Which of the Following Statements Is Not Accurate

question 28

Multiple Choice

Which of the following statements is not accurate?

• A)Loan applicants are placed into two risk classes with one rejected and the other accepted.
• B)Lender may be basing the interest rate on the average quality of the loans.
• C)Lenders present an array of interest rates with the rate offered appropriate to the risk of non-payment that the individual household presents.
• D)All of the above statements are accurate.
• E)None of the above statements is accurate.

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Definitions:

Modified Duration

A measure of the sensitivity of the price of a bond or a bond portfolio to a change in interest rates, adjusted for the possibility that the bond may be called before maturity.

Basis Point

A basis point is a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument, equivalent to 0.01%.

Interest Rates

The fee, shown as a percentage of the principal amount, that a lender imposes on a borrower for the use of assets.

T-bill Rate

The yield on U.S. Treasury bills, a benchmark for short-term interest rates in the United States.