QUESTION 15

PART A:

From the bank's perspective, the primary measure of an individual borrower's likelihood to repay a loan is given by

a.

collateral

b.

character

c.

credit

d.

capital

e.

capacity

PART B:

Which of the following represents a type of financial instrument where the bank pays the borrower monthly payments over the term of the loan and then the bank is repaid the whole principal or "loan" amount at the end of the term?

a.

shared appreciation mortgage

b.

adjustable-rate mortgage

c.

reverse annuity mortgage

d.

interest-only mortgage with a balloon payment at the end of term

e.

price-level adjusted mortgage