Introduction to Business

Section 2: Maintaining Credit

Self-Checks

1
An interest rate that fluctuates or changes is called a(n) ________ rate.
A)elastic
B)unrestricted
C)flexible
D)variable
2
With a fixed rate mortgage the interest rate ________ .
A)always remains the same
B)changes as the balance decreases
C)is fixed at the beginning of each year
D)is set by the government
3
The $500 you pay on the day you purchase a used car for $5,000 is called the ________ .
A)down payment
B)minimum payment
C)first installment
D)security deposit
4
The amount of borrowed money that is still owed is called ________ .
A)balance
B)principal
C)maximum payment
D)remainder
5
The amount the lender charges the borrower to finance a loan is the ________ .
A)fee for service
B)origination fee
C)finance charge
D)service charge
6
A mortgage is an example of a(n) ________ loan.
A)insecure loan
B)secured loan
C)secure loan
D)unsecured loan
7
The term used to describe the action of a creditor taking back collateral is ________ .
A)reclaim
B)repossess
C)refinance
D)reposition
8
When a court orders an employer to send a portion of an employee's paycheck to a creditor it is called ________ .
A)automatic payment
B)garnishment of wages
C)court-ordered diversion
D)third-party intervention
9
You should not use more than ________ of your income for credit payments.
A)20 percent
B)50 percent
C)40 percent
D)75 percent
10
When a consumer with a low credit rating gets a loan, the interest rate may be ________ .
A)fixed
B)lower
C)higher
D)similar
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