Test Bank for The US Banking System 3rd Edition by Center for Financial

1. Personal loans do not require the borrower to state a specific purpose for the funds.

  a.  True

  b.  False

ANSWER:   True

POINTS:   1

LEARNING OBJECTIVES:   BNKG.CFFT.3.LO: 7.2.1 – LO: 7.2.1

2. Secured loans are sometimes called signature loans.

  a.  True

  b.  False

ANSWER:   False

POINTS:   1

LEARNING OBJECTIVES:   BNKG.CFFT.3.LO: 7.2.1 – LO: 7.2.1

3. Balance sheets for all banks are private documents seen only by bank management.

  a.  True

  b.  False

ANSWER:   False

POINTS:   1

LEARNING OBJECTIVES:   BNKG.CFFT.3.LO: 7.1.3 – LO: 7.1.3

4. The three general categories of loans are consumer loans, commercial loans, and mortgage loans.

  a.  True

  b.  False

ANSWER:   True

POINTS:   1

LEARNING OBJECTIVES:   BNKG.CFFT.3.LO: 7.1.1 – LO: 7.1.1

5. Subprime rates are higher-than-normal interest rates offered to a less-than-perfect credit applicant.

  a.  True

  b.  False

ANSWER:   True

POINTS:   1

LEARNING OBJECTIVES:   BNKG.CFFT.3.LO: 7.3.1 – LO: 7.3.1

6. If a credit applicant has opened many new accounts recently, that is probably a sign that the applicant is very creditworthy.

  a.  True

  b.  False

ANSWER:   False

POINTS:   1

LEARNING OBJECTIVES:   BNKG.CFFT.3.LO: 7.3.2 – LO: 7.3.2

7. Paying off a loan early saves the consumer no money if the sum-of-digits method has been used to compute finance charges.

  a.  True

  b.  False

ANSWER:   True

POINTS:   1

LEARNING OBJECTIVES:   BNKG.CFFT.3.LO: 7.4.1 – LO: 7.4.1

8. One consequence of credit overextension is a ruined credit rating.

  a.  True

  b.  False

ANSWER:   True

POINTS:   1

LEARNING OBJECTIVES:   BNKG.CFFT.3.LO: 7.4.2 – LO: 7.4.2