Stefan and Patricia Would Like to Buy a Home,but They

question 88

Multiple Choice

Stefan and Patricia would like to buy a home,but they aren't sure how large a house payment they can afford.Their combined gross monthly income is $5,000,and they have a $425 education loan payment.Assuming a 38 percent back-end ratio,Stefan and Patricia qualify for a maximum total house payment of

• A)$1,000.
• B)$1,475.
• C)$1,900.
• D)$4,575.

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the individual data points differ from the mean.

Expected Rate

The anticipated return on an investment, factoring in the probability of various outcomes, including risks and rewards.

T-bill

Short for Treasury bill, a short-term government security issued at a discount from the par value and pays no interest before maturity, but is redeemed at its face value.

Correlation Coefficient

A numerical measure that describes the size and direction of a relationship between two variables.