QUESTION 17

PART A:

Which of the following would you expect to have the lowest monthly payments during the term of the loan?

a.

fixed-rate, amortizing conventional loan with a 2% prepayment penalty

b.

adjustable-rate loan

c.

interest-only loan

d.

fixed-rate, amortizing conventional loan with no prepayment penalty

e.

An islamic-type financial instrument, or add-on loan

PART B:

Which type of 10-year loan would be the most likely to have monthly payments that are different from year to year?

conventional fixed-rate, amortizing mortgage

pure discount loan

adjustable-rate mortgage

reverse annuity mortgage

an Islamic-type financial instrument, or add-on loan