Ch. 13 by Albert Chang

Chapter 13: Consuming Activity


1.) Mortgage whose periodic payments are only sufficient to cover the interest due is partially mortgage. (T/F)

2.) GPM stand for Graduated payment mortgage? (T/F)

3.) Reverse annuity mortgage targets younger, working people? (T/F)

4.) Increase in outstanding mortgage balance that arises in ARMs and GPMs when periodic payments are less than interest due is Negative amortization? (T/F)

5.) Loan charges to cover lender's cost of processing the application is Points? (T/F)

6.) A variable rate or payment mortgage that periodically adjusts to a specific index.
a) Reverse annuity mortgage
b) Adjustable rate mortgage
c) Negative amortization
d) None of the above

7.) Lender's true yield once points and other fee are considered their IRR assuming borrowers holds the load to maturity.
a) NPV
b) APR
c) PV
d) None of the Above

8.)What are Points?
a) When some score in a game
b) Loan charges designed to boost lender's effective rate of return
c) When you pay off your bill
d) None of the Above







Answers: 1.) F 2.)T 3.)F 4.)T 5.)F 6.)B 7.)B 8.)B