Unit 4

What is the definition of liability? the amount a consumer must pay after an incident before the insurance company starts paying the monthly amount paid for insurance intentionally destroying something in order to collect insurance a responsibility to pay for or fix a problem

What is one cost of avoiding insurance? falling into debt if faced with a serious problem not benefitting from insurance deductibles not being able to purchase a car or home facing increased probability of accidents

Which is most likely to happen to consumers with good credit? Check all that apply. They can be approved for loans. They are denied a mortgage. They can receive lower interest rates. They are denied an unsecured loan. They can use credit in emergencies. They are forced into high interest rates.

Which are considered types of credit available to borrowers? Check all that apply. personal loans bonds credit cards mortgages cash auto loans gift cards

In some cases, it is safe to avoid insurance because: it is too expensive. it may not be needed. one already has enough savings. one is already in debt.

What does purchasing insurance for a business reveal about the business owner's attitude toward financial risk? It shows that the owner expects financial risk and is eliminating it by making an insurance company liable. It shows that the owner acknowledges the financial risks and is willing to pay every month to transfer the risk to an insurance company. It shows that the owner is willing to share ownership of the business to reduce financial risk. It shows that the owner is willing to budget for short-term financial risks to avoid long-term risks.

Tamara has a hard time remembering pin numbers for her credit cards, but she wants to keep the information secure. Which is the best solution for her dilemma? writing them down on one list and keeping them in a safe place at home typing them into her smartphone so they are easily accessible typing them into an e-mail and sending it to her personal e-mail account writing them down on one list and keeping them in her wallet

Companies report people to credit agencies if they: fail to pay their bills on time. borrow too much money. fail to use different types of credit. use large amounts of credit at once.

Which describes the difference between a personal loan and a credit card? Credit cards offer lump sums of money, while personal loans set a maximum amount a person can borrow. Credit cards are secured loans for large amounts, while personal loans are unsecured for small purchases. Personal loans offer lump sums of money, while credit cards set a maximum amount a person can borrow. Personal loans are secured for small purchases, while credit cards are unsecured loans for large amounts.

Federal and state governments protect victims of identity theft by: creating laws that impose fines and jail time for identity thieves. passing laws requiring financial institutions to reimburse victims. forcing credit-reporting agencies to notify victims of suspicious activity. requiring people to do a better job protecting their personal information.

A credit score tells a lender how: quickly someone will repay a loan. much money someone will earn in the future. trustworthy someone is as a lender. trustworthy someone is as a borrower.

Bankruptcy is considered a last resort because it stays on someone's record for: one to four years. four to seven years. seven to ten years. eleven to fourteen years.