If Your Lender Charges 1

question 10

Multiple Choice

If your lender charges 1.5 mortgage points on a house selling for $100,000, on which there is a $90,000 loan, the points will cost you:

• A) $1,350.
• B) $1,500.
• C) $2,850.
• D) $150.
• E) $900.

---

Definitions:

Geometric Average Return

The average rate of return per period on an investment, compounded over multiple periods, which is calculated by taking the nth root of the total returns, where n represents the number of periods.

Stock

An investment vehicle that denotes holding equity in a firm, granting the holder rights to a fraction of the company's assets and earnings.

Geometric Average

A method of calculating the average rate of return of a set of values that is compounded over time.

Arithmetic Average

A measure of central tendency calculated by dividing the sum of all values in a dataset by the number of values.