Finc 2400 Chapter 8 |113 Questions| With Correct Answers.

Advantages of using credit include the ability to make purchases without cash and the convenience of not carrying checks. {Ans: TRUE}When you apply for a credit card, the potential creditor will look at which of the following as a source of future debt payments if necessary? A) Cash outflows B) Credit history C) Potential inheritances D) Balances in savings accounts {Ans: D}The previous balance method takes into account the time that you pay off any part of the outstanding balance {Ans: FALSE}You are presented two choices to borrow funds for a significant unexpected expenditure. it will take at least three years to pay off the loan assuming you make more than the minimum payment. Which choice is the least cost alternative in terms of interest paid over the life of the loan? A) A credit card with a variable interest rate of 4 % over the prime rate; for info, the latest forecast is for prime to stay below 5% throughout the life of your loan. B) An interest only balloon payment loan for 3 years with 10% interest, but your monthly payments would be half of those compared to the credit card. C) There is not