The Sudden Explosion of Cheap and Readily Available Mortgages Encouraged

question 77

Multiple Choice

The sudden explosion of cheap and readily available mortgages encouraged people to:

• A) buy bigger and more expensive homes.
• B) buy homes in areas with lower prices.
• C) become more risk-averse.
• D) invest more in bonds.

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Definitions:

Maturity Value

The total amount payable to the holder of a financial instrument at its maturity date, including principal and any accrued interest.

360-Day Year

An accounting convention that simplifies interest calculation by assuming all months have 30 days.

Maturity Date

The date on which the principal amount of a loan, bond, or other financial instrument becomes due and payable.

Leap Years

Years that include an extra day (February 29) to keep the calendar year synchronized with the astronomical year.