As Short-Term Interest Rates Began to Rise in 2005, Which

question 122

Multiple Choice

As short-term interest rates began to rise in 2005, which one of the following mortgage loan categories experienced the largest increase in default and foreclosure rates?

• A) Fixed rate mortgages to prime borrowers.
• B) Fixed rate mortgages to sub-prime borrowers.
• C) Adjustable rate mortgages extended to both prime and sub-prime borrowers.
• D) Adjustable rate mortgages to sub-prime borrowers only; the default and foreclosure rates of these loans extended to prime borrowers declined.

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Definitions:

Quarts

A unit of volume in the U.S. customary and the British imperial systems, equal to a quarter of a gallon, or approximately 0.946 liters.

Tint

A slight or faint shade of color or a small amount of a particular color added to something.

Ounces

A measure of mass in the avoirdupois system, equivalent to 1/16th of a pound or about 28.35 grams.

Square Feet

A unit of area measurement equal to a square measuring one foot on each side.