Personal Finance Canadian Canadian 6th Edition Kapoor Test Bank Download

PERSONAL FINANCE CANADIAN
CANADIAN 6TH EDITION KAPOOR TEST

BANK
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06
Student:
1. In financial institutions, the sources of credit:
A. come in all shapes and sizes.

B. play an important role in our
economy. C. are typically short term
D. A and B are correct
E. A, B and C are correct
2. By evaluating your credit options, you can
A. reduce your finance charges.

B. reconsider your decision to borrow
money. C. discover a less expensive type of
loan.
D. find a lender that charges a lower rate.
E. reduce your finance charges, reconsider your decision to borrow money, discover a less
expensive type of loan, and find a lender that charges a lower rate.
3. Which of the following financing methods provides a float
period? A. installment loan

B. lump-sum loan
C. credit card
D. home equity line of credit
E. a loan from a relative
4. A float refers to:
A. an interest charged for only a few

days. B. something one enjoys in a
parade.
C. a home equity loan.
D. a period when no interest is
charged. E. a lump-sum loan from a
credit union.
5. Which of the following offer the least expensive
loan? A. finance companies

B. banks
C. savings and loan associations
D. parents or family members
E. loan sharks
6. Which of the following tend to be expensive loans?
A. retailers
B. banks
C. credit unions
D. family members
E. trust companies
7. The interest rate on a collateralized loan is relatively low, but one of the disadvantages of such
loans is that
A. the loan must be repaid in a short period of time.

B. the assets used as collateral are tied up until the loan has been
repaid. C. the loan is difficult to obtain.
D. commercial banks do not make such
loans. E. you ruin your credit rating.
8. You can often obtain medium-priced loans from
A. parents or family
members. B. American
Express.
C. commercial banks and credit
unions. D. finance companies.
E. retailers.
9. Membership in credit unions has been
A. growing steadily.
B. declining
gradually. C. static.
D. restricted by the Tax Act.
E. restricted by provincial laws.
10. Compounding the annual percentage rate (APR) four times a year is equivalent
to: A. the annual percentage rate (APR) quoted by a financial institution.

B. the annual percentage rate (APR) compounded
semi-annually. C. the effective annual rate (EAR) annually.
D. the effective annual rate (EAR) semi-annually
E. the effective annual rate (EAR) quarterly.
11. If a bank charges you interest up front then this loan is called a loan
A. compounded.
B. simple
interest. C.
discount.
D. add-on.
E. installment.
12. If you borrow $100 at 12 percent annual interest and repay it in one lump sum at the end of one
year, you will have to pay
A. $12.
B. $100.
C. $112.
D. $1,200.
E. $8.33.
13. What is the EAR for a $100 loan when the interest is compounded monthly and the stated
annual interest rate is 7 percent?
A. 7.0 percent
B. 8.0 percent
C. 7.23 percent
D. 12.0
percent E. 16.0
percent
14. What is monthly payment for a $25,000 amortized loan to purchase a car payable over 5 years at
an annual interest rate of 12%?
A. $200
B. $333
C. $445
D. $556
E. $565
15. If creditors add finance charges after subtracting payments made during the billing period,
this is called the
A. adjusted balance
method. B. discount
method.
C. previous balance
method. D. APR method
E. average daily balance method.
16. If creditors give you no credit for payments made during the billing period, this is called the
A. APR method.
B. discount method.
C. previous balance
method. D. adjusted
balance method.
17. The most commonly purchased type of credit insurance is
A. credit life insurance.

B. credit accident
insurance. C. credit health
insurance.
D. credit property insurance.
E. credit disability
insurance.
18. Which type of credit insurance repays your debt in the event of a loss of income due to illness
or injury?
A. credit life insurance

B. credit accident and health insurance
C. credit property insurance
D. credit casualty insurance
E. credit debit insurance
19. Which of the following are signs of debt
problems? A. foreclosure proceedings.

B. overdue payments.
C. approaching credit
limits. D. A and B are
correct.
E. A, B and C are correct.
20. According to consumer affairs experts, one of the nation's main family financial problems is
A. that families don't prepare their

budgets. B. over-indebtedness.
C. over consumption.
D. buying too much
insurance. E. unemployment.
21. If you default on your automobile loan,
A. an advance notice to you is required before your car is

repossessed. B. no advance notice is required before repossession.
C. the federal consumer credit laws give you
protection. D. you don't have to pay the full balance
due on the loan. E. the creditor pays the towing and
storage costs.
22. If you have trouble paying your
bills, A. take a personal finance course.

B. turn to a company that claims to offer assistance in solving debt problems.
C. check with your local Better Business Bureau for
help. D. seek assistance from a collection agency.
E. try to solve the problem with your creditor.
23. Which of the following may indicate potential debt
problems? A. paying only the minimum balance each month.

B. always borrowing to make it to next payday.
C. your wages have been garnished to pay for debt.
D. your utility company cuts off service because your bills are unpaid.
E. paying only the minimum balance each month, always borrowing to make it to next payday,
your wages have been garnished to pay for debt, and your utility company cuts off service
because your bills are unpaid.
24. Most people who are unable to manage their debts are:
A. criminals who take advantage of

creditors. B. living in the poverty-stricken
areas.
C. expected to declare Chapter 11
bankruptcy. D. mostly dishonest people.
E. mostly honest people.
25. Consumer credit counseling services are basically concerned with
A. lending the money to destitute

people. B. giving debtors food and
shelter.
C. helping destitute debtors to relocate in less expensive areas.
D. preventing and solving the problems related to credit
overextension. E. getting you more credit
26. Credit counselors will aid families by
A. setting up a budget for

them. B. paying off their
loans.
C. providing free basic necessities.
D. providing one month free
shelter.
E. relocating them in less expensive areas.
27. Non-profit credit counseling services are sometimes provided by
A. universities.
B. military
bases. C. credit
unions.
D. provincial and federal authorities.
E. All of them may provide such services.
28. Which of the following allows a debtor with a regular income to extinguish his or her debts
from future earnings or other property over a period of time?
A. Assignment in bankruptcy
B. Frequent payment plan
C. Consumer proposal
29. In a bankruptcy, a trustee
A. is required to draw up a petition listing all of your assets and

liabilities. B. will have to pay a filing fee.
C. is appointed by a 'banker'
D. seeks absolution from alimony and child support
payments. E. repays educational loans first.
30. A maximum 5-year plan for paying creditors all or a portion of outstanding debt is referred to
as a consumer .
A. bankruptcy
B. proposal
C. consolidation
D. counseling
E. Assurance
31. What effective rate of interest is being charged when the quoted APR is 6%, compounded
semi-
annually?
A. 6.00%
B. 6.09%
C. 6.17%
D. 6.18%
E. 6.50%
32. Identify the correct statements.
I. Shortening the term of a loan will reduce total interest charges.

II. The interest component of each installment loan payment rises over time.
III. A credit card holder who pays the minimum balance each month will remain in good
standing.
A. I and II, only

B. II and III,
only C. I and III,
only D. I, II and
III
E. I only
33. In order to minimize complications, all loans to and from family members should
A. be in writing
B. state the interest rate, if there is an interest rate
C. include a repayment schedule
D. include the final payment
date E. all of these should be
included
34. By current Canadian law, a lender in Canada can legally charge up to per annum
A. 10%
B. 22%
C. 28%
D. 60%
E. there is no limit
35. Government of Canada student loans
A. are available to all full-time and part-time post-secondary students regardless of financial need
B. are offered only in Ontario and Quebec
C. are not required to be repaid
D. are the same as student grants
E. program is called the Canada Student Loans Program
36. Student loans to finance education beyond high school
A. are available from the Government of Canada

B. charge lower interest rates than commercial rates
C. must be repaid with interest, just like car loans and mortgages
D. cannot be cancelled because you were dissatisfied with your education
E. all of the choices are correct
37. Student loans to finance education beyond high school
A. have rates that are subsidized by the Government of Canada

B. charge interest rates equal to commercial rates
C. must be repaid but interest is not charged if repaid in a timely manner
D. can be cancelled if you were dissatisfied with your education
E. are available to all full-and part-time post-secondary students regardless of financial need
38. According to the current Canada Student Grants Program, the Government of Canada will provide
up to a maximum of in loans per week of study to eligible students
A. $100
B. $210.
C. $400.
D. $600
E. $1,000.
39. If you borrow $200 at 8 percent annual interest and repay it in one lump sum at the end of one
year, you will have to pay
A. $16.
B. $200.
C. $216.
D. $208
E. $8.
annual interest rate is 6.00 percent?
A. 6.00 percent
B. 6.39 percent
C. 6.17 percent
D. 7.52 percent
E. 8.21 percent
annual interest rate is 5.00 percent?
A. 5.00 percent
B. 5.06 percent
C. 5.12 percent
D. 5.52 percent
E. 5.92 percent
A. $416
B. $432
C. $483
D. $556
E. $565
A. $387
B. $556
C. $578
D. $608
E. $588
44. According to many consumer organizations
A. credit life insurance is the most important to have.

B. credit accident insurance is most important to have.
C. credit health insurance is the most important to
have.
D. credit life insurance is not needed by most
borrowers. E. credit disability insurance is most
important to have.
problems? A. you continually go over your spending
limit
B. use credit cards as a necessity rather than as a convenience
C. always borrowing money to make it from one payday to the next
D. A and B are correct.
problems? A. continually go over your spending
limit
D. you pay only interest or service charges monthly and do not reduce your total debt
E. all these statements are signs of debt problems.
47. Consolidation loans
A. have the advantage of a single interest rate on the full amount of your selected debts
B. usually have shorter terms than your initial debts
C. usually have lower interest rates because you are considered to be a lower risk for the lender
D. are best used for low or no interest debts
E. usually pay less overall when you extend the term of payment
48. To be eligible for the insolvency protection application called a consumer proposal
A. you must be solvent and more than $200,000 in debt

B. you must be insolvent and more than $200,000 in debt
C. you must be insolvent and less than $75,000 in debt, excluding a mortgage on your
principal residence
D. you must be solvent and less than $100,000 in debt
E. you must be insolvent and more than $100,000 in debt, excluding a mortgage on your
principal residence
49. By evaluating your credit options, you can reduce your finance
charges. True False
50. After you have selected a product, you should buy it immediately before the store runs out of
it. True False
51. The most expensive loans available are provided by finance companies, retailers, and banks
through credit cards.
True False
52. Using parents or family members as lenders is the most risky type of loan
method. True False
53. You can often obtain medium-priced loans from banks, trust companies, and credit
unions. True False
54. The least expensive loans are available from car dealers, appliance stores, department
stores. True False
55. Credit unions rarely offer the same range of consumer loans that banks and other
financial institutions do.
True False
56. The best way to pay off credit is to follow the minimum payment amount stated on your
bill. True False

57. The disadvantage of using an interest only line of credit is the considerably longer time it
takes to repay the loan in comparison to a traditional consumer installment loan.
True False
58. Credit card co-branding has become popular with banks and
industries. True False
59. Two key concepts that you should keep in mind when borrowing are the finance charge and
the annual percentage rate.
True False
60. Credit costs usually do not
vary. True False
61. The Annual Percentage Rate is the percentage cost of credit on a yearly
basis. True False
62. You want to borrow $100 for a year at an annual rate of 8% compounded semi-annually.
The effective annual rate of the loan is 8.04 percent.
True False
63. The shorter the term of the loan the greater the amount of interest charges that must be
paid. True False
64. A variable interest rate is based on fluctuating rates in the banking system, such as the prime
rate. True False
65. With a larger down payment, you'll probably pay a higher interest rate on your
loan. True False
66. You may be able to borrow at a lower interest rate if you accept a shorter-term
loan. True False
67. It takes considerably longer to repay an interest only line of credit than it takes to repay a
traditional consumer installment loan.
True False
68. Lines of credit usually charge a variable interest rate, tied to the lender's prime
rate. True False

69. Creditors use the same system to calculate the balance on which they assess finance
charges. True False
70. The fairest method of calculating the interest is the adjusted balance
method. True False
71. The consumer proposal is a maximum five-year plan for paying creditors all or apportion of the
total debt owed.
True False
72. The fairest method of calculating interest is the average daily balance
method. True False
73. If creditors add finance charges after subtracting payments made during the billing period,
this is called the previous balance method.
True False
74. Credit disability insurance can be used when the borrower is unable to pay back a loan in a case
of illness or injury.
True False
75. If you want to take advantage of the interest-free period on your credit card, you must pay your
bill in full every month.
True False
76. Inflation increases the purchasing power of
money. True False
77. Banks often encourage you to make the maximum
payment. True False
78. The most commonly purchased type of credit insurance is credit life
insurance. True False
79. Credit life insurance provides for the repayment of the loan if the borrower
dies. True False
80. Most borrowers should buy credit life
insurance. True False

81. The consumer credit laws require that an advance notice be given before repossessing a
car. True False
82. If you are having trouble paying your bills, turn to a company that claims to offer assistance
in solving debt problems.
True False
83. Over-indebtedness is one of the nation's main family financial
problems. True False
84. Paying only the minimum balance each month on credit card bills is a signal of potential
debt problems.
True False
85. Anyone overburdened by credit obligations can phone, write, or visit a credit
counsellor. True False
86. There is never a charge for any service provided by a credit
counsellor. True False
87. Governmental non-profit counseling services are usually free or at low
cost. True False
88. An increasing number of bankruptcy filers are well-educated middle-class baby
boomers. True False
89. Increasingly, the bankruptcy debtor is likely to be
female. True False
90. For some debtors, bankruptcy has become an acceptable tool of credit
management. True False
91. During the last decade, the personal bankruptcy rate has increased almost 8 percent
annually. True False
92. Your only choice in declaring personal bankruptcy is through an assignment in
bankruptcy. True False

93. You have two choices in declaring personal bankruptcy: A consumer proposal or declaration
through an assignment in bankruptcy.
True False
94. Both consumer proposals and declarations of insolvency through an assignment in bankruptcy
are considered an easy way out of debt.
True False
95. In a straight bankruptcy many, but not all, debts are
forgiven. True False
96. Obtaining credit may be easier for people who file a consumer proposal rather than a
bankruptcy. True False
97. Obtaining credit may be easier for people who file a bankruptcy rather than a consumer
proposal. True False
98. There are no costs involved in filing for a bankruptcy or submitting a consumer
proposal. True False
99. If you declare bankruptcy, you do not have to pay alimony, child support, or educational
loans. True False
100. The most inexpensive loans available are provided by finance companies, retailers, and
banks through credit cards.
True False
101. Credit unions often offer the same range of consumer loans that banks and other
True False
102. The longer the term of the loan the greater the amount of interest charges that must be
paid. True False
103. Inflation decreases the purchasing power of
money. True False
104. If you declare bankruptcy, you have to continue to pay any alimony, child support, debts
incurred through fraud and court costs.
True False
105. What are the major sources of consumer credit?
106. What are two key concepts to keep in mind as you shop for credit?
107. What are the various methods used to calculate the credit card balance on which
interest is calculated?
108. What can you do if you are unable to meet your credit obligations?
109. Referring to over indebtedness as one of the nation's main family financial problems, an expert
on consumer affairs lists 7 frequent reasons for indebtedness. List and briefly describe these.
110. In regards bankruptcy and insolvency, briefly define a consumer proposal. Who is eligible for
this type of insolvency protection application?
06 KEY
1. (p. 177) In financial institutions, the sources of credit:
A. come in all shapes and sizes.

B. play an important role in our
economy. C. are typically short term
Difficulty: Easy
Gradable: automatic
Kapoor - Chapter 06 #1
Learning Objective: 1
2. (p. 177) By evaluating your credit options, you

can
A. reduce your finance charges.

B. reconsider your decision to borrow
money. C. discover a less expensive type of
loan.
D. find a lender that charges a lower rate.
E. reduce your finance charges, reconsider your decision to borrow money, discover a less
expensive type of loan, and find a lender that charges a lower rate.
Difficulty: Easy
Gradable: automatic
3. (p. 177) Which of the following financing methods provides a float
period? A. installment loan

B. lump-sum loan
C. credit card
D. home equity line of credit
E. a loan from a relative
Difficulty: Medium
Gradable: automatic
4. (p. 177) A float refers to:
A. an interest charged for only a few

days. B. something one enjoys in a
parade.
C. a home equity loan.
D. a period when no interest is
charged. E. a lump-sum loan from a
credit union.
Difficulty: Easy
Gradable: automatic
5. (p. 178) Which of the following offer the least expensive loan?
A. finance companies
B. banks
C. savings and loan associations
D. parents or family members
E. loan sharks
Difficulty: Easy
Gradable: automatic
6. (p. 177) Which of the following tend to be expensive

loans?
A. retailers
B. banks
C. credit unions
D. family members
E. trust companies
Difficulty: Medium
Gradable: automatic
7. (p. 178) The interest rate on a collateralized loan is relatively low, but one of the disadvantages of
such loans is that
A. the loan must be repaid in a short period of time.

B. the assets used as collateral are tied up until the loan has been
repaid. C. the loan is difficult to obtain.
D. commercial banks do not make such
loans. E. you ruin your credit rating.
Difficulty: Medium
Gradable: automatic
8. (p. 177) You can often obtain medium-priced loans

from
A. parents or family
members. B. American
Express.
C. commercial banks and credit
unions. D. finance companies.
E. retailers.
Difficulty: Medium
Gradable: automatic
9. (p. 178) Membership in credit unions has been
A. growing steadily.
B. declining
gradually. C. static.
D. restricted by the Tax Act.
E. restricted by provincial laws.
Difficulty: Easy
Gradable: automatic
10. (p. 181) Compounding the annual percentage rate (APR) four times a year is equivalent to:
A. the annual percentage rate (APR) quoted by a financial

institution. B. the annual percentage rate (APR) compounded
semi-annually.
C. the effective annual rate (EAR) annually.
D. the effective annual rate (EAR) semi-annually
E. the effective annual rate (EAR) quarterly.
Difficulty: Medium
Gradable: automatic
11. (p. 181) If a bank charges you interest up front then this loan is called a
loan
A. compounded.
B. simple
interest. C.
discount.
D. add-on.
E. installment.
Difficulty: Medium
Gradable: automatic
12. (p. 181) If you borrow $100 at 12 percent annual interest and repay it in one lump sum at the end of
one year, you will have to pay
A. $12.
B. $100.
C. $112.
D. $1,200.
E. $8.33.
Difficulty: Easy
Gradable: automatic
13. (p. 181) What is the EAR for a $100 loan when the interest is compounded monthly and the
stated annual interest rate is 7 percent?
A. 7.0 percent
B. 8.0 percent
C. 7.23
percent D.
12.0 percent E.
16.0 percent
Difficulty: Hard
Gradable: automatic
14. (p. 183) What is monthly payment for a $25,000 amortized loan to purchase a car payable over 5
years at an annual interest rate of 12%?
A. $200
B. $333
C. $445
D. $556
E. $565
Difficulty: Hard
Gradable: automatic
15. (p. 185) If creditors add finance charges after subtracting payments made during the billing period,
this is called the
A. adjusted balance
method. B. discount
method.
C. previous balance
method. D. APR method
Difficulty: Hard
Gradable: automatic
16. (p. 185) If creditors give you no credit for payments made during the billing period, this is called the
A. APR method.
B. discount method.
C. previous balance
method. D. adjusted
balance method.
Difficulty: Hard
Gradable: automatic
17. (p. 187) The most commonly purchased type of credit insurance
is
A. credit life insurance.

B. credit accident
insurance. C. credit health
insurance.
D. credit property insurance.
E. credit disability
insurance.
Difficulty: Medium
Gradable: automatic
18. (p. 187) Which type of credit insurance repays your debt in the event of a loss of income due to
illness or injury?
A. credit life insurance

B. credit accident and health insurance
C. credit property insurance
D. credit casualty insurance
E. credit debit insurance
Difficulty: Medium
Gradable: automatic
19. (p. 188- Which of the following are signs of debt

problems?
189)
A. foreclosure
proceedings. B. overdue
payments.
C. approaching credit limits.
Difficulty: Medium
Gradable: automatic
20. (p. 188) According to consumer affairs experts, one of the nation's main family financial problems is
A. that families don't prepare their budgets.

B.
over-indebtedness. C.
over consumption.
D. buying too much
insurance. E. unemployment.
Difficulty: Easy
Gradable: automatic
21. (p. 188) If you default on your automobile loan,
A. an advance notice to you is required before your car is repossessed.

B. no advance notice is required before repossession.
C. the federal consumer credit laws give you
protection. D. you don't have to pay the full balance
due on the loan. E. the creditor pays the towing and
storage costs.
Difficulty: Hard
Gradable: automatic
22. (p. 188) If you have trouble paying your
bills, A. take a personal finance course.

B. turn to a company that claims to offer assistance in solving debt
problems. C. check with your local Better Business Bureau for help.
D. seek assistance from a collection agency.
E. try to solve the problem with your creditor.
Difficulty: Medium
Gradable: automatic
23. (p. 189) Which of the following may indicate potential debt
problems?
A. paying only the minimum balance each

month. B. always borrowing to make it to next
payday.
C. your wages have been garnished to pay for debt.
D. your utility company cuts off service because your bills are unpaid.
E. paying only the minimum balance each month, always borrowing to make it to next payday,
your wages have been garnished to pay for debt, and your utility company cuts off service
because your bills are unpaid.
Difficulty: Easy
Gradable: automatic
24. (p. 190) Most people who are unable to manage their debts
are: A. criminals who take advantage of creditors.

B. living in the poverty-stricken areas.
C. expected to declare Chapter 11
bankruptcy. D. mostly dishonest people.
E. mostly honest people.
Difficulty: Easy
Gradable: automatic
25. (p. 190) Consumer credit counseling services are basically concerned with
A. lending the money to destitute

people. B. giving debtors food and
shelter.
C. helping destitute debtors to relocate in less expensive areas.
D. preventing and solving the problems related to credit
overextension. E. getting you more credit
Difficulty: Medium
Gradable: automatic
26. (p. 190) Credit counselors will aid families

by
A. setting up a budget for

them. B. paying off their
loans.
C. providing free basic necessities.
D. providing one month free
shelter.
E. relocating them in less expensive areas.
Difficulty: Easy
Gradable: automatic
27. (p. 190) Non-profit credit counseling services are sometimes provided
by
A. universities.
B. military
bases. C. credit
unions.
D. provincial and federal authorities.
E. All of them may provide such services.
Difficulty: Medium
Gradable: automatic
28. (p. 192) Which of the following allows a debtor with a regular income to extinguish his or her
debts from future earnings or other property over a period of time?
A. Assignment in bankruptcy
B. Frequent payment plan
C. Consumer proposal
Difficulty: Medium
Gradable: automatic
29. (p. 192) In a bankruptcy, a trustee
A. is required to draw up a petition listing all of your assets and

liabilities. B. will have to pay a filing fee.
C. is appointed by a 'banker'
D. seeks absolution from alimony and child support
payments. E. repays educational loans first.
Difficulty: Hard
Gradable: automatic
30. (p. 192) A maximum 5-year plan for paying creditors all or a portion of outstanding debt is referred
to as a consumer .
A. bankruptcy
B. proposal
C. consolidation
D. counseling
E. Assurance
Difficulty: Medium
Gradable: automatic
31. (p. 180) What effective rate of interest is being charged when the quoted APR is 6%, compounded
semi-
annually?
A. 6.00%
B. 6.09%
C. 6.17%
D. 6.18%
E. 6.50%
Difficulty: Medium
Gradable: automatic
32. (p. 180) Identify the correct

statements.
I. Shortening the term of a loan will reduce total interest charges.

II. The interest component of each installment loan payment rises over time.
III. A credit card holder who pays the minimum balance each month will remain in
good standing.
A. I and II, only

B. II and III,
only C. I and III,
only D. I, II and
III
E. I only
Difficulty: Easy
Gradable: automatic
33. (p. 177) In order to minimize complications, all loans to and from family members should
A. be in writing
B. state the interest rate, if there is an interest rate
C. include a repayment schedule
D. include the final payment
date E. all of these should be
included
Difficulty: Medium
Gradable: automatic
34. (p. 178) By current Canadian law, a lender in Canada can legally charge up to per annum
A. 10%
B. 22%
C. 28%
D. 60%
E. there is no limit
Difficulty: Medium
Gradable: automatic
35. (p. 178) Government of Canada student

loans
A. are available to all full-time and part-time post-secondary students regardless of financial need
B. are offered only in Ontario and Quebec
C. are not required to be repaid
D. are the same as student grants
E. program is called the Canada Student Loans Program
Difficulty: Easy
Gradable: automatic
36. (p. 178) Student loans to finance education beyond high school
A. are available from the Government of Canada

B. charge lower interest rates than commercial rates
C. must be repaid with interest, just like car loans and mortgages
D. cannot be cancelled because you were dissatisfied with your
education
E. all of the choices are correct
Difficulty: Medium
Gradable: automatic
37. (p. 178) Student loans to finance education beyond high school
A. have rates that are subsidized by the Government of Canada

B. charge interest rates equal to commercial rates
C. must be repaid but interest is not charged if repaid in a timely manner
D. can be cancelled if you were dissatisfied with your education
E. are available to all full-and part-time post-secondary students regardless of financial
need
Difficulty: Medium
Gradable: automatic
38. (p. 179) According to the current Canada Student Grants Program, the Government of Canada
will provide up to a maximum of in loans per week of study to eligible
students
A. $100
B. $210.
C. $400.
D. $600
E. $1,000.
Difficulty: Medium
Gradable: automatic
39. (p. 181) If you borrow $200 at 8 percent annual interest and repay it in one lump sum at the end of
one year, you will have to pay
A. $16.
B. $200.
C. $216.
D. $208
E. $8.
Difficulty: Easy
Gradable: automatic
stated annual interest rate is 6.00 percent?
A. 6.00 percent
B. 6.39 percent
C. 6.17 percent
D. 7.52 percent
E. 8.21 percent
Difficulty: Hard
Gradable: automatic
stated annual interest rate is 5.00 percent?
A. 5.00 percent
B. 5.06 percent
C. 5.12 percent
D. 5.52 percent
E. 5.92 percent
Difficulty: Hard
Gradable: automatic
A. $416
B. $432
C. $483
D. $556
E. $565
Difficulty: Hard
Gradable: automatic
A. $387
B. $556
C. $578
D. $608
E. $588
Difficulty: Hard
Gradable: automatic
44. (p. 187) According to many consumer organizations
A. credit life insurance is the most important to have.

B. credit accident insurance is most important to have.
C. credit health insurance is the most important to
have.
D. credit life insurance is not needed by most
borrowers. E. credit disability insurance is most
important to have.
Difficulty: Medium
Gradable: automatic
45. (p. 188- Which of the following are signs of debt problems?
189)
A. you continually go over your spending limit

Difficulty: Easy
Gradable: automatic
46. (p. 188- Which of the following are signs of debt

problems?
189)
A. continually go over your spending limit

D. you pay only interest or service charges monthly and do not reduce your total debt
E. all these statements are signs of debt problems.
Difficulty: Easy
Gradable: automatic
47. (p. 191- Consolidation

loans
192)
A. have the advantage of a single interest rate on the full amount of your selected debts
B. usually have shorter terms than your initial debts
C. usually have lower interest rates because you are considered to be a lower risk for the lender
D. are best used for low or no interest debts
E. usually pay less overall when you extend the term of payment
Difficulty: Hard
Gradable: automatic
48. (p. 192) To be eligible for the insolvency protection application called a consumer proposal
A. you must be solvent and more than $200,000 in debt

B. you must be insolvent and more than $200,000 in debt
C. you must be insolvent and less than $75,000 in debt, excluding a mortgage on your
principal residence
D. you must be solvent and less than $100,000 in debt
E. you must be insolvent and more than $100,000 in debt, excluding a mortgage on your
principal residence
Difficulty: Hard
Gradable: automatic
49. (p. 177) By evaluating your credit options, you can reduce your finance charges.
TRUE
Difficulty: Easy
Gradable: automatic
50. (p. 177) After you have selected a product, you should buy it immediately before the store runs out
of it.
FALSE
Difficulty: Easy
Gradable: automatic
51. (p. 178) The most expensive loans available are provided by finance companies, retailers, and
TRUE
Difficulty: Medium
Gradable: automatic
52. (p. 177) Using parents or family members as lenders is the most risky type of loan method.
FALSE
Difficulty: Easy
Gradable: automatic
53. (p. 177) You can often obtain medium-priced loans from banks, trust companies, and credit unions.
TRUE
Difficulty: Easy
Gradable: automatic
54. (p. 178) The least expensive loans are available from car dealers, appliance stores, department stores.
FALSE
Difficulty: Medium
Gradable: automatic
55. (p. 178) Credit unions rarely offer the same range of consumer loans that banks and other
FALSE
Difficulty: Easy
Gradable: automatic
56. (p. 187) The best way to pay off credit is to follow the minimum payment amount stated on your bill.
FALSE
Difficulty: Easy
Gradable: automatic
57. (p. 185) The disadvantage of using an interest only line of credit is the considerably longer time it
takes to repay the loan in comparison to a traditional consumer installment loan.
TRUE
Difficulty: Medium
Gradable: automatic
58. (p. 178) Credit card co-branding has become popular with banks and
industries.
TRUE
Difficulty: Easy
Gradable: automatic
59. (p. 176) Two key concepts that you should keep in mind when borrowing are the finance charge and
the annual percentage rate.
TRUE
Difficulty: Easy
Gradable: automatic
60. (p. 180) Credit costs usually do not

vary.
FALSE
Difficulty: Medium
Gradable: automatic
61. (p. 180) The Annual Percentage Rate is the percentage cost of credit on a yearly
basis.
TRUE
Difficulty: Medium
Gradable: automatic
62. (p. 181) You want to borrow $100 for a year at an annual rate of 8% compounded semi-annually.
The effective annual rate of the loan is 8.04 percent.
FALSE
Difficulty: Hard
Gradable: automatic
63. (p. 181) The shorter the term of the loan the greater the amount of interest charges that must be paid.
FALSE
Difficulty: Medium
Gradable: automatic
64. (p. 182) A variable interest rate is based on fluctuating rates in the banking system, such as the
prime rate.
TRUE
Difficulty: Medium
Gradable: automatic
65. (p. 183) With a larger down payment, you'll probably pay a higher interest rate on your loan.
FALSE
Difficulty: Medium
Gradable: automatic
66. (p. 183) You may be able to borrow at a lower interest rate if you accept a shorter-term loan.
TRUE
Difficulty: Medium
Gradable: automatic
67. (p. 187) It takes considerably longer to repay an interest only line of credit than it takes to
repay a traditional consumer installment loan.
TRUE
Difficulty: Medium
Gradable: automatic
68. (p. 184) Lines of credit usually charge a variable interest rate, tied to the lender's prime rate.
TRUE
Difficulty: Medium
Gradable: automatic
69. (p. 181) Creditors use the same system to calculate the balance on which they assess finance charges.
FALSE
Difficulty: Medium
Gradable: automatic
70. (p. 185) The fairest method of calculating the interest is the adjusted balance method.
FALSE
Difficulty: Hard
Gradable: automatic
71. (p. 192) The consumer proposal is a maximum five-year plan for paying creditors all or apportion of
the total debt owed.
TRUE
Difficulty: Medium
Gradable: automatic
72. (p. 185) The fairest method of calculating interest is the average daily balance
method.
TRUE
Difficulty: Medium
Gradable: automatic
73. (p. 185) If creditors add finance charges after subtracting payments made during the billing period,
this is called the previous balance method.
FALSE
Difficulty: Hard
Gradable: automatic
74. (p. 188) Credit disability insurance can be used when the borrower is unable to pay back a loan in a
case of illness or injury.
FALSE
Difficulty: Hard
Gradable: automatic
75. (p. 186) If you want to take advantage of the interest-free period on your credit card, you must pay
your bill in full every month.
TRUE
Difficulty: Easy
Gradable: automatic
76. (p. 187) Inflation increases the purchasing power of money.
FALSE
Difficulty: Easy
Gradable: automatic
77. (p. 187) Banks often encourage you to make the maximum
payment.
FALSE
Difficulty: Medium
Gradable: automatic
78. (p. 187) The most commonly purchased type of credit insurance is credit life
insurance.
TRUE
Difficulty: Medium
Gradable: automatic
79. (p. 187) Credit life insurance provides for the repayment of the loan if the borrower dies.
TRUE
Difficulty: Medium
Gradable: automatic
80. (p. 187) Most borrowers should buy credit life

insurance.
FALSE
Difficulty: Medium
Gradable: automatic
81. (p. 188) The consumer credit laws require that an advance notice be given before repossessing a car.
FALSE
Difficulty: Medium
Gradable: automatic
82. (p. 188) If you are having trouble paying your bills, turn to a company that claims to offer assistance
in solving debt problems.
FALSE
Difficulty: Medium
Gradable: automatic
83. (p. 189) Over-indebtedness is one of the nation's main family financial problems.
TRUE
Difficulty: Medium
Gradable: automatic
84. (p. 190) Paying only the minimum balance each month on credit card bills is a signal of potential
debt problems.
TRUE
Difficulty: Medium
Gradable: automatic
85. (p. 190) Anyone overburdened by credit obligations can phone, write, or visit a credit counsellor.
TRUE
Difficulty: Easy
Gradable: automatic
86. (p. 190) There is never a charge for any service provided by a credit
counsellor.
FALSE
Difficulty: Medium
Gradable: automatic
87. (p. 190) Governmental non-profit counseling services are usually free or at low
cost.
TRUE
Difficulty: Easy
Gradable: automatic
88. (p. 188) An increasing number of bankruptcy filers are well-educated middle-class baby boomers.
TRUE
Difficulty: Medium
Gradable: automatic
89. (p. 191) Increasingly, the bankruptcy debtor is likely to be

female.
TRUE
Difficulty: Medium
Gradable: automatic
90. (p. 191) For some debtors, bankruptcy has become an acceptable tool of credit management.
TRUE
Difficulty: Medium
Gradable: automatic
91. (p. 191) During the last decade, the personal bankruptcy rate has increased almost 8 percent annually.
TRUE
Difficulty: Medium
Gradable: automatic
92. (p. 191) Your only choice in declaring personal bankruptcy is through an assignment in bankruptcy.
FALSE
Difficulty: Medium
Gradable: automatic
93. (p. 192- You have two choices in declaring personal bankruptcy: A consumer proposal or declaration
193)
through an assignment in bankruptcy.
TRUE
Difficulty: Medium
Gradable: automatic
94. (p. 192- Both consumer proposals and declarations of insolvency through an assignment in bankruptcy
193)
are considered an easy way out of debt.
FALSE
Difficulty: Easy
Gradable: automatic
95. (p. 193) In a straight bankruptcy many, but not all, debts are
forgiven.
TRUE
Difficulty: Medium
Gradable: automatic
96. (p. 192) Obtaining credit may be easier for people who file a consumer proposal rather
than a bankruptcy.
TRUE
Difficulty: Medium
Gradable: automatic
97. (p. 192) Obtaining credit may be easier for people who file a bankruptcy rather than a
consumer proposal.
FALSE
Difficulty: Medium
Gradable: automatic
98. (p. 194) There are no costs involved in filing for a bankruptcy or submitting a consumer proposal.
FALSE
Difficulty: Medium
Gradable: automatic
99. (p. 193) If you declare bankruptcy, you do not have to pay alimony, child support, or educational
loans.
FALSE
Difficulty: Medium
Gradable: automatic
100. (p. 177) The most inexpensive loans available are provided by finance companies, retailers, and
FALSE
Difficulty: Medium
Gradable: automatic
101. (p. 178) Credit unions often offer the same range of consumer loans that banks and other
TRUE
Difficulty: Easy
Gradable: automatic
102. (p. 181) The longer the term of the loan the greater the amount of interest charges that must be paid.
TRUE
Difficulty: Medium
Gradable: automatic
103. (p. 187) Inflation decreases the purchasing power of

money.
TRUE
Difficulty: Easy
Gradable: automatic
104. (p. 193) If you declare bankruptcy, you have to continue to pay any alimony, child support,
debts incurred through fraud and court costs.
TRUE
Difficulty: Medium
Gradable: automatic
105. (p. 177) What are the major sources of consumer

credit?
The major sources of consumer credit are commercial banks, trust companies, credit unions,
finance companies, life insurance companies, pawnshops, loan sharks, and family and friends.
Each type of source has unique advantages and disadvantages.
Difficulty: Medium
Gradable: manual
106. (p. 180- What are two key concepts to keep in mind as you shop for
credit?
181)
Two key concepts are the finance charge and the APR. Compare the finance charge and the
annual percentage rate as you shop for credit.
Difficulty: Medium
Gradable: manual
107. (p. 185) What are the various methods used to calculate the credit card balance on which
interest is calculated?
The various methods used to calculate the balance on which interest is calculated are: the adjusted
balance method, the previous balance method and the average daily balance method. The average
daily balance method is the fairest because creditors add the balances for each day in the billing cycle
and then divide by the number of days in the period.
Difficulty: Hard
Gradable: manual
108. (p. 188) What can you do if you are unable to meet your credit
obligations?
If you cannot meet your credit obligations, contact your creditors immediately. Before signing up
with a debt consolidation company, investigate it thoroughly. Better yet, contact a local non-profit
consumer credit counseling service. A debtor's last resort is to declare personal bankruptcy. Consider
the financial and psychological costs of bankruptcy before taking this extreme step.
Difficulty: Medium
Gradable: manual
109. (p. 189) Referring to over indebtedness as one of the nation's main family financial problems, an
expert on consumer affairs lists 7 frequent reasons for indebtedness. List and briefly
describe these.
1. Emotional problems, such as the need for instant gratification, as in the case of a man who can't
resist buying a costly suit or a woman who impulsively purchases an expensive dress in a trendy
department store.
2. The use of money to punis, such as a husband who buys a new car without consulting his wife,
who, in turn, buys a diamond watch to get even.
3. The expectation of instant comfort among those who assume that by use of the installment plan
they can immediately have the possessions their parents acquired after years of work.
4. Keeping up with the Joneses, which is more apparent than ever, not only among prosperous
families but also among limited-income families.
5. Overindulgence of children, often because of the parents' own emotional needs, competition with
each other, or inadequate communication regarding expenditures for the children.
6. Misunderstanding or lack of communication among family members. For example, a salesperson
visited a Calgary family to sell them an expensive freezer. Although the freezer was beyond the
means of this already over indebted family and too large for their needs anyway, the husband thought
his wife wanted it. Not until later, in an interview with a debt counsellor, did the wife relate her
concern when she signed the contract; she had wanted her husband to say no.
7. The amount of the finance charge, which can push a family over the edge of their ability to
pay, especially when they borrow from one company to pay another and these charges
pyramid.
Difficulty: Hard
Gradable: manual
110. (p. 192) In regards bankruptcy and insolvency, briefly define a consumer proposal. Who is eligible
for this type of insolvency protection application?
A consumer proposal is a maximum five-year plan for paying creditors all or a portion of the total
debt owed. To be eligible for this type of insolvency protection application, you must be insolvent and
be less than $75,000 in debt (excluding a mortgage on your principal residence).
Difficulty: Medium
Gradable: manual
06 Summary
Category # of Questions
Difficulty: Easy 30
Difficulty: Hard 18
Difficulty: Medium 62
Gradable: automatic 104
Gradable: manual 6
Kapoor - Chapter 06 110
Learning Objective: 1 24

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PERSONAL FINANCE CANADIAN

CANADIAN 6TH EDITION KAPOOR TEST

Solution Manual: https://testbankpack.com/p/solution-manual-for-personal-

Test Bank: https://testbankpack.com/p/test-bank-for-personal-finance-canadian-

1. In financial institutions, the sources of credit:

A. come in all shapes and sizes.

2. By evaluating your credit options, you can

A. reduce your finance charges.

3. Which of the following financing methods provides a float

period? A. installment loan

A. an interest charged for only a few

5. Which of the following offer the least expensive

loan? A. finance companies

A. the loan must be repaid in a short period of time.

8. You can often obtain medium-priced loans from

9. Membership in credit unions has been

to: A. the annual percentage rate (APR) quoted by a financial institution.

17. The most commonly purchased type of credit insurance is

A. credit life insurance.

A. credit life insurance

19. Which of the following are signs of debt

problems? A. foreclosure proceedings.

A. that families don't prepare their

21. If you default on your automobile loan,

A. an advance notice to you is required before your car is

22. If you have trouble paying your

bills, A. take a personal finance course.

23. Which of the following may indicate potential debt

problems? A. paying only the minimum balance each month.

A. criminals who take advantage of

25. Consumer credit counseling services are basically concerned with

A. lending the money to destitute

26. Credit counselors will aid families by

A. setting up a budget for

27. Non-profit credit counseling services are sometimes provided by

29. In a bankruptcy, a trustee

A. is required to draw up a petition listing all of your assets and

32. Identify the correct statements.

I. Shortening the term of a loan will reduce total interest charges.

A. I and II, only

36. Student loans to finance education beyond high school

A. are available from the Government of Canada

37. Student loans to finance education beyond high school

A. have rates that are subsidized by the Government of Canada

44. According to many consumer organizations

A. credit life insurance is the most important to have.

45. Which of the following are signs of debt

problems? A. you continually go over your spending

46. Which of the following are signs of debt

problems? A. continually go over your spending

A. you must be solvent and more than $200,000 in debt

charges. True False

it. True False

method. True False

unions. True False

stores. True False

bill. True False

industries. True False

60. Credit costs usually do not