ANSWERS

1. (C)     A credit report is a loan and bill payment history.
It is kept by a credit bureau and used by financial institutions and other potential creditors to determine
how likely it is that you will repay a future debt. Information in your credit report can affect your ability to
get a job, a loan, a credit card, or insurance.


2.  (A)     It stands for Annual Percentage Rate.
The APR is a measure of the cost of credit, expressed as a yearly interest rate. Usually, the lower the
APR, the better for you.


3. (D)     No one.
Your investments in the stock market are not insured. Know the risks before investing in the stock market.


4. False.
The law does not require dealers to give buyers a three-day right to cancel. The right to return the car in a
few days for a refund exists only if the dealer grants this privilege to buyers, but it is discretionary. Dealers
may describe the right to cancel as a "cooling off" period, a money-back guarantee, or a "no questions
asked" return policy. Before you purchase a new or used car from a dealer, ask about the dealer's return
policy, get it in writing, and read it carefully.


5. True.
Your premium is based in part on the car's sticker price, the cost to repair it, its overall safety record, and
the likelihood of theft. Many insurers offer discounts for features that enhance safety or prevent theft.
These include air bags, antilock brakes, daytime running lights, and antitheft devices. Some states
require insurers to give discounts for cars equipped with air bags or antilock brakes.


6.   (D)   All of the above.
Reverse mortgages allow consumers over age 62 to convert the equity in their homes to cash while
retaining ownership. With a reverse mortgage, you receive money from the lender and generally don’t
have to pay it back for as long as you live in your home. In return, the lender holds some--if not most or
all--of your home's equity.


7. (A) The creditor has 30 days.
The creditor must acknowledge your complaint in writing within 30 days after receiving it, unless the
problem has already been resolved. The creditor must resolve the dispute within two billing cycles (but
not more than 90 days) after receiving your letter.


8. (A) You are responsible for up to $50.
Your maximum liability under federal law for unauthorized use of your credit card is $50. If you report the
loss or theft before your credit cards are used, the Fair Credit Billing Act says the card issuer cannot hold
you responsible for any unauthorized charges. If a thief uses your cards before you report them missing,
the most you will owe for unauthorized charges is $50 per card. If the loss or theft involves your credit
card number, but not the card itself, you’re not responsible for unauthorized use.


9. (C) 7 years.
Accurate negative information generally can stay on your report for seven years; bankruptcy information
may be reported for 10 years.


10. (D) Points are fees you pay the lender for the loan.
One point equals 1% of the loan amount. Points usually are paid in cash at closing. In some cases, you
may borrow the money you need to pay points, but doing so will increase the loan amount and your total
costs.


11. True.
Each state has a law that lets pharmacists substitute less expensive generic drugs for many brand-name
products and, depending on your prescription needs, your savings could be significant.


12. True.
Unit pricing is a tool for comparing prices. While the package price tells you how much you pay for a food
item, the unit price tells you the price of each unit in a package. A unit can be an ounce, a pound, a quart,
a square foot, or an individual piece in a package. For example, the unit price shows you the cost of each
ounce in a can of soup. The package price just tells you the price of the whole can. Unit pricing helps you
compare costs of different brands and various sizes without doing arithmetic. But remember, compare
only similar items.


13. True.
In most cases, manufacturers recommend using a regular octane gasoline, and using a higher octane
gasoline than your owner’s manual recommends offers absolutely no benefit. Unless your engine is
knocking, buying higher octane gasoline is a waste of money. Premium gas costs 15 cents to 20 cents
more a gallon than regular. That can add up to $100 or more a year in extra costs. Studies indicate that
altogether, drivers may be spending hundreds of millions of dollars each year for higher octane gas than
their cars need.


14. False.
To date, only numbers that begin with 800, 888, 877, or 866 are free. And even then, there are some
exceptions: Companies that provide audio entertainment or information services may charge for calls to
800, 888, and other toll-free numbers, but only if they follow the Federal Trade commission’s Pay-Per-Call
Rule. In addition, some area codes begin with an 8. For example, the area code 809 serves the
Dominican Republic. If you dial this area code, you’ll be charged international long distance rates.


15. (B) In financial transactions, a CD is a Certificate of Deposit.
A CD in this case is a type of savings account that earns a fixed interest rate over a specified period of
time. At a credit union it is called a share certificate of deposit, which earns dividends.


16. True.
The "Rule of 72" tell you how long it will take to double your money. To use the "Rule of 72," divide 72 by
the interest rate you’re getting. For example, if you deposit $3,000 into an account with a 2% interest rate,
divide 72 by two. The answer--36--tells you that you will double your money in 36 years; in 36 years, you
will have $6,000.