Coursera - Intro to Finance (Quiz-2)‚ Question 1 (5 points) Carlos goes to the bank to take out a personal loan. The stated annual interest rate is 12%‚ but interest is compounded monthly and he will make monthly payments. The effective annual interest rate (EAR) of the loan is less than 12%. Your Answer | | Score | Explanation | False | | 5.00 | Correct. You understand compounding. | Total | | 5.00 / 5.00 | | EXCEL Function - EFFECT(0.12‚12) 12 times Npery and rate .12 Question 2
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In 2007 when the housing market crashed the whole world was effected. Trillions of dollars have been lost and we are still trying to recover and make sense of all that took place. This economic catastrophe could have been minimized if the proper accounting practices had been followed and if the regulatory framework in place were unassailable. Alan Greenspan‚ in his evaluation of the housing crash stated‚ “...the financial system would have held together‚ had the second bulwark against crisis-our
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The economic crisis began when the U.S. government subsidized mortgages for families and individuals who could not afford to buy homes. By doing so‚ the demand for housing skyrocketed‚ resulting in increased home values. Meanwhile‚ mortgage companies and banks celebrated their financial incentive to provide loans to anyone‚ regardless of credit history. The combination of falsely inflated home prices and “generous” bank loans burst the artificial bubble of prosperity Americans were enjoying. As home
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Irrational Exuberance and the Housing Bubble An investment in real estate is widely regarded as one of the best investments one can make. The notion that home prices will always rise is as strong as it is incorrect and in the early 2000’s this line of speculative thought led to a level of irrational exuberance that threatened to topple the U.S. economy and its financial system. After the dot.com bubble burst and the subsequent 70% drop in the NASDAQ‚ investors both professional and
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National Mortgage Association (FNMA) (NYSE: FNM)‚ commonly known as Fannie Mae‚ is a stockholder-owned corporation chartered by Congress in 1968 as a government sponsored enterprise (GSE)‚ but founded in 1938 during the Depression. Contrary to some beliefs‚ Fannie Mae does not make home loans directly to consumers‚ but rather functions as an intermediary in the U.S. secondary mortgage market. By purchasing and securitizing mortgages‚ Fannie Mae facilitates liquidity in the primary mortgage market by
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interpret the terms of mortgage loan financing purchase of properties compute the monthly mortgage loan payment and mortgage insurance premium compute the rental return on property investment 2 Selection Criteria of Mortgage Loan The following factors should be considered when choosing mortgage loan plan: 1. Interest Rate 2. Borrowing Period 3. Installment Loan Repayments 4. Cash Rebate 3 Interest Rate In Hong Kong’s mortgage loan market‚ there are three different
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When it comes to selling and buying a home‚ real estate legal liability has several components that involve representing the property‚ protecting the interest of all parties‚ and neglecting parts of the sales process. Sellers are more likely to be confronted with legal liabilities pertain to the home’s condition s found during the home inspection and after the sale‚ once the buyers take occupancy. Legal liabilities for sellers after the home is sold and transfer of ownership is complete may exist
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A New House Readiness Name XECO/212 Date Instructor A New House - Readiness In considering the purchase of a new home‚ there are many factors that can impact the final decision. The various factors are part of the 10 Principles of Economics (Mankiw‚ N. G.‚ 2007‚ p. 3); these principles determine the outcome of the decision to purchase a new home. The 10 Principles of Economics The 10 Principles of Economics are based on individual behaviors‚ interactions of people in an economy and
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the Global Financial Crisis (GFC)‚ the United States experienced one of the its worst financial crisis in its history. Easy credit‚ the housing slump‚ banks holding risky mortgages and tax regulations all played a significant part in causing the GFC of 2008/09. The major cause of the 2008 Financial Crisis is the Subprime Mortgage and Subprime Landing. Economists warned of the dangers‚ but one wants to interrupt the party. Consumers were happy to marking money. By the end‚ “When the United States
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Role of Finance Companies Traditional role of Finance Companies The finance companies are much smaller in scale compared with commercial banks‚ and they are also saddled with more restrictions which will be discussed later in the report. Traditionally‚ they relied on their personalized and flexible services to attract clients. This is because there are always consumers who are rejected by the commercial banks because adding these consumers to their portfolios would be uneconomical for these commercial
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