To Diversify,a Homeowner with a Variable-Rate Mortgage Should Choose Investments

question 61

Multiple Choice

To diversify,a homeowner with a variable-rate mortgage should choose investments that

• A)pay higher returns when interest rates rise and lower returns when interest rates fall.
• B)pay lower returns when interest rates rise and higher returns when interest rates fall.
• C)provide a higher return than the market average.
• D)provide a lower return than the market average.

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Definitions:

Production Volume

The total quantity of goods or services produced by a business within a certain period.

Fixed Component

A portion of a cost that remains constant regardless of the level of production or sales volume, such as rent, salaries, and insurance.

Mixed Cost

A cost composed of a fixed and variable component, changing with the level of activity but also containing a constant element.

Escrows Completed

Typically, the term "escrow" refers to a financial arrangement where a third party holds and regulates the payment of funds required for two parties involved in a given transaction. "Escrows Completed" could refer to transactions that have successfully met their conditions and been finalized, although this is not a standard accounting or financial term.