1. Which of the following (1 or more) adjustable rate mortgage features directly reduce the lenders risk? [the index, an introductory teaser rate, a periodic interest rate cap, negative amortization, the term, the margin]

2. Which of the following (1 or more) adjustable rate mortgage features directly reduce the borrowers risk? [the index, an introductory teaser rate, a periodic interest rate cap, negative amortization, the term, the margin]

3. In comparison to a standard fixed-rate loan, which of the following are designed to give the borrower lower payments, at least in the early years of the loan. [mezzanine loan, adjustable rate loan, mini-perm loan, option ARM, hybrid ARM, interest-only (IO) loan, reverse mortgage, home equity loan, graduated payment mortgage]

4. The effective interest rate of a mortgage [decreases, stays the same, increases, could go either way]as the holding period increases and [decreases, stays the same, increases, could go either way] as the amount of discount points charged increases.

5. Subprime loans are [less risky, riskier]than prime loans and as such their interest rates are normally _________ [higher, lower]than those of prime loans.

(an amount goes in the blank)