One Contributing Factor to the 2007-2009 Financial Crisis Was the Structuring

question 18

Multiple Choice

One contributing factor to the 2007-2009 financial crisis was the structuring of mortgage loans with:

• A) high initial payments, offset by significantly lower payments later.
• B) low initial payments, offset by significantly higher payments later.
• C) no initial payments, offset by significantly high payments later.
• D)equal payments over the life of the loan.

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Definitions:

Direct Method

A way of preparing a cash flow statement where actual cash flows from operating activities are listed directly.

Statement Of Cash Flows

A financial report that provides aggregate data regarding all cash inflows and outflows a company receives from its ongoing operations, investment, and financial activities.

Direct Method

A way of reporting cash flows from operating activities in a cash flow statement that lists specific types of cash receipts and payments.

Cash Inflow

Money coming into a business or project from various sources including sales, investment income, or financing.