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

question 328

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:

Scatterplot

A type of graph used in statistics to display values for two variables for a set of data.

Linear

Refers to a relationship or function that can be graphically represented in a straight line, indicating a proportional relationship between variables.

Statistical Significance

A determination that the observed results in a study are unlikely to have occurred by chance, at a predetermined significance level.

Nature

Refers to the inherent qualities or characteristics of something, or the physical world collectively, including plants, animals, landscapes, and other features and products of the earth.