Which of the Following Statements Regarding the Break-Even Point for Paying

question 96

Multiple Choice

Which of the following statements regarding the break-even point for paying discount points in order to get a lower interest rate on the loan is correct?

• A) All else equal, the break-even point for a taxpayer paying points on an original mortgage is longer when the taxpayer's marginal income tax rate increases in the years subsequent to the original financing compared to a taxpayer whose marginal tax rate does not change in the years subsequent to the year in which the loan is executed.
• B) All else equal, the break-even point for paying points on an original mortgage is longer than the break-even point for paying points on a refinance.
• C) All else equal, the break-even point for paying points on an original mortgage is longer for a taxpayer who does not make extra principal payments each year on the loan than for a taxpayer who does make additional principal payments each year on the loan.
• D) None of these statements is correct.

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Definitions:

Locus of Control

A psychological concept that refers to the extent to which individuals believe they have power over events in their lives, as opposed to external forces beyond their control.

MBTI

The Myers-Briggs Type Indicator: a personality assessment tool that categorizes individuals into 16 distinct personality types based on their preferences in four dimensions of human behavior.

Personality Type

A classification of individuals based on their characteristic patterns of thought, emotion, and behavior.

Inherited Traits

Characteristics or qualities passed down genetically from parents to offspring.