Suppose a Buyer Agrees to Purchase a Tract of Land

question 24

Multiple Choice

Suppose a buyer agrees to purchase a tract of land for $40,000. The buyer is only able to obtain a mortgage for $32,000. Rather than let the deal fall through, the seller agrees to accept $4,000 in cash and a note from the buyer for the remaining $4,000. This type of transaction is commonly referred to as a:

• A) conventional loan
• B) home equity mortgage
• C) purchase money mortgage
• D) reverse mortgage

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Definitions:

Long Position

Owning or buying securities with the expectation that their value will increase over time, allowing the investor to profit from the appreciation.

Wheat Future Contract

A legal agreement to buy or sell wheat at a predetermined price at a specified time in the future, used for hedging or speculation.

Spot Price

The current market price at which an asset, like a commodity, currency, or security, can be bought or sold for immediate delivery.

Bushel

A unit of volume that is used in the United States for trading and pricing agricultural commodities like corn, wheat, and soybeans.