An Index as Used in an Adjustable Rate Mortgage Must

question 4

Multiple Choice

An index as used in an adjustable rate mortgage must be

• A) one approved by the lender's regulatory authority.
• B) the lender's current cost of funds.
• C) current market yields on mortgage loans.
• D) any mortgage index.

Explain the concept of economic income and how it is calculated.

Identify and understand the concepts of horizontal and vertical equity in taxation.

Describe how the benefits-received principle of taxation works and compare it to the ability-to-pay principle.

Calculate net worth based on assets and liabilities.

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Definitions:

Projected Benefit Obligation

An estimate of the total amount of benefits, both vested and non-vested, that a company expects to provide to employees in pension plans.

Prior Service Cost

The cost of additional benefits granted to employees in a pension plan amendment, attributed to employee service in prior periods.

Actuarially Determined

Usually pertaining to pension schemes, insurance, or finance, calculated based on actuarial methods and assumptions about future events.

Pension Expense

the cost recognized by an employer for the benefits provided to employees' post-retirement, calculated based on projected obligations and plan assets.