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When the Contract Rate at Closing Is Less Than the Current

question 23

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When the contract rate at closing is less than the current market rate (i.e., interest rates have increased since the time of the loan commitment) , the mortgage banker will have to sell the newly originated loan at a discount. This scenario best depicts the mortgage banker's exposure to which of the following risks?


Definitions:

Marginal Utility

The supplementary joy or advantage an individual experiences when acquiring an extra unit of a good or service.

Total Utility

The total satisfaction or benefit that a consumer derives from consuming a certain quantity of a good or service.

Total Utility

The total satisfaction received from consuming a particular quantity of goods and services.

Marginal Utility

The change in satisfaction or utility that an individual gains from consuming an additional unit of a good or service.

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