FIN3140 Exam 2 FSU ACTUAL
QUESTIONS AND CORRECT ANSWERS
cashier's check - Correct answers✔a check from a bank or other financial institution that can be
purchased by paying the amount of the check plus a service fee
certified check - Correct answers✔a personal check issued by a bank that guarantees the amount
will be paid; the bank charges a fee for this type of check
money order - Correct answers✔a prepaid check from a bank, credit union, and convenience and
grocery stores
traveler's check - Correct answers✔a prepaid check purchased from a credit card company, bank,
or credit union that must be signed before it can be cashed
FDIC insurance - Correct answers✔protects depositors in the institution up to at least $250,000
per account ownership category in case the bank or credit union fails
finance charge - Correct answers✔total amount of fees and interest charged by a lender for a
loan; equals interest + fees
collateral - Correct answers✔the item of value that can be sold in the event that loan repayments
are not made by the borrower
What does it mean to have one's wages garnished - Correct answers✔a court order to have an
employer pay an employee's wages directly to a creditor
, What negatively affects your credit report - Correct answers✔declared bankruptcy, lost a home to
foreclosure, been sued and lost the court battle, incurred court-related judgements, liens, or
unpaid financial obligations (e.g., child support, unpaid fines)
How is your credit score determined? - Correct answers✔FICO uses payment history, amount of
credit, length of credit history, new credit, types of credit
How long can negative events stay on your credit report? - Correct answers✔Bankruptcy: 10
years; other negative information: 7 years
revolving credit - Correct answers✔a loan that may be accessed, repaid, and used again
indefinitely
installment credit - Correct answers✔a type of loan in which borrower makes a series of
payments, typically equal in amount, to the lender over a predetermined period of time
line of credit - Correct answers✔a type of loan that the borrower can access at any time, make
payments on the loan to decrease or pay off the balance, and borrow the money again without
having to reapply for a loan from the lender
responsibility of a co-signer on a loan - Correct answers✔an individual, in addition to the
borrower, who will be held responsible for the repayment of a debt
grace period vs introductory period - Correct answers✔grace period: the amount of time allowed
to pay a bill without incurring interest; introductory period: a brief time period in which the
interest rate on the card is significantly reduced
QUESTIONS AND CORRECT ANSWERS
cashier's check - Correct answers✔a check from a bank or other financial institution that can be
purchased by paying the amount of the check plus a service fee
certified check - Correct answers✔a personal check issued by a bank that guarantees the amount
will be paid; the bank charges a fee for this type of check
money order - Correct answers✔a prepaid check from a bank, credit union, and convenience and
grocery stores
traveler's check - Correct answers✔a prepaid check purchased from a credit card company, bank,
or credit union that must be signed before it can be cashed
FDIC insurance - Correct answers✔protects depositors in the institution up to at least $250,000
per account ownership category in case the bank or credit union fails
finance charge - Correct answers✔total amount of fees and interest charged by a lender for a
loan; equals interest + fees
collateral - Correct answers✔the item of value that can be sold in the event that loan repayments
are not made by the borrower
What does it mean to have one's wages garnished - Correct answers✔a court order to have an
employer pay an employee's wages directly to a creditor
, What negatively affects your credit report - Correct answers✔declared bankruptcy, lost a home to
foreclosure, been sued and lost the court battle, incurred court-related judgements, liens, or
unpaid financial obligations (e.g., child support, unpaid fines)
How is your credit score determined? - Correct answers✔FICO uses payment history, amount of
credit, length of credit history, new credit, types of credit
How long can negative events stay on your credit report? - Correct answers✔Bankruptcy: 10
years; other negative information: 7 years
revolving credit - Correct answers✔a loan that may be accessed, repaid, and used again
indefinitely
installment credit - Correct answers✔a type of loan in which borrower makes a series of
payments, typically equal in amount, to the lender over a predetermined period of time
line of credit - Correct answers✔a type of loan that the borrower can access at any time, make
payments on the loan to decrease or pay off the balance, and borrow the money again without
having to reapply for a loan from the lender
responsibility of a co-signer on a loan - Correct answers✔an individual, in addition to the
borrower, who will be held responsible for the repayment of a debt
grace period vs introductory period - Correct answers✔grace period: the amount of time allowed
to pay a bill without incurring interest; introductory period: a brief time period in which the
interest rate on the card is significantly reduced
