This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Which of the statements below is FALSE? A) A part of the default premium has to do with the ... (Read 32 times)

Frost2351

  • Hero Member
  • *****
  • Posts: 557
on: Jul 10, 2018
Which of the statements below is FALSE?
 
  A) A part of the default premium has to do with the frequency of default by the borrower.
  B) For the home loan, the collateral (the house) is an asset that will increase in value over time (in general), compared with a car loan in which the collateral (the car) decreases in value over time.
  C) With a car, the potential loss due to default is less than a house because the growing value of the asset should be sufficient to cover the outstanding balance (principal) of the loan.
  D) A personal credit card essentially has no collateral, so the potential loss is even higher if the customer defaults on his or her credit card payments.

Question 2

The two major components of the interest rate that cause rates to vary across different investment opportunities or loans are ________.
 
  A) the default premium and the bankruptcy premium
  B) the liquidity premium and the maturity premium
  C) the default premium and the maturity premium
  D) the inflation premium and the maturity premium


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

brittrenee

  • Sr. Member
  • ****
  • Posts: 321
Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: C
Explanation: C) With a HOUSE, the potential loss due to default is less than a car because the growing value of the asset should be sufficient to cover the outstanding balance (principal) of the loan.

Answer to Question 2

Answer: C


Frost2351

  • Member
  • Posts: 557
Reply 2 on: Jul 10, 2018
Excellent

cassie_ragen

  • Member
  • Posts: 347
Reply 3 on: Yesterday
Gracias!

« previous next »
 

Did you know?

Giardia is one of the most common intestinal parasites worldwide, and infects up to 20% of the world population, mostly in poorer countries with inadequate sanitation. Infections are most common in children, though chronic Giardia is more common in adults.

Did you know?

About one in five American adults and teenagers have had a genital herpes infection—and most of them don't know it. People with genital herpes have at least twice the risk of becoming infected with HIV if exposed to it than those people who do not have genital herpes.

Did you know?

Women are 50% to 75% more likely than men to experience an adverse drug reaction.

Did you know?

Addicts to opiates often avoid treatment because they are afraid of withdrawal. Though unpleasant, with proper management, withdrawal is rarely fatal and passes relatively quickly.

Did you know?

More than 4.4billion prescriptions were dispensed within the United States in 2016.

Simple food web of an Arctic island. NOTE: The indication of detritivores and pathogens was not part Simple food web of an Arctic island. NOTE: The indication of detritivores and pathogens was not part
Part C - Determining genotypes in autosomal recessive pedigrees Pedigree 3 from Part C - Determining genotypes in autosomal recessive pedigrees Pedigree 3 from
How to find the inverse of any function (Part 2) How to find the inverse of any function (Part 2)
How to convert one unit of measurement to another unit (Part 1) How to convert one unit of measurement to another unit (Part 1)
Part of a Semantic Network in Long-Term Memory Part of a Semantic Network in Long-Term Memory
All human organ systems and their functions (Part 1) All human organ systems and their functions (Part 1)
Video: Bulk flow - factors that influence bulk flow

For a complete list of videos, visit our video library