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Finance Flashcards

finance chapter 9

federally insured mortgages guarantee loan repayment to the lending financial institutions
at a given point in time, the interest rate offered on a new fixed rate mortgage is blank the initial interest rate offered on a new adjustable rate mortgage above
an institution that originates and holds a fixed rate mortgage is adversely affected by blank interest rates and the borrower who was provided the mortgage is adversely affected by blank interest rates increasing, decreasing
rates for adjustable rate mortgages are commonly tied to average treasury bill rates for the previous year
caps on mortgage rate fluctuations with adjustable rate mortgages are typically blank percent per year and blank percent of the mortgage lifetime 2; 5
from the perspective of the lending financial institution, interest rate risk is what lower on a 15 year fixed rate mortgage than on a 30 year fixed rate mortgage
mortgage companies specialize in what originating mortgages and selling those mortgages
for any given interest rate, the shorter the life of the mortgage, the blank the monthly payment and the blank the total payment over the life of the mortgage greater, less
a financial institution has a higher degree of interest rate risk on a blank than a blank 30 year fixed rate mortgage, 15 year fixed rate mortgage
a mortgage that requires interest payments for a three to five year period then full payment of principal balloon payment mortgage
in an amortization schedule of monthly mortgages payments: interest payments exceed principal payments early on
a mortgage with low initial payment that increase over time without ever leveling off is a blank mortgage growing equity mortgage
the interest rate on a second mortgage is blank a first mortgage created at the same time because the second mortgage is blank the existing first mortgage in priority claimm against the property in event of default higher than, behind
which of the following mortgages allows the home purchaser to obtain a mortgage at a below market interest rate throughout the life of the mortgage shared appreciation mortgage
a BLANK mortgage allows the borrower to initially make small payments on the mortgage. The payments then increase over the first 5 to 10 years and then level off graduated payment
BLANK was created in 1968 as a corporation that is wholly owned by the federal government. It supplies funds to low and moderate income homeowners directly by facilitating the flow of funds into secondary mortgage sales Ginnie Mae
a financial investment that prefers to invest in mortgages for long periods of time or to generate fee income would likely: originate mortgages
the difference between the 30 year mortgage rate and the 30 year treasury bond rate is primarily attributed to BLANK risk credit
mortgage prices would normally be expected to BLANK when the budget deficit BLANK, holding other factors constant increase, decrease
collateralized mortgage obligations (CMOS) are generally perceived to have: a high degree of interest rate risk
the issuance of pass through securities by financial institutions that provide mortgages: can reduce their interest rate risk
the interest rate received by purchasers of the mortgage passthrough securities is BLANK the interest rate on the mortgages serving as collateral slightly less than
which pass through security is backed by mortgages that are insured through private insurance companies publicly issued pass through securities (PIPs)
which of the following is not a guarantor of federally insured mortgages the US treasury
BLANK economic growth will probably BLANK the risk premium on mortgages and BLANK the price of mortgages weal, decrease, increase
a BLANK mortgage allows borrowers to initially make small payments on the mortgages, which are then increased on a graduated basis over the first five to ten years and payments then level off graduated payment
the adjustable rate mortgage creates uncertainty for the BLANk profit margin but reduces the uncertainty for the BLANK borrower’s, originator’s
when financial institutions originate residential mortgages, the mortgage contracts should probably not specify: the mortgage contract should specify all of these
which of the following is not a common type of mortgage pass through security according to the text balloon payment mortgage
BLANK risk is the risk that borrowers may prepay the mortgage in response to a decline in interest rate prepayment risk
the majority of mortgage debt is on one to four family properties true
a balloon payment mortgage requires interest payment for a 10 to 20 year period at the end which the borrower must pay the full amount of the principal false
commercial banks and savings institutions are the primary originators of mortgages true
securitization refers to the private insurance of conventional mortgages false

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