Tuesday, May 14, 2013

Ch. 10 Questions- Jason Davies

1. (T/F). Hypothecation is the practice of leaving collateral in the borrower's possession while the debt is being paid.

2. (T/F). Mortgage documentation refers to the document issued by a trustee to return legal title to the mortgagor after meeting all the requirements of a promissory note.

3. (T/F). As interest rates fall, bond or mortgage values rise or "goes up".

4. (T/F). Debt service refers to the mortgage payment that comprises one component, which is principal.

5. (T/F). An origination point is a charge paid by the mortgagor at orinigation to reduce or buy down the mortgage contract rate.

6. A lender's effective yield can be described as which of the following examples:
a. NPV
b. IRR
c. TVM
d. FV

7. Which of the following terms would best describe a debt from a friend or credit card debt?
a. Secured Debt
b. Collateral
c. Unsecured Debt
d. Debt Service

8. Which of the following terms describes a situation which creates a good incentive to avoid missing a mortgage payment?
a. Prepayment Clause
b. Due on Sale Clause
c. Collateral Clause
d. Acceleration Clause

1. T 2. F 3. T 4. F 5. F 6. b 7. c 8. d

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