapter 13 restructures your debt.
3.
Which type of loan typically has a lower interest rate: secured or unsecured?
Secured. Secured loans, which are backed by collateral (such as a house or car), have lower interest rates, because having collateral lowers the risk of loss for the lender.
4.
To determine how much you should pay each month on credit card bills, _______.
Use a financial calculator. Enter the number of months, interest rate, and principal balance to calculate the monthly payment.
5.
Monthly debt payments are current expenses that you need to pay in your budget.
False. Monthly debt payments are ghosts of prior expenses for which you did not have enough cash to pay at the time.
6.
Which of the following would most likely give you additional tax savings on your loan interest?
Home equity loan. Interest on home equity loans may be tax deductible.
7.
If you speak to your creditors when you start falling behind on your debts, they will refuse to work with you to make it easier to pay your debts.
False. Though it isn't guaranteed, they may revise your loan terms to make it easier for you to keep paying. It is in their interest to get at least something out of you.
8.
A good way to reduce your monthly debt payments is to pay only the minimum amount due on credit card statements.
False. Paying the minimum amount due on credit card statements will only increase the time and money paid on a debt.