The Boom in 'Sub-Prime' Lending (Which Was the Source of the GFC)was

question 63

Multiple Choice

The boom in 'sub-prime' lending (which was the source of the GFC) was motivated by the:

• A)desire to help low-income minority groups
• B)belief that the repayment capacity of borrowers had been misrepresented
• C)desire for high risk and return investments
• D)belief that housing prices would always rise
• E)provision of subsidies by the US government.

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Definitions:

First Payment

The initial amount paid at the start of a financial agreement or loan.

Compounded Annually

A method of calculating interest where the interest rate is applied once per year, adding to the principal sum for the next period.

Equal Annual Payments

Regular payments of the same amount made over a specified period of time.

First Payment

The initial amount paid at the start of a payment plan or schedule, such as for a loan or lease.