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Choose the best answer to the following question. Explain your reasoning with one or more complete sentences. What does a loan of $400,000 that carries a 4-point origination fee require as an advance payment? Choose the correct answer below. OA. An advance payment of $1,600 is required. Each point is 1% of the loan amour so the advance payment amount is 4% of $400,000. OB. An advance payment of $16,000 is required. Each point is 1% of the loan amount, so the advance payment amount is 4% of $400,000. OC. An advance payment of $8,000 is required. Each point is 1% of the loan amour so the advance payment amount is 4% of $400,000. OD. An advance payment of $16,000 is required. Each point is 10% of the loan amount, so the advance payment amount is 40% of $400,000. E. An advance payment of $8,000 is required. Each point is 10% of the loan amount, so the advance payment amount is 40% of $400,000.

Choose the best answer to the following question. Explain your reasoning with one or more complete sentences. What does a loan of $400,000 that carries a 4-point origination fee require as an advance payment? Choose the correct answer below. OA. An advance payment of $1,600 is required. Each point is 1% of the loan amour so the advance payment amount is 4% of $400,000. OB. An advance payment of $16,000 is required. Each point is 1% of the loan amount, so the advance payment amount is 4% of $400,000. OC. An advance payment of $8,000 is required. Each point is 1% of the loan amour so the advance payment amount is 4% of $400,000. OD. An advance payment of $16,000 is required. Each point is 10% of the loan amount, so the advance payment amount is 40% of $400,000. E. An advance payment of $8,000 is required. Each point is 10% of the loan amount, so the advance payment amount is 40% of $400,000.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Choose the best answer to the following question. Explain your reasoning with one or more complete sentences. What does a loan of $400,000 that carries a 4-point origination fee require as an advance payment? Choose the correct answer below. A. An advance payment of $1,600 is required. Each point is 1% of the loan amount, so the advance payment amount is 4% of $400,000. B. An advance payment of $16,000 is required. Each point is 1% of the loan amount, so the advance payment amount is 4% of $400,000. OC. An advance payment of $8,000 is required. Each point is 1% of the loan amount, so the advance payment amount is 4% of $400,000. OD. An advance payment of $16,000 is required. Each point is 10% of the loan amount, so the advance payment amount is 40% of $400,000. E. An advance payment of $8,000 is required. Each point is 10% of the loan amount, so the advance payment amount is 40% of $400,000. OF. An advance payment of $1,600 is required. Each point is worth between 50 and 100 points depending on the prepayment penalties.
Transcribed Image Text:Choose the best answer to the following question. Explain your reasoning with one or more complete sentences. What does a loan of $400,000 that carries a 4-point origination fee require as an advance payment? Choose the correct answer below. A. An advance payment of $1,600 is required. Each point is 1% of the loan amount, so the advance payment amount is 4% of $400,000. B. An advance payment of $16,000 is required. Each point is 1% of the loan amount, so the advance payment amount is 4% of $400,000. OC. An advance payment of $8,000 is required. Each point is 1% of the loan amount, so the advance payment amount is 4% of $400,000. OD. An advance payment of $16,000 is required. Each point is 10% of the loan amount, so the advance payment amount is 40% of $400,000. E. An advance payment of $8,000 is required. Each point is 10% of the loan amount, so the advance payment amount is 40% of $400,000. OF. An advance payment of $1,600 is required. Each point is worth between 50 and 100 points depending on the prepayment penalties.
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