By Eileen Ambrose
-- Personal Finance -- Baltimore Sun
Posted 10/30/2005
Extra Credit
Most of us learn about personal finance
from experience.
For instance, workers looking at
their 401(k) statements in the past
six years have come to understand
the meaning of a bull, bear and now
"sideways" market.
The new bankruptcy law requires not
only that debtors undergo pre-bankruptcy
counseling, but that after they file
they must attend a financial class
before their debts are discharged.
The course must be at least two hours
long and cover budgeting, credit,
money management and consumer laws.
There's no mandatory final exam.
Still, some groups teaching the class
plan to give a test - without grades
- to measure the effectiveness of
their program or student comprehension.
The subjects these educators must
teach are important for all consumers,
not just those emerging from bankruptcy.
So, how would you fare if you had
to take a test like some bankruptcy
filers will undergo?
These are questions
that bankruptcy education groups say
will appear, or are likely to appear,
on their quizzes. Good luck.
1. Which of the following investments
has the highest level of risk?
a) Money-market account
b) Individual stock
c) U.S. savings bonds
d) Mutual funds
2. The best way to determine the
cost of a mortgage would be to look
at the:
a) Number of monthly payments
b) Monthly payment amount
c) Interest rate
d) APR (annual percentage rate)
3. Beginning at age 18, if you saved
$3,000 a year for five years and earned
an annual return of 10 percent over
47 years, at age 65 how much money
would you have?
a) $55,000
b) $165,000
c) $460,000
d) More than $1 million
4. Compounding of interest is a powerful
force because:
a) Bankruptcy judges require it
b) Interest you earn also earns
interest
c) Only insured accounts are allowed
to earn it
5. If you claim the right number
of dependents for your payroll deductions,
at the end of the year you should
receive:
a) No tax refund
b) A small tax refund
c) A reasonable tax refund
d) The largest possible tax refund
6. One of the provisions of the Fair
and Accurate Credit Transactions Act,
or FACT Act, allows you to:
a) Repair your credit score
b) Place a consumer statement on
your credit report
c) Receive a free copy of your credit
report from each of the three major
credit bureaus
d) Both a and b
7. The best way to improve a damaged
credit history would be to:
a) Contact a credit repair company
b) Establish a record of timely
payments
c) File for bankruptcy
d) Dispute inaccurate information
8. Credit-card, student loan and
recent tax debts are among the debts
that can be discharged in a Chapter
7 bankruptcy.
a) True
b) False
9. A FICO score is:
a) The spread between assets and
liabilities
b) A number representing your creditworthiness
at a particular time
c) An interest rate determination
set by the bank
10. A good way to cut insurance costs
is to:
a) Ask for a multiple-policy discount
b) Ask for discounts for safety
features
c) Increase your deductibles
d) All of the above
11. Things to consider when planning
to buy life insurance include:
a) How healthy you are
b) Whether you have dependent children
or a dependent spouse
c) How much insurance you currently
have
d) Both b and c
12. Which type of life insurance
has an investment component that goes
beyond straight insurance coverage?
a) Term life
b) Whole life
c) Health insurance
d) Roth IRA
13. Higher deductibles on insurance
will lower your monthly payment, but
increase your risk of out-of-pocket
expenses.
a) True
b) False
14. Your credit score is based on:
a) Your income and your outstanding
debts
b) Your employment and your outstanding
debts
c) Your income and your payment
history
d) Your payment history and your
outstanding debts
15. You risk losing all of the money
in your bank account if you don't
report the loss of your debit card
within:
a) Two days
b) 30 business days
c) 60 business days
d) One year
16. Chapter 7 bankruptcies stay on
your credit report for _______ after
discharge.
a) Five years
b) Seven years
c) 10 years
17. Once a Chapter 7 discharge of
debts has occurred, you must wait
at least _______ before filing for
another Chapter 7 bankruptcy.
a) Four years
b) Six years
c) Eight years
18. On a credit report, most negative
information can remain for a maximum
of seven years from the time it was
reported.
a) True
b) False
19. To fight against identity theft
and unauthorized credit card use,
it is wise to purchase credit protection
products.
a) True
b) False
20. Which of the following loans
offers a line of credit you can use
anytime you wish?
a) Auto loan
b) Home-equity loan
c) College loan
d) Home-equity line of credit
Answers to Credit
Quiz
| 1. b |
11. d |
| 2. d |
12. b |
| 3. d |
13. a |
| 4. b |
14. d |
| 5. a |
15. c |
| 6. c |
16. c |
| 7. b |
17. c |
| 8. False.
Only unsecured debts such
as credit card balances,
medical bills and collection
accounts may be discharged. |
18. True
Exceptions include: Chapter
7 bankruptcy (10 years);
student loan defaults and
child support arrears. Both
may remain indefinately
until paid. |
| 9. b |
19. False
The Fair Credit Billing
Act limits your responsiblity
for unauthorized charges
to $50 when reported in
a timely fashion and stipulates
you won't be charged for
goods and services you didn't
accept or that weren't delivered. |
| 10. d |
20. d |
|
How did you score?
Sources: Consumer
Credit Counseling Service of Middle
Georgia Inc., Consumer Credit Counseling
Service of San Francisco, Credit Education
Bureau, Family Credit Counseling Service.,
InCharge Education Foundation Inc.,
Institute for Financial Literacy,
Money Management International and
Novadebt
|
