Which of the Following Is FALSE Concerning Buydown Loans

question 26

Multiple Choice

Which of the following is FALSE concerning Buydown Loans:

• A) They are often used during periods of high inflation
• B) They always lower the rate on the loan for the borrower for the entire loan term
• C) Help borrowers qualify for a loan
• D) They can be offered by home builders

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Definitions:

Degree of Operating Leverage

A financial ratio that measures the sensitivity of a company's operating income to its sales, indicating the potential for higher returns or risks.

Sales Decrease

A reduction in the quantity or value of items sold by a business within a particular period.

Financial Break-Even

Financial break-even is the point at which total revenues exactly cover total costs, leaving the business with neither profit nor loss, focusing on financial stability.

Initial Investment

The amount of money used to start a project, purchase an asset, or invest in a financial instrument, marking the beginning of the investment’s lifecycle.