the economics of money, banking, and financial markets

344 #

© 2014 Pearson Canada Inc.#

9. 
   

   Consumer finance companies typically make loans to consumers for all of the following
   except to ____.
   A) buy particular items such as furniture or home appliances
   B) to make home improvements
   C) purchase accounts receivables at a discount
   D) refinance small debts
   Answer: C
   Diff: 2 Type: MC Page Ref: 281
   Skill: Recall
   Objective List: 12.3 Identify key aspects of finance companies

   
   


10. 
    

    Purchasing accounts receivable (bills owed to the firm) at a discount is known as ____.
    A) loaning funds
    B) leasing
    C) factoring
    D) purchasing
    Answer: C
    Diff: 1 Type: MC Page Ref: 281
    Skill: Recall
    Objective List: 12.3 Identify key aspects of finance companies

    
    


11. 
    

    Business finance companies also specialize in ____.
    A) leasing equipment
    B) derivatives
    C) securitization
    D) mortgages
    Answer: A
    Diff: 1 Type: MC Page Ref: 281
    Skill: Recall
    Objective List: 12.3 Identify key aspects of finance companies

    
    


12. 
    

    Why are consumers better off obtaining credit from sources other than consumer finance
    companies?
    Answer: Consumer finance companies are separate corporations from retailers or manufacturing
    companies or are owned by banks. Typically, these companies charge higher interest rates and
    make loans to consumers who cannot obtain credit from other sources.
    Diff: 2 Type: SA Page Ref: 281
    Skill: Recall
    Objective List: 12.3 Identify key aspects of finance companies