Question 1

A type of instrument which offers a wide range of maturities based on the same pool of mortgages is known as a:

Accepted Answer

A)  CMO 
B)  VRM 
C)  RRM 
D)  GPM 
E)  FRM 
A)  CMO 
B)  VRM 
C)  RRM 
D)  GPM 
E)  FRM

Question 2

A type of mortgage instrument in which changes in the interest rate attached to the mortgage loan can be passed along to the borrower by changing the loan principal, loan maturity, monthly payment or any combination of these is the:

Accepted Answer

A)  Canadian Rollover Mortgage 
B)  Adjustable Mortgage Loan 
C)  Variable Rate Mortgage 
D)  Graduated Payment Mortgage 
E)  None of the above 
A)  Canadian Rollover Mortgage 
B)  Adjustable Mortgage Loan 
C)  Variable Rate Mortgage 
D)  Graduated Payment Mortgage 
E)  None of the above

Question 3

The Federal Housing Administration (FHA) was established by Congress in 1944.

Accepted Answer

A) True 
 B)False

Question 4

The organization established to offer "assistance mortgages" was the:

Accepted Answer

A)  Government National Mortgage Association 
B)  Federal Home Loan Mortgage Corporation 
C)  Federal National Mortgage Association 
D)  Mortgage Guarantee Insurance Corporation 
E)  None of the above 
A)  Government National Mortgage Association 
B)  Federal Home Loan Mortgage Corporation 
C)  Federal National Mortgage Association 
D)  Mortgage Guarantee Insurance Corporation 
E)  None of the above

Question 5

New instruments in the mortgage market that have served to make mortgage securities more competitive with government and corporate securities and allowed mortgage lenders to reach national and global markets are called securitized mortgages.

Accepted Answer

A) True 
 B)False

Question 6

The organization that was established for the purpose of buying and selling FHA-guaranteed mortgages in the secondary market is the:

Accepted Answer

A)  Government National Mortgage Association 
B)  Federal Home Loan Mortgage Corporation 
C)  Federal National Mortgage Association 
D)  Mortgage Guarantee Insurance Corporation 
E)  None of the above 
A)  Government National Mortgage Association 
B)  Federal Home Loan Mortgage Corporation 
C)  Federal National Mortgage Association 
D)  Mortgage Guarantee Insurance Corporation 
E)  None of the above

Question 7

What are the advantages and disadvantages for the consumer of home ownership?

Accepted Answer

The much-sought-after goal of home owner

Question 8

Like the Federal Housing Administration (FHA), the Veteran's Administration (VA) offered to insure residential mortgages and helped to _________ required to buy new homes.

Accepted Answer

A)  Lower both loan rates and down payments 
B)  Lower loan rates 
C)  Lower the down payment 
D)  Raise loan rates and lower down payment 
E)  None of the above 
A)  Lower both loan rates and down payments 
B)  Lower loan rates 
C)  Lower the down payment 
D)  Raise loan rates and lower down payment 
E)  None of the above

Question 9

According to the textbook, financial instruments based on mortgages which have allowed mortgage lenders to invade national and international capital markets for funds are called:

Accepted Answer

A)  Mortgage certificates 
B)  Securitized mortgages 
C)  FNMA discount notes 
D)  Euromortgage bonds 
E)  None of the above 
A)  Mortgage certificates 
B)  Securitized mortgages 
C)  FNMA discount notes 
D)  Euromortgage bonds 
E)  None of the above

Question 10

Savings and loans make mortgage loans at branches throughout the United States.

Accepted Answer

A) True 
 B)False

Question 11

To raise funds to support loan purchases, Freddie Mac sells _____________ and guaranteed mortgage certificates (GMCs).

Accepted Answer

A)  Mortgage participation certificates (PCs) 
B)  Subprime mortgages 
C)  Office paraphernalia 
D)  All of the above 
E)  None of the above 
A)  Mortgage participation certificates (PCs) 
B)  Subprime mortgages 
C)  Office paraphernalia 
D)  All of the above 
E)  None of the above

Question 12

With the development of adjustable mortgage instruments and creative financing techniques fixed-rate mortgages have been almost completely supplanted by the newer financial instruments, according to the textbook.

Accepted Answer

A) True 
 B)False

Question 13

The federal government's goals to stabilize the economy and support the housing industry are frequently in conflict with each other.

Accepted Answer

A) True 
 B)False

Question 14

A weak and failing housing market can cause ripples in the aggregate economy.

Accepted Answer

A) True 
 B)False

Question 15

An instrument that partitions the principal cash flow from a pool of mortgages or mortgage-backed securities into maturity classes is called a:

Accepted Answer

A)  REMIC 
B)  CMS 
C)  VRM 
D)  GPM 
E)  None of the above 
A)  REMIC 
B)  CMS 
C)  VRM 
D)  GPM 
E)  None of the above

Question 16

Savings and loan associations rank second in loan volume to commercial banks among all mortgage lenders.

Accepted Answer

A) True 
 B)False

Question 17

Today mortgage bankers originate just under half of all home mortgages.

Accepted Answer

A) True 
 B)False

Question 18

Most homeowners who refinance their home mortgages do not borrow additional funds when they take on the new, lower-rate mortgage.

Accepted Answer

A) True 
 B)False

Question 19

Fixed-rate home mortgages are among the oldest forms of home loans.

Accepted Answer

A) True 
 B)False

Question 20

The organization set up to insure conventional home mortgage loans carrying down payments as low as five percent was the:

Accepted Answer

A)  Government National Mortgage Association 
B)  Federal Home Loan Mortgage Corporation 
C)  Federal National Mortgage Association 
D)  Mortgage Guarantee Insurance Corporation 
E)  None of the above 
A)  Government National Mortgage Association 
B)  Federal Home Loan Mortgage Corporation 
C)  Federal National Mortgage Association 
D)  Mortgage Guarantee Insurance Corporation 
E)  None of the above

Exam 22: Mortgage Market and Mortgage Instruments

A type of instrument which offers a wide range of maturities based on the same pool of mortgages is known as a:

A type of mortgage instrument in which changes in the interest rate attached to the mortgage loan can be passed along to the borrower by changing the loan principal, loan maturity, monthly payment or any combination of these is the:

The Federal Housing Administration (FHA) was established by Congress in 1944.

The organization established to offer "assistance mortgages" was the:

New instruments in the mortgage market that have served to make mortgage securities more competitive with government and corporate securities and allowed mortgage lenders to reach national and global markets are called securitized mortgages.

The organization that was established for the purpose of buying and selling FHA-guaranteed mortgages in the secondary market is the:

What are the advantages and disadvantages for the consumer of home ownership?

Like the Federal Housing Administration (FHA), the Veteran's Administration (VA) offered to insure residential mortgages and helped to _________ required to buy new homes.

According to the textbook, financial instruments based on mortgages which have allowed mortgage lenders to invade national and international capital markets for funds are called:

Savings and loans make mortgage loans at branches throughout the United States.

To raise funds to support loan purchases, Freddie Mac sells _____________ and guaranteed mortgage certificates (GMCs).

With the development of adjustable mortgage instruments and creative financing techniques fixed-rate mortgages have been almost completely supplanted by the newer financial instruments, according to the textbook.

The federal government's goals to stabilize the economy and support the housing industry are frequently in conflict with each other.

A weak and failing housing market can cause ripples in the aggregate economy.

An instrument that partitions the principal cash flow from a pool of mortgages or mortgage-backed securities into maturity classes is called a:

Savings and loan associations rank second in loan volume to commercial banks among all mortgage lenders.

Today mortgage bankers originate just under half of all home mortgages.

Most homeowners who refinance their home mortgages do not borrow additional funds when they take on the new, lower-rate mortgage.

Fixed-rate home mortgages are among the oldest forms of home loans.

The organization set up to insure conventional home mortgage loans carrying down payments as low as five percent was the:

Understanding the Financial System and Its Impact on the Economy and Markets

Financial Systems, Monetary Units, and the Role of Money in the Economy

Financial Indices, Market Information, and Economic Data

The Financial Crisis and Its Impact on the Mortgage Market and Economy

Understanding Interest Rates, Savings, and the Wealth Effect

Financial Concepts and Interest Rates

Effects of Inflation and Yield Curves on Stock Prices and Investments

Understanding Risk and Market Factors in Financial Securities

Exploring Financial Markets and Hedging Strategies

Factors Affecting the Volume of CDs

Exploring the Reserve Accounting System, Money Markets, and Financial Instruments

Exploring Central Banks and Their Impact on the Economy and Financial System

Central Banking and Monetary Policy: Exploring Tools and Strategies

Banking and Financial Services: Regulations, Operations, and Trends

Comparative Analysis of Financial Institutions and Their Operations

Exploring Various Aspects of Pension Funds, Finance Companies, and Insurance Industry

The Impact of Deregulation and Regulation on Financial Institutions and Banking Industry in the United States

Treasury Auctions, Public Debt, and Government Borrowing: Exploring the Us Treasury System

Corporate Bond Pricing, Market Development, and Financing Strategies

The Truth About Regulation Fd and Stock Holdings: Debunking Common Myths in the Financial Market

Flexible Savings Account Options

International Financial Transactions and Balance of Payments

International Banking and Financial Regulations

Exploring the Complexities of Financial Services and Regulation

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