As Applied to Mortgage Loans, Which of the Following Statements

question 21

Multiple Choice

As applied to mortgage loans, which of the following statements is FALSE?

• A) Advertised rates are EARs.
• B) A spreadsheet uses the periodic interest rate, not the annual percentage rate.
• C) It is essential to know the compounding periods per year in order to use the TVM equations or determine the actual cost to rent money.
• D) A mortgage problem is very similar to a future value problem with an annuity.

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Definitions:

Income Taxes

Taxes levied by governments on the income generated by individuals and businesses within their jurisdiction.

Gross Profit

The difference between revenue and the cost of goods sold, indicating how efficiently a company produces goods/services at a profit.

Operating Income

Earnings before interest and taxes (EBIT), representing the profit a company generates from its core operations.

Income Tax Expense

The amount of money that an individual or corporation owes to the government based on their taxable income.