Many Lenders Will Hold Dave to the 28/36 Rule in Evaluating

question 82

Multiple Choice

Many lenders will hold Dave to the 28/36 rule in evaluating his application for a mortgage.What does the 36 mean?

• A)A down payment of 36 months is required.
• B)A down payment of 36% is required.
• C)Debt payments including mortgage must be less than 36% of his gross monthly income.
• D)Debt payments must be less than 36% of his monthly take-home pay.
• E)Mortgage insurance is required during the first 36 months of the loan.

Analyze the impact of bond transactions on financial statements.

Understand the theoretical justification and accounting treatment of bond issue costs.

Apply the effective interest method to compute interest expense and amortization of bond discount/premium.

Analyze the impact of bond premium or discount amortization on the carrying amount of bonds.

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Definitions:

Fair Market Value

The price at which an asset would sell in a competitive auction setting, reflecting the value agreed upon by a willing buyer and seller.

Restatement of Contracts

A collection of legal principles regarding contracts, intended to clarify and synthesize current contractual laws in the United States.

Mental Impairment

A condition that impacts an individual's cognitive functioning, potentially affecting memory, decision-making, or learning abilities.

Divisible Agreement

A contract that can be legally separated into individual obligations, allowing for partial fulfillment.