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This type of credit allow debtors (customers) to receive goods or services from suppliers (creditor) and pay for them at a later date.
Charge accounts
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Type of credit that is a contract issued by the seller that requires intermittent payments at specified
times such as bi-weekly or monthly.
Installment
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Type of credit that require debtors to make monthly
payments of a specified amount for a period of time.
Consumer loans
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Name 2 advantages of businesses using credit.
Establishing favorable credit ratingKeeping business separate from personal expenses
Minimizing record-keeping and receiptsKeeping track of what employees are spending
Earning rewards
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Name 2 disadvantages of businesses using credit.
Experiencing theft of customer records/databases
Overbuying by employees
Overusing credit
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What are the 3 factors of granting credit? 3 C’s
CharacterCapital
Capacity
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What does capacity refer to?
how much debt can comfortably be handled.
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What does the signature on the credit application signify?
Indicates provided information is true.
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What are the 3 credit bureaus?
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Name 2 things that could be found on a credit statement.
Balance due
Amounts charged or credited during the billing period
Current balance
Minimum amount of next payment
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This law requires lenders to reveal the cost of credit (APR and finance
charge) and terms before signing an application or contract.
Truth in Lending Law
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This law allows credit applications be judged on
financial responsibility of credit applicants. The three areas of
responsibilities are low income, large debts, and a
poor payment record.
Equal Credit Opportunity Act
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This law requires creditors to correct billing mistakes promptly.
Fair Credit Billing Act
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What are the 3 types of credit assistance?
Debt repayment plan
Credit counseling
Bankruptcy
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How long does bankruptcy stay on a person’s credit report?
10 years
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What type of risk results in a financial loss?
Economic
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What type of risk is the threat of a loss without an opportunity for
gain?Pure
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What type of risk offers the chance of gain or loss?
Speculative
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What are 3 of the 4 ways to handle risk?
AvoidTransferInsure
Assume
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Name 3 of the 6 types of uninsurable risks.
Economic ConditionsConsumer Demand
Action of CompetitorsTechnology Changes
Local FactorsBusiness Operations
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This type of health insurance covers all or part of the surgeon’s
fees for an operation.
Surgical
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This type of health insurance covers fees for nonsurgical care given in the doctor’s office, the patient’s home, or a hospital.
Regular
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This type of health insurance covers cost of extended and specialized care out of the
hospital such as medicine and special nursing care.
Major medical
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This type of health insurance combines the features of
hospital, surgical, regular, and major medical insurance.
Comprehensive
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What’s the difference between term and permanent life
insurance?Term-like renting. But cheaper.
Permanent-like owning a home. If you want to walk away from policy, you get the cash
you put into it. More expensive.
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Han sued a furniture store that verified it provided inaccurate information about his credit
history. Which regulation would protect him in having the information corrected?
Fair Credit Reporting Act
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Fred's Electric Company receives over thirty service orders daily. The company's manager refers some of the orders to another company, since she wants to
maintain a reputation of completing orders in a timely
manner. How did the company handle the risks?
Transfer
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After talking with a Sears customer representative about
her overdue balance, Tina implemented a strategy that will
minimize her debt. Tina used which type of credit assistance?
Debt repayment plan
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GEICO Insurance Company opened several new offices to
accommodate requests of policy holders for face-to-face contact. This is an example of which type
uninsurable risk? Consumer demand
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Chase Mortgage Company sends quarterly summaries of
transactions. Which type of document does the company
send?
Statement of account
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Many newspapers are experiencing fewer subscribers since more subscribers are now obtaining news from the Internet. This is an example of which type
uninsurable risk? Technology change
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ABC Investment Company invested over $300,000 obtained from their clients. The company
gained 5% as a return on its investment. This is an example of
which type of insurance risk? Speculative
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Mary paid only $50 for unauthorized charges made to her Capital One MasterCard.
Which regulation protected her?
Truth in Lending
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Mary makes prearranged equal payments monthly to Progress
Energy. Which type of credit did Mary use?
Charge account
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Josh saved over $10,000 in a local bank while working on his job for the past six years. Which "C" of credit is he MOST LIKELY
to meet?
Capacity
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Tonya is considering shopping at a Rooms To Go furniture store
that advertises the option of payments for a period of three years. Which type of payment
option was advertised? Installment
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A local food company filed an insurance claim to compensate employees who lost personal belongings in a company fire.
This is an example of which type of insurance risk?
Economic
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A bank loaned Doug $4,500 for 24 months. Which type of credit
did he accept? Consumer loan
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The Whole Foods Market provides workshops on how to prepare healthy meals. During
the past three months, the attendance increased over 40%. This is an example of which type
uninsurable risk? Consumer demand