A Reverse Mortgage

question 88

Multiple Choice

A reverse mortgage

• A) Is the same thing as a second mortgage.
• B) Offers a home buyer a home loan with a 30-year payment period.
• C) Provides older home owners with tax-free income in the form of a loan that is repaid when the home is sold or the home owner dies.
• D) Two of these are correct.
• E) All of these are correct.

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Definitions:

Survivorship Bias

The error of focusing on the successes or survivors in a group and overlooking those that failed, which can lead to overly optimistic beliefs or conclusions.

Reporting Bias

A tendency to selectively choose or promote certain outcomes, data, or studies over others, which can lead to a distorted view of reality.

Incentive Bias

The tendency of an individual or entity to act in a way that is more favorable for their interests due to the promise of a reward or bonus.

Incentive Fee

A fee paid to a fund manager based on performance; typically a percentage of the fund's profits.