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REE 4204 Exam 1 questions with verified answers
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REE 4204 Exam 1 questions withverified answers
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. -
✔✔True
In order to derive the mortgage constant factor one must know the amount
of funds to be borrowed. - ✔✔False
A prepayment penalty, when stated as a percentage, is a percentage of the
outstanding balance at the time of prepayment. - ✔✔True
The APR reported by the lender to the borrower makes no assumption regarding
the holding period of the mortgage. - ✔✔False
In a normal economic period with an upward sloping yield curve, the interest
rate on a fifteen year mortgage will be less than the interest rate on a thirty
year mortgage. - ✔✔True
,For a fully amortized mortgage that has a life of n payments, the outstanding
balance at a point in time m is the present value of the n minus m number of
payments. - ✔✔True
A mortgage lender is always allowed to collect interest in advance. - ✔✔False
Financing costs such as discount points increase the effective cost of borrowing
by raising the monthly debt service payments. - ✔✔False
The mortgage constant factor is the reciprocal of the future value annuity factor. -
✔✔False
The mortgage constant calculates the payment per dollar borrowed at
a given interest rate and term. - ✔✔True
Finance - ✔✔-study of the process, institutions,markets and instruments
used to transfer money and credit between individuals, business, and gov
applied economics - ✔✔-study of the allocation of resources for the
purpose of producing goods and services for various members of society
-considers time value of money and implications of the interest rates
-focused on cash flows not profts
-makes extensive use of the concept of risk
Real estate finance - ✔✔-study of institutions, markets, and instruments
used to transfer money and credit for the purpose of developing or acquiring
real property
, The market segmentation theory by its nature dictates that short term rates
must always be less than long term rates. - ✔✔False
Default risk is the risk that a bond issuer will be unable to repay the principal and
interest on the debt. - ✔✔True
The yield observed on a riskless bond in a non-inflationary environment would
be the real rate if interest. - ✔✔True
A primary market transaction always involves the original issuer of the security. -
✔✔True
The term "toxic mortgage debt" in the 2000s referred to mortgages on properties
contaminated by hazardous waste. - ✔✔False
In using the discounted cash flow model, the valuation of an asset depends on
the expected amount, timing, and risk associated with the project's cash flows. -
✔✔True
Negative financial leverage occurs when the cost of debt is greater
than the equity yield
on the investment. - ✔✔Quiz = False But I think it's True
The Federal National Mortgage Association was originally established in 1938 for
the purpose of buying FHA mortgages. - ✔✔True
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