Which of the Following Is NOT an Example of Aggressive

question 5

Multiple Choice

Which of the following is NOT an example of aggressive lending practices contributing to the subprime crisis?

• A)Mortgagors were not required to make any down-payment at the inception of the loan
• B)Loans were given to people with poor credit histories
• C)Loans were given to people with no income
• D)A borrower could get a second mortgage and use it as down-payment
• E)None of the above

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Definitions:

Fundamental Characteristics

Essential qualities or attributes that are critical to the definition, operation, or function of a concept, often used in reference to accounting principles.

Assets

Resources owned by a business from which future economic benefits are expected to flow to the enterprise.

Equity

The value of an ownership interest in property or a business, calculated as total assets minus total liabilities; represents what the owners' claim on the assets is.

Entity Assumption

The accounting principle that treats a business as a separate legal and accounting entity, distinct from its owners, managers, or operators.