Exam (elaborations)
REE4204 FINAL EXAM QUESTIONS WITH VERIFIED ANSWERS
- Course
- Institution
REE4204 FINAL EXAM QUESTIONS WITH VERIFIED ANSWERS
[Show more]
Seller
Follow
Content preview
REE4204 FINAL EXAMQUESTIONS WITH VERIFIED
ANSWERS
True - ✔✔The Federal National Mortgage Association was
originally established in 1938 for the purpose of buying FHA
mortgages.
False - ✔✔The falling house prices in the mid-2000s generated greater
equity positions for those buyers who had recently purchased a home.
True - ✔✔Influence on current U.S. law related to real estate can be traced
all the way back to the Roman empire.
False - ✔✔The adjustable-rate mortgage allows the borrower to shift all
or some of the interest rate risk to the lender.
True - ✔✔Negative amortization increases the risk of default since,
at some point, the balance of the mortgage could exceed the value of
the property.
Put - ✔✔A homeowner incurring a residential mortgage acquires a ______
option which is generally exercised when the value of the property is less than the
amount owed on the mortgage.
,False - ✔✔A major factor of the collapse of the U.S. banking system
in the 1930s was the high number of long-term mortgages outstanding.
False - ✔✔A borrower taking a fifteen year mortgage versus a thirty
year mortgage will pay significantly more interest over the life of the
loan.
True - ✔✔The outstanding balance of a mortgage at a given point in time
is the present value of the remaining stream of payments discounted at the
contract rate.
True - ✔✔For a mortgage with no prepayment penalty and no
financing costs, early repayment does not affect the effective cost of the
loan.
True - ✔✔Since a fixed-rate mortgage establishes an interest rate for a
long period of time, this interest rate reflects the lender's expectations of
inflation over this time period.
True - ✔✔An incentive for the borrower to make extra payments on
his/her mortgage is that the lender cannot charge interest on any principal
amounts repaid.
False - ✔✔In order to derive the mortgage constant factor one must
know the amount of funds to be borrowed.
True - ✔✔A prepayment penalty, when stated as a percentage, is a
percentage of the outstanding balance at the time of prepayment.
, False - ✔✔The APR reported by the lender to the borrower
makes no assumption regarding the holding period of the mortgage.
False - ✔✔The maturity mismatch problem faced by many financial
institutions resulted from holding liabilities with much longer lives than
their assets.
False - ✔✔It is impossible for the cash flow on a project to be positive if
the taxable income is negative.
False - ✔✔Removing the rate ceilings on deposits in thrifts in the early
1980s eliminated the maturity mismatch problem that these institutions had
previously suffered.
false - ✔✔Under the semi-strong form of market efficiency an investor
could earn excess returns using private or inside information.
True - ✔✔Disintermediation is the process of funds flowing out
of financial institutions.
True - ✔✔Favorable financial leverage occurs when the cost of debt is less
than the return on the investment.
False - ✔✔Agents never have incentives to pursue behavior which
is detrimental to their principals.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller KenAli. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $13.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
72841 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now