Question
1 Which of the following is not a common difference between prime and subprime loans? (4 Points) a Subprime Mortgages have lower downpayments. b Lower
1 Which of the following is not a common difference between prime and subprime loans? (4 Points)
a Subprime Mortgages have lower downpayments.
b Lower credit score requirements for borrowers in the subprime market.
c Subprime mortgages mature later.
d Higher interest rates for subprime mortgages 2 Which of the following types of loans has on average the lowest interest rate? (4 Points)
a Alt-A Loans
b Option ARM in the subprime market
c Hybrid ARM in the prime market.
d Conforming conventional loans.
3 How do Qualified Mortgages differ from other mortgages? (4 Points)
a Qualified Mortgages are subject to federal programs and are therefore tax exempt.
b Qualified Mortgages are subject to stricter regulations, e.g., the ability-to-pay standard.
c Only a certain percentage of Mortgages issued in a year can qualify and can receive the title "Qualified Mortgage", giving them a higher trustworthiness on the Mortgage market.
d All of the above
e None of the above
4 What can be among the costs of refinancing? (4 Points)
a Search costs for a new mortgage.
b Upfront fees
c Opportunity costs of not refinancing more cheaply within the close future
d All of the above
e None of the above
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