Which of the Following Is FALSE Regarding DCR

question 25

Multiple Choice

Which of the following is FALSE regarding DCR?

• A)It indicates whether NOI is sufficient to cover mortgage payments
• B)It is not of concern to lenders when loan to value ratios are low
• C)It is an indication of risk for the lender
• D)It is derived from NOI / Mortgage Payment

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Definitions:

Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy an asset at a specified price within a certain period of time.

Put Option

A financial contract giving the holder the right to sell a specified amount of an underlying asset at a set price before a certain date.

GM Stock

Equity shares issued by General Motors Company, a major automotive manufacturer based in the United States.

Strike Price

The predetermined price at which the holder of a options contract can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.