Adjustable Rate Mortgages Became Increasingly Attractive and Grew as a Percentage

question 59

Multiple Choice

Adjustable rate mortgages became increasingly attractive and grew as a percentage of total outstanding mortgages during 2002 to 2004 because

• A) interest rates were kept artificially low during this period.
• B) interest rates rose sharply during this period.
• C) lending standards were tightened during this period.
• D) housing prices declined during this period.

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Definitions:

Consolidated Financial Statements

Financial reports that aggregate all financial information of a parent company and its subsidiaries, showing the group's overall financial performance and position.

Parent's Share

The portion of equity interest in a subsidiary held by the parent company, reflecting its claim on the subsidiary's assets and income.

Unrealized Profits

Profits that have been recognized in the accounting records but have not yet been realized through the receipt or payment of cash or other assets.

Inventory

The total amount of goods and materials held by a company for the purpose of sale or production.