Question

Select the most likely consequence of making credit card payments late.
a. fees and paying the introductory interest rate on the balanceb. paying higher interest ratesc. fees and paying the default interest rate on the balanced. none of these answers are correct2. zach is an authorized user on his parents credit card. what may happen if zach doesn't use the card in a responsible way?
a. zach's parents credit may be damaged
b. zach's credit may be damaged
c. none of these answers are correct
d. zach and zach's parents credit may be damaged 3.. if interest rates rise, what will happen to the prices of bonds?
a. no change
b. decrease
c. increased. interest rates and bond prices are not related 4. if the typical balance on lucy's credit card is $500 and the interest rate on her credit card is 16%, how much in interest would you expect lucy to be charged in a typical month?
a. about $51.74
b. about $80.86
c. about $6.67
d. about $16.00

Answer 1

1) Select the most likely consequence of making credit card payments late. 
c. fees and paying the default interest rate on the balance

2) What may happen if Zach doesn't use the card in a responsible way?
a. zach's parents credit may be damaged
* Even though Zach is an authorized user of the card, he is not the owner of the card. Only his parent's credit may be damaged.

3) If interest rates rise, what will happen to the prices of bonds? 
b. decrease
* I'm assuming that the interest rates are not limited to the credit card. Bond prices and interest rates have inverse relationship. This means that if one increases the other decreases.

4) Credit card balance: 500 ; annual interest rate = 16% 
How much in interest would you expect Lucy to be charged in a typical month? 
16% / 12 months = 1.33% per month
500 x 1.33% = 6.67  Choice C.