Loans & Lending Practices MCQ Questions Answers

1. What is the definition of a loan?

2. What would the entry be for a monthly interest payment on a long term loan?

3. Why would someone not use a credit card to purchase a car?

4. What is the collateral under a mortgage loan?

5. How do lenders abuse people who are looking to get their homes refinanced?

6. Why is the repayment of a loan not considered income to the lender?

7. What is a down payment?

8. What does the term "Margin" mean?

9. What are low interest loans offered by schools to the neediest students called?

10. What is a typical mortgage loan term?

11. Who is a mortgagee?

12. What does the term 'Escrow' mean?

13. What options does a bank have if a company breaks a covenant?

14. What would a company that wants to decrease their debt to equity ratio do?

15. What is something that has been made payable and is overdue and unpaid called?

16. What is a written document that transfers the title to personal property callled?

17. How does a long term loan received in cash affect a firm's quick ratio?

18. When does a mortgage payer have to pay a late payment penalty?

19. What is meant by the term 'Assumption'?

20. What is 'Equity'?

21. What is a loan that has a fixed rate of interest over a period of time known as?

22. What purpose does a title serve?

23. Why are 'Pay Day Loans' considered predatory?

24. How are borrowers affected by nonpayment of loans?

25. Why have the lenders been restricting the issuance of credit cards in recent years?

26. What is a 'custom loan repayment schedule'?

27. What typically happens if a borrower breaks one of the loan covenants?

28. Why can a borrower not deduct loan repayments from their income when calculating taxes?

29. Why is interest paid by the borrower deductible on their tax return?

30. Which one is a reason for the proliferation of credit cards?

31. What purpose do mortgage brokers serve?

32. What is meant by the term 'Recoverable Grants'?

33. What is the purpose of covenants?

34. When can interest paid be deducted on a tax return?

35. What is meant by the term 'Floor'?

36. What does the term 'Collateral' mean?

37. What is the short-term loan that provides temporary financing until more permanent financing is available called?

38. What does the term 'Closing' mean?

39. How does the payment of a short term loan affect a company's balance sheet?

40. How would a 10 year loan show up on a company balance sheet?

41. What is meant by Housing Expense Ratio?

42. What does the term 'Flipping' denote?

43. What is meant by the term 'Forbearance'?

44. What does the term 'Escrow Payment' mean?

45. What is meant by a secured credit card?

46. How much is one point worth?

47. What is meant by the term 'Usury'?

48. What is meant by Predatory Lending?

49. What is the process of evaluating a loan application to determine the advisability of making the loan called?

50. What can a lender do if a borrower refuses to pay back a loan?

51. What does the term 'Covenant' mean?

52. Why have credit cards become a popular method of payment?

53. What is meant by the term 'Credit Repository'?

54. What does the term 'General Recourse' mean?

55. What does the term 'Survey' imply?

56. How would a company that purchased a building using a mortgage show it in its account books?

57. Why can a lender not deduct the loans made from their net income?

58. What would happen to the balance sheet of a company that has automobiles with loans associated with them, and sells the automobiles for more than the carrying value of the loan?

59. What type of debt do credit cards fall under?

60. How does a credit card differ from a personal loan?

61. What is the debt that must be repaid before a subordinated debt receives any payment in the event of default called?

62. What does the term 'Foreclosure' denote?

63. How is interest on a loan shown on the financial statements?

64. What is meant by the term 'Portfolio'?

65. What is the term used when a borrower does not pay back their loan?

66. What happens if a lender charges a rate beyond what is legally allowed and the borrower does not pay?

67. What is meant by the term 'Impound'?

68. What is meant by Subprime Lending?

69. Should a loan be taken out just for its tax benefits?

70. What type of repayment plans do credit cards typically have?

71. What is meant by a secured loan?

72. What does the term 'Deferment' denote?

73. What is the payment of the monthly installment by the borrower to the lender called?

74. When do lenders require Private Mortgage Insurance (PMI)?

75. What is an interest only loan?

76. How do consumers abuse loan practices?

77. Why is interest earned on a loan considered taxable revenue?

78. What is an unsecured loan?

79. Why is a loan not taxable income?

80. What does the term 'Endowment' mean?

81. What does the term 'Assignment' denote?