Which of the Following Was a Contributing Factor to the Housing

question 58

Multiple Choice

Which of the following was a contributing factor to the housing boom and bust and the financial crisis of 2008?

• A) An increase in the share of loans to sub-prime borrowers.
• B) An increase in the share of loans extended to borrowers making only a small down payment.
• C) An increase in adjustable-rate mortgages (ARMs) as a share of the total.
• D) All of the above.

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Definitions:

Earnings Quality

An assessment of the reliability and sustainability of a company's earnings, considering its ability to generate cash flow.

Effective Income Tax Rate

This rate is the average percentage that companies or individuals pay in taxes on their taxable income.

U.S. Statutory Income Tax Rate

This refers to the prescribed rate at which income is taxed by the U.S. government, set by law for corporations and individuals.

Installment Method

A revenue recognition method allowing companies to recognize revenue and expense in proportion to the cash received from sales, typically used when sales are made with terms allowing payment over more than one year.