Real 4000 Test #2 Dietz Exam Questions
and Answers
Standard mortgage loans require monthly payments typically composed of
two components: interest and principal repayments. When scheduled
mortgage payments are insufficient to pay all of the accumulating interest,
causing some interest to be added to the outstanding balance after each
payment shortfall, the loan is said to be: - -Negatively Amortizing
- Assume that an individual has just lost his job and has been consistently
late paying his bills. The bank recognizes deterioration in the individual's
credit score and has notified him that he must pay his home equity line of
credit in full. The mortgage clause that makes this possible is known as the: -
-Demand Clause
- Which of the following clauses requires a borrower to make monthly
deposits into an account in order to pay obligations such as property taxes,
community association fees, or causality insurance premiums? - -Escrow
Clause
- Even after a property goes into foreclosure, it is still possible for the
borrower to reclaim the property as long as they produce the outstanding
mortgage balance and all foreclosure costs incurred to that point. In a state
such as Florida, this right may even extend beyond the date of the
foreclosure sale. When this occurs, this right is more commonly referred to
as: - -Statutory Redemption
- Mortgage loans that fail one or more of the underwriting standards
established by government sponsored enterprises are more commonly
referred to as: - -Nonconforming Loans
- TRUE or FALSE:
The loan origination market, in which borrowers and lenders come together
to provide adequate financing for the purchase of a property, is more
commonly referred to as the secondary mortgage market. - -FALSE
- TRUE or FALSE:
If you have a personal required rate of return, say 10%, and are offered an
investment with a 9.9% expected return, you should walk away, as there is
no way in your control that you could influence the expected return. - -
FALSE
- The most popular type of mortgage in the United States is the - -30-Year
Fixed-Rate Fully-Amortized Mortgage
, - Consider the quesiton: "What is your monthly mortgage payment on a
$200,000 15-year amortizing loan that demands 7% interest?" What would
you input into the TI BA II+ Calculator for interest (I/Y)? - -I/Y = 7/12
ANSWER: .5833333
- How much would you pay today for the right to receive $100,000 at the
end of 10 years if you can earn 7% interest on an alternate investment of
similar risk? - -N: 10
I/Y: 7
PV: CPT?
PMT: 0
FV: -100,000
ANSWER: 50,834.93
- What is the present value of an investment that pays you $25,000 at the
end of each of the next three years and an additional $150,000 received at
the end of the third year, assuming a required rate of return of 12 percent? -
-CF Key
CF0= 0
CF1= 25,000
F01= 3
CF2= 150,000
F02= 1
NPV key
I = 12
IRR CPT ANSWER: 166,812.82
- What is the value of an investment that provides you with $10,000 in
income at the end of each year for 40 years, when you can find alternate
investments of similar risk that provide returns of 7%? - -N: 40
I/Y: 7
PV: CPT?
PMT: -10,000
FV: 0
ANSWER: 133,317.09
- What would the value of these payments be to a lender who can earn 6%
annual interest on other loans?
- 30 years of monthly payments (360 payments)
- $1,000 each payment - -N: 360
and Answers
Standard mortgage loans require monthly payments typically composed of
two components: interest and principal repayments. When scheduled
mortgage payments are insufficient to pay all of the accumulating interest,
causing some interest to be added to the outstanding balance after each
payment shortfall, the loan is said to be: - -Negatively Amortizing
- Assume that an individual has just lost his job and has been consistently
late paying his bills. The bank recognizes deterioration in the individual's
credit score and has notified him that he must pay his home equity line of
credit in full. The mortgage clause that makes this possible is known as the: -
-Demand Clause
- Which of the following clauses requires a borrower to make monthly
deposits into an account in order to pay obligations such as property taxes,
community association fees, or causality insurance premiums? - -Escrow
Clause
- Even after a property goes into foreclosure, it is still possible for the
borrower to reclaim the property as long as they produce the outstanding
mortgage balance and all foreclosure costs incurred to that point. In a state
such as Florida, this right may even extend beyond the date of the
foreclosure sale. When this occurs, this right is more commonly referred to
as: - -Statutory Redemption
- Mortgage loans that fail one or more of the underwriting standards
established by government sponsored enterprises are more commonly
referred to as: - -Nonconforming Loans
- TRUE or FALSE:
The loan origination market, in which borrowers and lenders come together
to provide adequate financing for the purchase of a property, is more
commonly referred to as the secondary mortgage market. - -FALSE
- TRUE or FALSE:
If you have a personal required rate of return, say 10%, and are offered an
investment with a 9.9% expected return, you should walk away, as there is
no way in your control that you could influence the expected return. - -
FALSE
- The most popular type of mortgage in the United States is the - -30-Year
Fixed-Rate Fully-Amortized Mortgage
, - Consider the quesiton: "What is your monthly mortgage payment on a
$200,000 15-year amortizing loan that demands 7% interest?" What would
you input into the TI BA II+ Calculator for interest (I/Y)? - -I/Y = 7/12
ANSWER: .5833333
- How much would you pay today for the right to receive $100,000 at the
end of 10 years if you can earn 7% interest on an alternate investment of
similar risk? - -N: 10
I/Y: 7
PV: CPT?
PMT: 0
FV: -100,000
ANSWER: 50,834.93
- What is the present value of an investment that pays you $25,000 at the
end of each of the next three years and an additional $150,000 received at
the end of the third year, assuming a required rate of return of 12 percent? -
-CF Key
CF0= 0
CF1= 25,000
F01= 3
CF2= 150,000
F02= 1
NPV key
I = 12
IRR CPT ANSWER: 166,812.82
- What is the value of an investment that provides you with $10,000 in
income at the end of each year for 40 years, when you can find alternate
investments of similar risk that provide returns of 7%? - -N: 40
I/Y: 7
PV: CPT?
PMT: -10,000
FV: 0
ANSWER: 133,317.09
- What would the value of these payments be to a lender who can earn 6%
annual interest on other loans?
- 30 years of monthly payments (360 payments)
- $1,000 each payment - -N: 360
