People typically use credit as a way to pay for goods and services that cost more than they can afford to take from their current income. Whatever their age group, people tend to borrow for several major reasons. Which of the following is out of those reasons?

To avoid paying cash for large outlays

One can avoid the possibility of future repayment socks by keeping in mind the some types of transactions for which you should not generally use credit. Which of the following is Not out of those transactions?

To purchase durable goods and services

To purchase non-durable (short-lived) goods and services

To purchase durable goods and services

Sound financial planning dictates that you need a good idea of how much credit you can comfortably tolerate. One can do some measures to build a strong credit history. Which of the below mentioned points can be out of those measure?

Fulfill all the terms of credit

Be consistent in making payments promptly

Fulfill all the terms of credit

Be consistent in making payments promptly

Do not consult creditors immediately

A loan that can be obtained by a bank credit cardholder at any participating bank or financial institution

A debt that can be obtained by a bank credit cardholder at any participating bank or financial institution

A financial leverage that can be obtained by a bank credit cardholder at any participating bank or financial institution

It is a bank credit card that combines features of a traditional bank credit card with an additional incentive, such as rebates and air mileage.

Both A and B are one and the same

Debit card is a card use to make transactions for cash rather than credit; replaces the need for cash or checks by initiating charges against the checking account. Its big disadvantage is that:

It does not provide line of credit

Repaying of cash process is complicated

Merchants may even charge you for just using your credit cards

Overdraft protection line is:

A line of credit linked to a checking account

Its account allows depositor to overdraw the account up to a specified amount

A line of credit linked to a checking account

Its account allows depositor to overdraw the account up to a specified amount

A line of credit linked to a checking account that allows a depositor to overdraw the account up to a specified amount

In 3 years you are to receive $5,000. If the interest rate were to suddenly increase, the present value of that future amount to you would:

Cannot be determined without more information

They say it pays to shop around and when it comes to credit cards that are certainly true. Regardless of which category they fall into, there are basically four credit card features to look for. Which of the following is/are out of those features?

Length of the expiration period

Rate of interest charged on account balance

Length of the expiration period

An item of value used to secure the principle portion of a loan

An item of value used to secure the interest amount

An item of value used to secure the principle portion of a loan

An item of value used to secure the credit line of a loan

An item of value used to secure the repayments of a loan

Single payment loan is a loan:

At the end of which payment is due in full

At the end of which half of the payment is due

A profitability index of .85 for a project means that:

The project returns 85 cents in present value for each current dollar invested

The present value of benefits is 85% greater than the project's costs

The project's NPV is greater than zero

The project returns 85 cents in present value for each current dollar invested

The payback period is less than one year

Which of the following statements is correct?

If the PI of a project is less than 1, its NPV should be less than 0

If the NPV of a project is greater than 0, its PI will equal 0

If the IRR of a project is 0%, its NPV, using a discount rate, k, greater than 0, will be 0

If the PI of a project is less than 1, its NPV should be less than 0

If the IRR of a project is greater than the discount rate, k, its PI will be less than 1 and its NPV will be greater than 0

Assume that a firm has accurately calculated the net cash flows relating to an investment proposal. If the net present value of this proposal is greater than zero and the firm is not under the constraint of capital rationing, then the firm should:

Accept the proposal, since the acceptance of value-creating investments should increase shareholder wealth

calculate the IRR of this investment to be certain that the IRR is greater than the cost of capital

Compare the profitability index of the investment to those of other possible investments

Calculate the payback period to make certain that the initial cash outlay can be recovered within an appropriate period of time

Accept the proposal, since the acceptance of value-creating investments should increase shareholder wealth

A project's profitability index is equal to the ratio of the of a project's future cash flows to the project's .

Present value; initial cash outlay

Net present value; initial cash outlay

Present value; depreciable basis

Net present value; depreciable basis

ABA CTFA Practice Test 8 - Free Online Exam Prep & Questions

It is a guarantee offered by the U.S Veterans Administration to lenders who make qualified mortgage loans t eligible veterans of the U.S. Armed Forces and their unmarried surviving spouses. What is it?

Buydown

FHA mortgage

VA loan guarantee

Biweekly mortgage

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