From the Perspective of the Lending Financial Institution, Interest Rate

question 32

Multiple Choice

From the perspective of the lending financial institution, interest rate risk is

• A)lower on a 30-year fixed-rate mortgage than on a 15-year fixed-rate mortgage.
• B)lower on a 15-year fixed-rate mortgage than on a 30-year fixed-rate mortgage.
• C)higher on a 15-year fixed-rate mortgage than on a 30-year fixed-rate mortgage.
• D)higher on a 15-year adjustable-rate mortgage than on a 30-year adjustable-rate mortgage.

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Definitions:

Natural Resource

Assets derived from the earth, such as minerals, forests, and water, which are used to produce goods and services.

Depletion Expense

The allocation of the cost of natural resources over their useful life, representing the exhaustion of mineral, oil, or gas deposits.

Mineral Deposit

A naturally occurring accumulation of minerals that can be extracted for economic benefit.

Journalize

The act of recording transactions in an accounting journal, noting the debit and credit aspects of each transaction.