FIN 3713: Final Exam
T or F: Prepayment of a loan without penalty is a right of all borrowers. - Answers-False
T or F: After a house is purchased, contractors cannot ask the new owner of the house to pay any bills
that were outstanding before the house was sold. - Answers-False
What does APR stand for? - Answers-Annual Percentage Rate
Which of the following documents conveys title to a property at the time the purchaser completes the
performance of the obligation called for in the document?
A) Junior mortgage
B) Package mortgage
C) Land contract
D) Purchase-money mortgage - Answers-C
T or F: A second mortgage is a junior lien mortgage that is sometimes used to bridge the gap between
the price of a property and the sum of the first mortgage and down payment. - Answers-True
The global pool of money podcast showed us an investment product designed by Wall Street in the early
2000's. These CDOs were in great demand for international investors because of their high rates of
return. What does CDO stand for?
,A) Collateralized Debt Obligation
B) Capital Derivative Offer
C) Congressional Debt Obligation
D) Collateralized Derivative Order - Answers-A
What term BEST describes the borrower who is personally liable for a debt obligation related to the
purchase of a home?
A) Mortgagee
B) Mortgagor
C) Grantee
D) Granto - Answers-B
Which of the following solutions is LEAST likely to be acceptable to a mortgagee when discussing
alternatives to foreclosing a property?
A) Permanently extending the amortization period
B) Permanently reducing the interest rate
C) Providing a temporary grace period during which principal and interest are not paid
D) Finding someone else to assume the mortgage - Answers-B
What term BEST describes a person that owns a property and is conveying title to the property to
another person?
A) Grantor
B) Mortgagor
C) Grantee
, D) Mortgagee - Answers-A
In the Global Pool of Money podcast, what role did smaller mortgage banks play?
A) They served as a stopgap and turned down thousands of risky mortgages.
B) They had no role, really, in the financial crisis described in the podcast.
C) They loaned significant funds to larger Wall Street banks to fund their CDOs.
D) They borrowed huge sums to fund the mortgages they approved, then sold these same mortgages to
Wall Street. - Answers-D
T or F: The grantee typically conveys title to the grantor by means of a deed. - Answers-False
A borrower takes out a 30-year mortgage loan for $250,000 with an interest rate of 5%. What would the
monthly payment be?
A) $1,342
B) $1,042
C) $694
D) $1,355 - Answers-A
When would seller financing NOT be used?
A) The seller desires to artificially raise the price of the property by offering a lower-than-market interest
rate on the mortgage
B) The seller desires to take advantage of the installment method of reporting the gain from sale
C) The buyer does not qualify for long term mortgage credit because of low down payment or difficulty
meeting monthly payments
T or F: Prepayment of a loan without penalty is a right of all borrowers. - Answers-False
T or F: After a house is purchased, contractors cannot ask the new owner of the house to pay any bills
that were outstanding before the house was sold. - Answers-False
What does APR stand for? - Answers-Annual Percentage Rate
Which of the following documents conveys title to a property at the time the purchaser completes the
performance of the obligation called for in the document?
A) Junior mortgage
B) Package mortgage
C) Land contract
D) Purchase-money mortgage - Answers-C
T or F: A second mortgage is a junior lien mortgage that is sometimes used to bridge the gap between
the price of a property and the sum of the first mortgage and down payment. - Answers-True
The global pool of money podcast showed us an investment product designed by Wall Street in the early
2000's. These CDOs were in great demand for international investors because of their high rates of
return. What does CDO stand for?
,A) Collateralized Debt Obligation
B) Capital Derivative Offer
C) Congressional Debt Obligation
D) Collateralized Derivative Order - Answers-A
What term BEST describes the borrower who is personally liable for a debt obligation related to the
purchase of a home?
A) Mortgagee
B) Mortgagor
C) Grantee
D) Granto - Answers-B
Which of the following solutions is LEAST likely to be acceptable to a mortgagee when discussing
alternatives to foreclosing a property?
A) Permanently extending the amortization period
B) Permanently reducing the interest rate
C) Providing a temporary grace period during which principal and interest are not paid
D) Finding someone else to assume the mortgage - Answers-B
What term BEST describes a person that owns a property and is conveying title to the property to
another person?
A) Grantor
B) Mortgagor
C) Grantee
, D) Mortgagee - Answers-A
In the Global Pool of Money podcast, what role did smaller mortgage banks play?
A) They served as a stopgap and turned down thousands of risky mortgages.
B) They had no role, really, in the financial crisis described in the podcast.
C) They loaned significant funds to larger Wall Street banks to fund their CDOs.
D) They borrowed huge sums to fund the mortgages they approved, then sold these same mortgages to
Wall Street. - Answers-D
T or F: The grantee typically conveys title to the grantor by means of a deed. - Answers-False
A borrower takes out a 30-year mortgage loan for $250,000 with an interest rate of 5%. What would the
monthly payment be?
A) $1,342
B) $1,042
C) $694
D) $1,355 - Answers-A
When would seller financing NOT be used?
A) The seller desires to artificially raise the price of the property by offering a lower-than-market interest
rate on the mortgage
B) The seller desires to take advantage of the installment method of reporting the gain from sale
C) The buyer does not qualify for long term mortgage credit because of low down payment or difficulty
meeting monthly payments
