Which of the Statements Below Is FALSE

question 48

Multiple Choice

Which of the statements below is FALSE?

• A)A part of the default premium has to do with the frequency of default by the borrower.
• B)For the home loan,the collateral (the house)is an asset that will increase in value over time (in general),compared with a car loan in which the collateral (the car)decreases in value over time.
• C)With a car,the potential loss due to default is less than a house because the growing value of the asset should be sufficient to cover the outstanding balance (principal)of the loan.
• D)A personal credit card essentially has no collateral,so the potential loss is even higher if the customer defaults on his or her credit card payments.

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Definitions:

Accredited Investor

An individual or entity that meets the requirements set forth by regulations, allowing them to invest in certain types of higher-risk investments, private placements, and other securities offerings not registered with regulatory entities.

Net Worth

The total value of an individual's or organization's assets minus liabilities, representing the financial health or wealth at a particular point in time.

Bankruptcy

A legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts.

Tippee

An individual who receives confidential information from an insider (the tipper), potentially violating insider trading laws if used for trading.