Which of the Following Is True of Consumer Finance Companies

question 38

Multiple Choice

Which of the following is true of consumer finance companies?

• A)Consumer finance companies always charge lower rates of interest than commercial banks.
• B)Consumer finance companies make large loans to low-risk borrowers.
• C)Consumer finance companies offer consumer loans at the lowest interest rates.
• D)Consumer finance companies offer consumer loans only for home mortgage lending.
• E)Consumer finance companies make secured and unsecured (signature)loans to qualified individuals.

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Definitions:

Mutual Funds

Investment programs funded by shareholders that trade in diversified holdings and are professionally managed.

Maintenance Margin

The minimum equity an investor must maintain in a margin account after the purchase has been made, to keep the position open.

Initial Margin

The minimum amount of funds required to open a position in the securities market, used as a deposit to cover some of the credit risk of the counterparty.

Stop-Buy Order

A type of stock market order that buys a security once its price ascends to a specific point, usually to limit losses or enter the market at a favorable momentum.