Answered: With regard to mortgages, how is the…

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With regard to mortgages, how is the monthly payment including principal and interest categorized as an annuity?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Answer the following questions: REGARDING AMLS A: What is the difference between an interest rate change cap and a life of loan interest rate change cap.? Be specific and give an example. B: What is the rationale/consideration in not using the initial interest rate for the rate used to qualify a borrower?
Illustration the mortgage for future advances?
Which of the following is true when the mortgage loan is an amortizing loan? a. At the beginning of the term of the loan the largest part of the payment is a paydown of principal, but a payments progress a rising portion is applied to interest payments. b. Interest payments and paydown of principal remain constant during the loan. c. At the beginning of the term of the loan the largest part of the payment is interest, but a payments progress a rising portion is applied to the paydown of principal. d. Paydown of principal occurs at the end of the loan. e. None of the above.
If an installment loan is paid in full before the maturity date, the full amount of interest on the loan must still be paid. False O True
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An amortized loan: repays both the principal and the interest in one lump sum at the end of the loan term. requires the principal amount to be repaid in even increments over the life of the loan. requires that all payments be equal in amount and include both principal and interest. requires that all interest be repaid on a monthly basis while the principal is repaid at the end of the loan term. may have equal or increasing amounts applied to the principal from each loan payment.
If you were given a choice of investing in an account that paid quarterly interest and one that paid monthly interest, which one should you choose if they both offer the same stated interest rate and why?
Based upon the simple interest rate method of a fixed interest rate installment loan or mortgage, successive monthly loan payments over time a. pay the same percentage to interest and principal. b. pay increasing percentages to interest and decreasing percentages to principal. c. pay increasing percentages to principal and decreasing percentages to interest. d. pay decreasing percentages to interest and principal.
A perpetuity includes: a.An annuity due b.Common stock c.Preferred stock d.All of the above.
What assumption about the future composite rate of interest on an adjustable-rate mortgage is made when determining the APR for federal truth-in-lending disclosures?
Explain Incremental Borrowing Cost versus a Second Mortgage?
What are liabilities that will be due within a short time (usually one year or less) and that are to be paid out of current assets called? Group of answer choices equity liabilities current liabilities fixed liabilities contra liabilities

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