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:

Lockup Transaction

Agreements restricting company insiders from selling their shares for a set period after an initial public offering to prevent a sudden oversupply of stock.

Synergies

Synergies are the additional value created by the combination of two companies, expected to result in cost savings or increased revenues beyond what the individual entities could achieve alone.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Investment Opportunities

Options available for entities or individuals to invest capital with the expectation of a positive return.