Part 1. Which of the following is NOT a reason lenders charge points for a loan?

A.Lenders can replace revenue in a declining rate environment

B.Effective interest costs are rising, so lenders must charge points.

C.Interest rates are sticky. Points provide a cushion

D.Lenders have agreed to sell the loan at a rate close to the originating loan rate

Part 2. Assume you pay points on a 30-year fixed rate loan but have decided to sell your house five years after getting the loan. Which of the following most accurately describes the effective interest rate on the loan?

A.Cannot be determined from the information given

B.There is no effect on the effective interest rate.

C.The effective interest rate increases

D.The effective interest rate declines