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Real Estate Finance & Investments 16th Edition by William B Brueggeman

Test Bank For Real Estate Finance & Investments 16th Edition by William

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Edition:
16th Edition
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Real Estate Finance & Investments 16th Edition by William B Brueggeman

Real Estate Finance & Investments, 16e (Brueggeman)

Chapter 5   Adjustable and Floating Rate Mortgage Loans

1) ARMs were developed because lenders were tired of offering a limited selection of loan alternatives to borrowers.

Answer:  FALSE

Difficulty: 1 Easy

Topic:  ARMs

Accessibility:  Keyboard Navigation

Gradable:  automatic

2) ARMs help lenders combat unanticipated inflation changes, interest rate changes, and a maturity gap.

Answer:  TRUE

Difficulty: 1 Easy

Topic:  ARMs

Accessibility:  Keyboard Navigation

Gradable:  automatic

3) Characteristics of a PLAM include an increasing mortgage payment and an adjusting loan balance tied to an index.

Answer:  TRUE

Difficulty: 1 Easy

Topic:  PLAMs

Accessibility:  Keyboard Navigation

Gradable:  automatic

4) A major benefit of a PLAM is the mortgage payment increases closely follows borrower salary increases.

Answer:  FALSE

Difficulty: 1 Easy

Topic:  PLAMs

Accessibility:  Keyboard Navigation

Gradable:  automatic

5) PLAMs have been very popular with lenders.

Answer:  FALSE

Difficulty: 1 Easy

Topic:  PLAMs

Accessibility:  Keyboard Navigation

Gradable:  automatic

6) Lender’s can partially avoid estimating interest rates by tying an ARM to an interest rate index.

Answer:  TRUE

Difficulty: 1 Easy

Topic:  ARMs

Accessibility:  Keyboard Navigation

Gradable:  automatic

7) Negative amortization reduces the principal balance of a loan.

Answer:  FALSE

Difficulty: 1 Easy

Topic:  Negative amortization

Accessibility:  Keyboard Navigation

Gradable:  automatic

8) The floor of an ARM is the maximum reduction of payments or interest rates allowed.

Answer:  TRUE

Difficulty: 1 Easy

Topic:  ARMs

Accessibility:  Keyboard Navigation

Gradable:  automatic

 

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