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 46 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
YES! Correct, THANKS for helping me on my review

kthug

  • Member
  • Posts: 332
Reply 3 on: Yesterday
Wow, this really help

« previous next »
 

Did you know?

Although puberty usually occurs in the early teenage years, the world's youngest parents were two Chinese children who had their first baby when they were 8 and 9 years of age.

Did you know?

Human neurons are so small that they require a microscope in order to be seen. However, some neurons can be up to 3 feet long, such as those that extend from the spinal cord to the toes.

Did you know?

Each year in the United States, there are approximately six million pregnancies. This means that at any one time, about 4% of women in the United States are pregnant.

Did you know?

Although the Roman numeral for the number 4 has always been taught to have been "IV," according to historians, the ancient Romans probably used "IIII" most of the time. This is partially backed up by the fact that early grandfather clocks displayed IIII for the number 4 instead of IV. Early clockmakers apparently thought that the IIII balanced out the VIII (used for the number 8) on the clock face and that it just looked better.

Did you know?

Famous people who died from poisoning or drug overdose include, Adolf Hitler, Socrates, Juan Ponce de Leon, Marilyn Monroe, Judy Garland, and John Belushi.

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
The Periodic Table (Part 1) The Periodic Table (Part 1)
TrUe....FaLsE TrUe....FaLsE
Please provide me with a solution for part b. Please provide me with a solution for part b.
The oil pump is the only part in an engine that gets unfiltered engine oil. The oil is drawn up ... The oil pump is the only part in an engine that gets unfiltered engine oil. The oil is drawn up ...
Question 37 Part 2 Question 37 Part 2
Video: Non-polar compounds - insolubility

For a complete list of videos, visit our video library