Problems Underlying the US Sub-Prime Loans That Triggered the GFC

question 3

Multiple Choice

Problems underlying the US sub-prime loans that triggered the GFC included which of the following?

• A)Borrowers often had a poor employment record.
• B)Borrowers often had a history of loan defaults.
• C)LVR's were commonly 100 per cent.
• D)It was assumed property prices would always rise.
• E)All of these.

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Definitions:

Predetermined Overhead Rate

An estimated rate used to assign manufacturing overhead costs to individual units of production, calculated at the beginning of a period.

Machine-Hours

The total hours that production machinery is operated within a given period, rephrased as the aggregate operational time of production equipment.

Direct Labor-Hours

The total hours worked by employees directly involved in the production process, used as a basis for allocating labor costs to products.

Manufacturing Overhead

Manufacturing overhead encompasses all of the indirect costs associated with the production of goods, such as utilities, maintenance, and the salaries of management.