Since the Mid-1990s, the Percentage of New Mortgages Categorized as Sub-Prime

question 126

Multiple Choice

Since the mid-1990s, the percentage of new mortgages categorized as sub-prime or Alt-A loans has

• A) remained steady at about 5 percent of all loans.
• B) decreased to about one third of all loans, while conventional loans have increased to about two-thirds.
• C) increased to about one third of all loans, while conventional loans have decreased to about one third as well.
• D) decreased as a result of regulations designed to tighten loan standards.

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Definitions:

BAT Model

BAT Model stands for the Behavioral Analysis and Therapy Model, which is typically related to psychology and behavioral sciences, not a common term in finance and hence might be mistaken or the context misidentified.

Cash Outflows

Money that exits a company, typically as a result of operational expenses, investment activities, and financing.

Opportunity Cost

Opportunity cost is the potential benefits an individual, investor, or business misses out on when choosing one alternative over another.

Target Cash Balance

A firm’s desired cash level as determined by the trade-off between carrying costs and shortage costs.