Based on the Rising Housing Prices of 2000-2005, Many Buyers

question 57

Multiple Choice

Based on the rising housing prices of 2000-2005, many buyers opted for interest-only loans and variable rate mortgages with little or no down payment because

• A) they expected short-term interest rates to fall substantially in the future and this would reduce their monthly mortgage payment in the years ahead.
• B) variable rate mortgages are a good way to reduce the risk accompanying your investment when you plan to stay in the house for a long time.
• C) they thought housing prices would continue to rise and therefore they would be able to sell the house for a profit within a couple of years.
• D) they could easily recoup their investment, even if there was a downturn in housing prices in the future.

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Definitions:

Brightness

A perception of how luminous an object appears; often influenced by the relative intensity of light it emits or reflects.

Hue

The dimension of color that is determined by the wavelength of light; what we know as the color names blue, green, and so forth.

Accommodation

The cognitive process of adjusting one's understanding to incorporate new information.

Cornea

The transparent front part of the eye that covers the iris, pupil, and anterior chamber, contributing to the eye's optical power.