A Mortgage for Less Than 80% of the Appraised Value

question 134

True/False

A mortgage for less than 80% of the appraised value of the home will not require PMI insurance because they default less often.

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Definitions:

Fair Value Hedge

A hedge of the exposure to changes in fair value of a recognized asset or liability, or an unrecognized firm commitment, that is attributable to a particular risk.

Forward Contract

A financial contract obligating the buyer to purchase, and the seller to sell a specific asset at a predetermined future date and price.

Spot Rates

The current market price at which a particular security can be bought or sold for immediate delivery.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.