How is your borrowing power affected when you are considered a "high risk"?There is a good chance that you will receive better loan terms and low interest rates.You might not qualify for a loan to buy a home, car, etc.You will pay lower interest rates.None of the above.

When a borrower is considered high risk, it is due to the bad credit history of the borrower. There…

Answered: How is your borrowing power affected…

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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In the case where taxes on interest earned in a savings account causes negative real rates of return after taxes: O it is still better to put your money in a savings account than to hold it in the form of cash. O it is better to lend your money directly to borrowers than to put your money in a savings account. O putting your money in a savings account is neither better nor worse than holding it in the form of cash. O it is better to hold your money in the form of cash than to put it into a savings account.
How is your borrowing power affected when you are considered a "high risk"? There is a good chance that you will receive better loan terms and low interest rates. O You might not qualify for a loan to buy a home, car, etc. O You will pay lower interest rates. O None of the above.
Banks may deny creditworthy borrowers loan requests if a. they are non-corporate entities b. they are on late on paying taxes c. the loan is too risky d. they are individuals
Some savings and investment choices have the potential for higher earnings. However, these may also be difficult to convert to cash when you need the funds. This problem refers to: Multiple Choice inflation risk. O interest rate risk. O income risk. personal risk.
2. Which of the following risks are insurable? For risks which are not insurable, explain why they are not insurable.(i) The risk that a $10 Christmas decoration will be broken.(ii) The risk that a borrower will need to pay interest on a debt.(iii) The risk that the interest rate on a debt will increase.(iv) The risk that an insurance company will have to pay too many losses.(v) The risk that an individual is late for an important meeting.(vi) The risk that a pregnancy will result in multiple births (twins, triplets,etc.) incurring unplanned expenses.(vii) The risk of an individual being killed by a malfunctioning self-flyingaeroplane within the next 30 years.(viii) The risk that a dress will not be fashionable in two month’s time.
how collateralized mortgage obligations (CMOs) help to alleviate some of the reinvestment and prepayment risk for investors?
No risk, no reward. Most people intuitively understand that they have to bear some risk to achieve an acceptable return on their investment portfolios. But how much risk is right for you? If your investments turn sour, you may put at jeopardy your ability to retire, to pay for your kid's college education, or to weather an unexpected need for cash. These worst-case scenarios focus our attention on how to manage our exposure to uncertainty. Assessing and quantifying-risk aversion is, to put it mildly, difficult. It requires confronting at least these two big questions. First, how much investment risk can you afford to take? If you have steady high-paying job, for example, you have greater ability to withstand investment losses. Conversely, if you are close to retirement, you have less ability to adjust your lifestyle in response to bad investment outcomes. Second, you need to think about your personality and decide how much risk you can tolerate. At what point will you be unable to…
Which of the following is a feature of a home equity loan? Group of answer choices a. The interest rate on a home equity loan is higher than that on other loans. b. The interest paid on a home equity loan is usually tax deductible. c. A home equity loan is generally the first mortgage loan. d. A home equity loan is a single-payment loan. e. A home equity loan is an unsecured loan.
You have a choice among three types of loan (discount loan, interest - only loan, and amortized loan), and wish to pay the LEAST expensive cost of borrowing. An amortized loan will the cheapest option. true or false
1) If borrowers with the most risky investment projects seek bank loans in higher proportion to those borrowers with the safest investment projects, banks are said to face the problem of A) adverse credit risk. B) adverse selection. C) moral hazard. D) lemon lenders.
How does a lower credit rating affect borrowers lenders and financial institution? What are the implications of the downgrade on the health of the financial system?
Money Management. What happens when a student loans defaults?

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How is your borrowing power affected when you are considered a "high risk"? There is a good chance that you will receive better loan terms and low interest rates. O You might not qualify for a loan to buy a home, car, etc. You will pay lower interest rates. O None of the above.