In a Reverse Mortgage, the Borrower

question 26

Multiple Choice

In a reverse mortgage, the borrower

• A) pays only interest, not principle, for the years of the loan.
• B) increases indebtness while drawing down the equity in the home.
• C) makes smaller interest payments in the last years of the loan.
• D) makes a lump sum payment to pay off the loan.

Comprehend the concept of yield to maturity and how to calculate it.

Understand the relationship between interest rates and bond prices.

Recognize the different risks associated with bond investing.

Explain the importance and functions of bond covenants and how they protect bondholders.

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Definitions:

Hierarchy of Needs

A motivational theory proposed by Abraham Maslow, outlining five levels of human needs, from basic (physiological) to higher-level (self-actualization), driving behavior to fulfill these needs.

ERG Theory

A motivation theory developed by Clayton Alderfer that categorizes human needs into three categories: Existence, Relatedness, and Growth, modifying Maslow's hierarchy of needs.

Needs Hierarchy Theory

A psychological theory proposing that human needs are arranged in a hierarchy, with basic needs being the most fundamental.

Perceptions of Fairness

Individual judgments about the appropriateness, justness, and equity of an action or decision, often relating to treatment by others.