Which of the Following Mortgages Would You Prefer to Hold

question 88

Multiple Choice

Which of the following mortgages would you prefer to hold if you were a lender and you expected inflation of uncertain magnitude?

• A) reverse annuity mortgages
• B) conventional fixed-rate mortgages
• C) adjustable-rate mortgage loans
• D) balloon payment mortgages

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Definitions:

Life Insurance Premiums

Regular payments made to an insurance company in exchange for life insurance coverage.

Present Value

The modern-day value of a sum of money to be received in the future, adjusted for a specific rate of return.

Electricity Bill Savings

The reduction in the cost of electricity consumption, often achieved through energy-efficient practices or devices.

Asset Beta

A measure of the systematic risk of a firm's assets, used in the Capital Asset Pricing Model (CAPM) to determine the expected return of the asset.