Which of the Following Is FALSE Regarding Negative Amortization

question 34

Multiple Choice

Which of the following is FALSE regarding negative amortization?

• A)It can result in a decrease to the borrower's equity in the property
• B)It usually increases default risk
• C)It usually has a lower interest rate than a conventional loan
• D)It usually results in a lower DCR

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Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a specific price point.

Quantity Supplied

The amount of a commodity that producers are willing and able to offer for sale at a specific price over a defined period of time.

Binding Price Ceiling

A legal maximum price for a good or service that is set below the equilibrium price, resulting in shortages.

Equilibrium Price

The market price at which the quantity of a good demanded equals the quantity supplied, leading to market stability.