T/F and why?

Q: Borrowers should consider refinancing their existing fixed rate mortgage (FRM) loan only when the…

A: A loan is a financial arrangement in which one or more people, companies, or other entities lend…

Q: Total Debt Service ratio determines your "capacity to repay". What is the maximum % a client should…

A: A loan is a liability which allows a person or entity to get immediate funds for their requirement…

Q: Consider two loans that are otherwise identical, except that Loan A has a higher chance of borrower…

A: Loans in finance are one of those credit instruments where some money is lent to the other party and…

Q: which of the following conditions indicates that a loan assumption is least advisable? An existing…

A: Loan Assumption In a simple term loan assumption which indicates that financial obligation which was…

Q: The advantage of a "balloon payment" loan over a conventional loan  repayment plan is:   A. less…

A: Balloon payment is referred as a large lump-sum payment, which is made at the end of the loan period…

Q: If there is a deflation rate of 2% and your account is earning a nominal interest rate of 1.75%,…

A: Deflation rate (d) = 2% Nominal interest rate (r) = 1.75%

Q: Because banks accept short term fixed rate deposits they prefer to give loans where loan rate floats…

A: Fixed interest rates are 1%-2.5% higher than the floating interest rate. The increase and decrease…

Q: a long menu of loan options. For each option, there is charged and an interest rate given. The…

A: Lender are not interested in short term because in short term interest rate highly volatile and…

Q: last year, i took out a loan with an interest rate of 4.24% when inflation was only 1.9%. now…

A: The real interest rate is the inflation adjusted interest rate which is reflecting the increase in…

Q: Which is true of variable rate loans? A) the rate can only go up B) the interest rate can go up or…

A: Variable rate loans, also known as adjustable-rate loans, have interest rates that can fluctuate…

Q: Which of the following is correct regarding the APR?

A: APR: It refers to the annual rate charged on a loan or earned on an investment. APR is used by…

Q: The internal rate of return on a mortgage loan calculated from the lender's perspective is more…

A: Discount point is the amount or a part of mortgage amount which the borrower pay at the time of…

Q: r=0% on deposits. Consumer needs to borrow $50 loan and the consumer has uncertain income of…

A: Expected income When there is uncertain in income and there are chances of occurring different level…

Q: 6) What is the present value of the following payment series when the interest rate is 3%: YR1 =…

A: The concept of the time value of money states that the current worth of money is more than its value…

Q: Which statement is true when considering a loan?   F. You should always take the least interest rate…

A: While considering a loan, both interest rate and term of the loan are important. Both of these…

Q: In the credit market model with limited commitment, suppose that a consumer's collateral constraint…

A: The credit market model with limited commitment is a framework used to analyze and understand the…

Q: You are planning on taking out a mortgage and would ake to determine the cash value for a given down…

A: Solution:- When a loan is taken, it can either be repaid as lump sum payment or in instalments.

Q: Which of the following statements regarding fixed-rate loans is true?   Group of answer choices a.…

A: Fixed rate loans are loans which have a fixed rate of interest.

Q: r=0% on deposits. Consumer needs to borrow $50 loan and the consumer has uncertain income of…

A: Expected return Expected return is the sum of all returns times the associated probability. It is…

Q: Select the correct choice below and fill in the answer box within your choice.

A: Loan Amount: It represents the credit given to the borrower by the lender. The borrower makes…

Q: TFC (Totally Fake Company) asks their bank what the interest rate would be on a $3 million dollar…

A: Interest Rate on $3 million line of credit is 6.375%, Interest Rate on $150 million line of credit…

Q: You are an analyst at a local bank and one of your corporate customers is interested in fixed rate…

A: A swap is a kind of derivative contract in which two parties enter into a contract in order to…

Q: 10. Antonio asks for a one-year loan at a bank when the one-year Treasury rate is 2%. a. If the loan…

A: When companies are unable to finance the requirement of business they take the help of loans. loans…

Q: Which of the following is false? I. A lower interest rate would increase the present value of an…

A: Solution: Present value means the value of cash flows in today’s terms.

Q: All else equal, when deciding between two loan offers the loan that should be accepted is the one:…

A: We have a multiple choice question on the key factor influencing the decision between two loan…

Q: Which equation would not work to find the fixed rate of simple interest on his loan? a) r= Pt b) / =…

A: Simple Interest is considered one of the easiest and simplest methods of calculating interest. Under…

Q: The penalty for spending before earning is the int . Ceteris paribus, as the frequency of compoundin…

A: Interest rates will reduce company activity since borrowing money would become more expensive. -…

Q: If you were taking out a loan and the interest rate was the same either way, would you want it to be…

A: Simple interest is the interest payable on principal or borrowed amount only. Compound interest is…

Q: r=0% on deposits. Consumer needs to borrow $50 loan and the consumer has uncertain income of…

A: Expected income It is the weighted average income. The expected income is calculated as shown below.…

Q: Over the duration of the loan, the total loan payment is... ... gradually increasing for…

A: Loans are paid by equal fixed payments that carry the interest and loan payments.

Q: Consider a $100,000 loan balance (EAD) Suppose a Borrower is in class 5 with a Probability of…

A: Expected Loss Rate = PD * LGD = 0.04% * 50% =0.0002%

Q: What is the total amount you will pay if you do not pay the loan within the term and meet all the…

A: Step 1:Given: Loan amount = $5400Period of loan = 72 monthsFinal loan amount = $6965.35Interest is…

Q: answe

A: The net rate of return is the return on an asset after expenses such as taxes, depreciation, and…

Q: What will the money rate of interest have to be at a 6% inflation rate to entice people to keep the…

A: given, real rate = 5% inflation= 6%

Q: Part B: Choose the correct option for each question (loans) A) increased, increased B) increased,…

A: The length of a loan, also referred to as the loan term or maturity, represents the duration over…

Q: What interest rate would make it worthwhile to incur a compensating balance of $25,000 in order to…

A: Let the interest rate be r.If compensating balance is not incurred , Total loan…

Q: Suppose that you want to take out a loan and that your local bank wants to charge you an annual real…

A: Compute the nominal interest rate: Nominal interest rate is calculated by using following formula:

Q: Different compounding periods, are used for different types of investments. In order to properly…

A: The Effective Rate is the interest rate that takes into account the compounding of interest over a…

Q: Based on Exhibit 9-9, or using a financial calculator, what would be the monthly mortgage payments…

A: We take loans in order to buy things like a car or a house. The mortgage or the loan is then repaid…

Q: . How do rising interest rates affect the size of real estate loans that lenders will advance?

A: The central bank of a country changes the interest rates intermittently to control inflation or…

Calculating the Return On A Loan