Tuesday, May 14, 2013

Chapter 10 Questions

by Xia Vue

1) A personal promise to pay back a loan is an unsecured debt.

2) A grantor is the buyer, while the grantee is the seller.

3) Debt service is the mortgage payment comprising of three components: interest, expenses, and principal.

4) The lender's effective yield is known as an internal rate of return.

5) One point is a charge of 2% of the mortgage amount that is paid by the mortgagor to the mortgagee at the loan origination.

Multiple Choice
6) The borrower's right, but not obligation, to prepay the entire loan balance without penalty is:
a) prepayment clause
b) acceleration clause
c) due on sale clause
d) none of the above

7) Deed of trust is a document transferring legal title to a:
a) mortgagee
b) mortgagor
c) trustee
d) none of the above

8) When calculating lender's effective yield, we're looking to solve for:
a) pmt
b) pv
c) fv
d) none of the above

1) T 2) F 3) F 4) T 5) F 6) a 7) c 8) d

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