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Insurance — Unit test Answers

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1
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Which is most likely to happen to consumers with good credit? Check all that apply.

A
They can be approved for loans.
B
They are denied a mortgage.
C
They can receive lower interest rates.
D
They are denied an unsecured loan.
E
They can use credit in emergencies.
F
They are forced into high interest rates.
2
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A credit score tells a lender how

A
quickly someone will repay a loan.
B
much money someone will earn in the future.
C
trustworthy someone is as a lender.
D
trustworthy someone is as a borrower.
3

Bankruptcy is considered a last resort because it stays on someone’s record for

A
one to four years.
B
four to seven years.
C
seven to ten years.
D
eleven to fourteen years.
4

Which describes the difference between a personal loan and a credit card?

A
Credit cards offer lump sums of money, while personal loans set a maximum amount a person can borrow.
B
Credit cards are secured loans for large amounts, while personal loans are unsecured for small purchases.
C
Personal loans offer lump sums of money, while credit cards set a maximum amount a person can borrow.
D
Personal loans are secured for small purchases, while credit cards are unsecured loans for large amounts.
5

Federal and state governments protect victims of identity theft by

A
creating laws that impose fines and jail time for identity thieves.
B
passing laws requiring financial institutions to reimburse victims.
C
forcing credit-reporting agencies to notify victims of suspicious activity.
D
requiring people to do a better job protecting their personal information.
6

Which are considered types of credit available to borrowers? Check all that apply.

A
personal loans
B
bonds
C
credit cards
D
mortgages
E
cash
F
auto loans
G
gift cards
7

Companies report people to credit agencies if they

A
fail to pay their bills on time.
B
borrow too much money.
C
fail to use different types of credit.
D
use large amounts of credit at once.
8

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?

A
writing them down on one list and keeping them in a safe place at home
B
typing them into her smartphone so they are easily accessible
C
typing them into an e-mail and sending it to her personal e-mail account
D
writing them down on one list and keeping them in her wallet
9

In some cases, it is safe to avoid insurance because

A
it is too expensive.
B
it may not be needed.
C
only one person is at risk.
D
one is already in debt.
10

What is one cost of avoiding insurance?

A
falling into debt if faced with a serious problem
B
not benefitting from insurance deductibles
C
not being able to purchase a car or home
D
facing increased probability of accidents
11

What is the definition of liability?

A
the amount a consumer must pay after an incident before the insurance company starts paying
B
the monthly amount paid for insurance
C
intentionally destroying something in order to collect insurance
D
a responsibility to pay for or fix a problem
12

What does purchasing insurance for a business reveal about the business owner’s attitude toward financial risk?

A
It shows that the owner expects financial risk and is eliminating it by making an insurance company liable.
B
It shows that the owner acknowledges the financial risks and is willing to pay every month to transfer the risk to an insurance company.
C
It shows that the owner is willing to share ownership of the business to reduce financial risk.
D
It shows that the owner is willing to budget for short-term financial risks to avoid long-term risks.

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