Which of the Following Are Disadvantages of PLAMs

question 22

Multiple Choice

Which of the following are disadvantages of PLAMs?

• A) Lenders face high levels of interest rate risk under PLAMs.
• B) Fewer homebuyers are likely to qualify for financing using PLAMs in comparison to CPMs.
• C) The price level used to index PLAMs is measured on an ex post basis and historic prices may not be an accurate reflection of future price.
• D) All of the above.

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Definitions:

Confidence Interval

A range of values that is used to estimate the true value of a parameter with a certain degree of confidence.

Sample

A subset of a population selected for measurement, observation, or questioning to provide statistical information about the whole.

Mean

Mean is the average of a set of numbers, calculated by dividing the sum of all values in the set by the number of values.

Standard Error

Estimates the variability of sample mean measurements around the population mean, indicating the precision of the sample mean as an estimate of the population mean.