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Question 1 of 10
1. Question
What is the scope of the Fair Debt Collection Practices Act (FDCPA)?
I. It defines the proper time to communicate with the debtor.
II. It forbids the collector to communicate with the debtor at his residence.
III. It forbids the collector to communicate with the debtor at his place of employment.
IV. It has no provisions for the debtor to request cease communication.Correct
Fair Debt Collection Practices Act
The Fair Debt Collections Act is Title VIII of the Consumer Credit Protection Act. This act forbids a debt collector from communicating with a consumer regarding the collection of a debt at the
consumer’s place of employment. The act also defines the appropriate times for contacting a consumer: between eight in the morning and nine at night, at the consumer’s residence. According to the Fair Debt Collection Act, a debt collector cannot communicate with any person other than the consumer, his or her attorney, and a consumer-reporting agency. Finally, this act states that if a consumer should notify the debt collector that he or she either does not intend to repay a debt or no longer wishes to hear from the debt collector, the debt collector is required to cease communications except to declare what consequential actions the debt collection agency or creditor will take.Incorrect
Fair Debt Collection Practices Act
The Fair Debt Collections Act is Title VIII of the Consumer Credit Protection Act. This act forbids a debt collector from communicating with a consumer regarding the collection of a debt at the
consumer’s place of employment. The act also defines the appropriate times for contacting a consumer: between eight in the morning and nine at night, at the consumer’s residence. According to the Fair Debt Collection Act, a debt collector cannot communicate with any person other than the consumer, his or her attorney, and a consumer-reporting agency. Finally, this act states that if a consumer should notify the debt collector that he or she either does not intend to repay a debt or no longer wishes to hear from the debt collector, the debt collector is required to cease communications except to declare what consequential actions the debt collection agency or creditor will take. -
Question 2 of 10
2. Question
What is not covered under the Fair Credit Reporting Act?
I. Rights of the customer to see his credit file.
II. Rights of the customer to get his credit rating corrected.
III. Bankruptcy information of the consumer remains on his file forever.
IV. Credit information of a customer can be provided to the government only under specific circumstances.Correct
Fair Credit Reporting Act
The Fair Credit Reporting Act asserts that consumers have the right to see their own files and request that corrections be made. The act also states that the information contained in a consumer report cannot be provided unless the recipient has a purpose specified in the act. Also, the government is not allowed to see a file unless it is considering hiring the individual, granting some kind of license, considering whether to give the person a security clearance, or if back taxes are owed. Furthermore, the Internal Revenue Service must have a legitimate case in order to receive a report. The act also specifies lengths of time after which information becomes obsolete. Adverse information becomes obsolete after seven years, and bankruptcy information becomes obsolete after ten years.
Incorrect
Fair Credit Reporting Act
The Fair Credit Reporting Act asserts that consumers have the right to see their own files and request that corrections be made. The act also states that the information contained in a consumer report cannot be provided unless the recipient has a purpose specified in the act. Also, the government is not allowed to see a file unless it is considering hiring the individual, granting some kind of license, considering whether to give the person a security clearance, or if back taxes are owed. Furthermore, the Internal Revenue Service must have a legitimate case in order to receive a report. The act also specifies lengths of time after which information becomes obsolete. Adverse information becomes obsolete after seven years, and bankruptcy information becomes obsolete after ten years.
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Question 3 of 10
3. Question
Which of the following are the necessary elements of a valid contract?
I. Presence of suitable consideration
II. Presence of a legal advisor
III. Duration of the contract
IV. Offer & acceptanceCorrect
In order for a valid contract to exist, there must be five specific elements. The first is offer and acceptance, in which one part makes a definite, unqualified offer that the other accepts completely. There must then be what is known as genuineness of assent, meaning that there can be no misrepresentation, coercion, undue influence, ambiguities, or willfully incorrect information. There must also be adequate consideration. The offeror and offeree must both be in a situation where they are capable of entering into such a contract. Finally, the terms of the contract must not require that any laws be broken.
Incorrect
In order for a valid contract to exist, there must be five specific elements. The first is offer and acceptance, in which one part makes a definite, unqualified offer that the other accepts completely. There must then be what is known as genuineness of assent, meaning that there can be no misrepresentation, coercion, undue influence, ambiguities, or willfully incorrect information. There must also be adequate consideration. The offeror and offeree must both be in a situation where they are capable of entering into such a contract. Finally, the terms of the contract must not require that any laws be broken.
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Question 4 of 10
4. Question
Which of the following is not a legal contract?
Correct
In a bilateral contract, both parties make legally enforceable promises to one another. In a unilateral contract, one party makes a promise in exchange for another party either doing something or not doing something. Insurance contracts are considered unilateral, since the insured doesn’t have any specific obligations. In an enforceable contract, all of the terms are present and clear. In a void contract, one or more of the elements required for a contract to be legal are missing. A voidable contract is one that is legally enforceable, but from which one of the parties could potentially escape because of some lack of genuineness of assent. A quasi-contract is not a legal contract itself, but may function as one if one party has unjustly received a benefit. An unenforceable contract is one that seems to have all the necessary elements for enforceability, but from which one party will be able to escape for some other reason.
Incorrect
In a bilateral contract, both parties make legally enforceable promises to one another. In a unilateral contract, one party makes a promise in exchange for another party either doing something or not doing something. Insurance contracts are considered unilateral, since the insured doesn’t have any specific obligations. In an enforceable contract, all of the terms are present and clear. In a void contract, one or more of the elements required for a contract to be legal are missing. A voidable contract is one that is legally enforceable, but from which one of the parties could potentially escape because of some lack of genuineness of assent. A quasi-contract is not a legal contract itself, but may function as one if one party has unjustly received a benefit. An unenforceable contract is one that seems to have all the necessary elements for enforceability, but from which one party will be able to escape for some other reason.
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Question 5 of 10
5. Question
What is the difference between crimes and torts?
Correct
A person can commit two types of misdeeds: public and private. Public misdeeds are a violation of the individual’s compact with society and are called crimes, while private misdeeds are violations of the rights of another person and are known as torts. The person who commits such a wrong is known as a tortfeasor. There are two kinds of torts: intentional and unintentional. Intentional torts are intentional infringements on the rights of others, such as assault, libel, trespass, or invasion of privacy. Unintentional torts are performed through negligence or carelessness. Liability insurance is unlikely to protect the insured from legal penalties resulting from intentional torts or criminal behavior.
Incorrect
A person can commit two types of misdeeds: public and private. Public misdeeds are a violation of the individual’s compact with society and are called crimes, while private misdeeds are violations of the rights of another person and are known as torts. The person who commits such a wrong is known as a tortfeasor. There are two kinds of torts: intentional and unintentional. Intentional torts are intentional infringements on the rights of others, such as assault, libel, trespass, or invasion of privacy. Unintentional torts are performed through negligence or carelessness. Liability insurance is unlikely to protect the insured from legal penalties resulting from intentional torts or criminal behavior.
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Question 6 of 10
6. Question
Under which circumstances is the holder of a negotiable instrument not entitled to payment?
I. If the instrument was made under the influence of violence or threat.
II. The instrument is fraudulent.
III. The instrument is in writing and is signed.
IV. The instrument has surpassed its defined time for being valid.Correct
A negotiable instrument is a written contract that is used as a substitute for money. A negotiable instrument may be either a promissory note (a promise to pay) or a draft (a three-party promise to pay). The holder of a negotiable instrument is entitled to payment unless: the owing party is an infant; the instrument was created under extreme duress; the paying party goes bankrupt; or a fraud has been committed. A valid negotiable instrument is in writing and signed by the maker, includes an unconditional promise to pay, is payable at a definite time, and is payable to a certain party. Banks have a similar obligation to honor checks owed to customers, though banks may also be required to honor a customer’s request for them not to pay. Such a stop order is valid for 14 days if given orally and six months if submitted in writing.
Incorrect
A negotiable instrument is a written contract that is used as a substitute for money. A negotiable instrument may be either a promissory note (a promise to pay) or a draft (a three-party promise to pay). The holder of a negotiable instrument is entitled to payment unless: the owing party is an infant; the instrument was created under extreme duress; the paying party goes bankrupt; or a fraud has been committed. A valid negotiable instrument is in writing and signed by the maker, includes an unconditional promise to pay, is payable at a definite time, and is payable to a certain party. Banks have a similar obligation to honor checks owed to customers, though banks may also be required to honor a customer’s request for them not to pay. Such a stop order is valid for 14 days if given orally and six months if submitted in writing.
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Question 7 of 10
7. Question
What is meant by the net worth of an individual?
Correct
There are three categories on a balance sheet: assets, liabilities, and net worth. Net worth is total assets minus total liabilities. Net worth increases due to an appreciation in the value of assets, an increase in assets from retaining income, an increase in assets from gifts or inheritances, or a decrease in liabilities from forgiveness. Net worth is unchanged by the paying off of debt or the purchase of an item with cash. Assets and liabilities are given at fair market value.
Incorrect
There are three categories on a balance sheet: assets, liabilities, and net worth. Net worth is total assets minus total liabilities. Net worth increases due to an appreciation in the value of assets, an increase in assets from retaining income, an increase in assets from gifts or inheritances, or a decrease in liabilities from forgiveness. Net worth is unchanged by the paying off of debt or the purchase of an item with cash. Assets and liabilities are given at fair market value.
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Question 8 of 10
8. Question
How is a pro forma statement made?
I. By taking highest possible income and lowest possible expenditures.
II. By taking average levels of both income and expenses.
III. By extrapolation the past three years income and expenses for the coming year.
IV. By taking lowest possible income and highest possible expenditures.Correct
A pro forma statement forecasts future balance sheets and cash flow statements. Sometimes, the best way to create a pro forma statement is to consider three scenarios: the worst-case budget, in which income is lowest and expenditures are highest possible; an average-case budget, in which both income and expenditures are at a reasonable level; and a best-case budget, in which income is highest and expenditures are at lowest possible.
Incorrect
A pro forma statement forecasts future balance sheets and cash flow statements. Sometimes, the best way to create a pro forma statement is to consider three scenarios: the worst-case budget, in which income is lowest and expenditures are highest possible; an average-case budget, in which both income and expenditures are at a reasonable level; and a best-case budget, in which income is highest and expenditures are at lowest possible.
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Question 9 of 10
9. Question
In which circumstances is variable rate home loan more suitable?
I. Home will be owned only for a short period of time.
II. Home will be owned for a very long duration.
III. The interest rates are high and decreasing.
IV. The interest rates are low and increasing.Correct
An adjustable rate mortgage (ARM) on a home is preferable if the home is only going to be owned for a brief time, as the initial interest rates will tend to be lower. When an ARM is said to have a 2/6 cap, this means that there is a 2 percent maximum interest rate increase every year, and 6 percent over the life of the loan. A fixed rate loan is best in a low or increasing interest rate environment, and a variable rate loan is better in a high or decreasing interest rate environment.
Incorrect
An adjustable rate mortgage (ARM) on a home is preferable if the home is only going to be owned for a brief time, as the initial interest rates will tend to be lower. When an ARM is said to have a 2/6 cap, this means that there is a 2 percent maximum interest rate increase every year, and 6 percent over the life of the loan. A fixed rate loan is best in a low or increasing interest rate environment, and a variable rate loan is better in a high or decreasing interest rate environment.
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Question 10 of 10
10. Question
What is meant by price elasticity?
Correct
Price elasticity exists when a small change in price results in a large change in sales. When perfect elasticity exists, the demand curve is exactly horizontal. Price inelasticity, on the other hand, exists when a large price change produces only a small change in sales. A vertical demand curve indicates perfect price inelasticity.
Incorrect
Price elasticity exists when a small change in price results in a large change in sales. When perfect elasticity exists, the demand curve is exactly horizontal. Price inelasticity, on the other hand, exists when a large price change produces only a small change in sales. A vertical demand curve indicates perfect price inelasticity.