Assignment3_082267

Assignment3_082267 - BA250 Personal Finance Assignment 3 3...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
BA250 Personal Finance Assignment 3 3 April 10 Chapter 6 Review Questions Pg. 187-188 1. Credit is receiving cash, goods, or services with an obligation to pay later. Open credit is a revolving account that allows you to borrow up to your maximum and then pay back at whatever rate you want as long as you make the minimum monthly payments. 3. A lender calculates the APR by multiplying the APR by the current balance. If you have a variable rate APR then the additional interest will be added on as well. 4. The three methods used to calculate a balance are: A. Average daily balance-summing the outstanding balances owed each day during the billing period and dividing that amount by the number of days in the cycle. B. Previous balance- Calculate interest using the outstanding balance at the end of the previous billing cycle. C. Adjusted balance- Calculate interest using the outstanding balance at the end of the previous billing minus any payments and returns. The previous balance method would result in the most interest paid while the adjusted balance method would result in the lowest interest paid. 7. Five benefits to credit card use are: A. Use for travel arrangements (hotels, airplanes, etc) B. Use for identification purposes C. Use for Internet or telephone purchases D. Itemized statements of all purchases at the end f each month. E. Temporary emergency funds (though this is a VERY BAD idea and I can’t believe it’s in the book) The major disadvantage to credit cards is that it is too easy to spend money with a credit card and it can quickly get out of control. 11. The five C’s of credit are: Character – Your sense of responsibility Capacity – Current income level and current level of borrowing Capital – The size of your financial holdings Collateral – Assets or property offered as security Conditions – Impact of the current economic environment
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

Assignment3_082267 - BA250 Personal Finance Assignment 3 3...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online