HomeworkLib
Question

True or false A floating rate mortgage is riskier than a fixed rate mortgage.

True or false

A floating rate mortgage is riskier than a fixed rate mortgage.

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

True. This is because there is more variability of interest rates whereas in fixed rate mortgage variability is 0.
Floating rate mortgage increases interest rate when rate in economy increases and vice versa.

0 0
Add a comment
Know the answer?
Add Answer to:
True or false A floating rate mortgage is riskier than a fixed rate mortgage.
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • All the below are true or false: a) The principal part of a fixed mortgage loan...

    All the below are true or false: a) The principal part of a fixed mortgage loan payment can be found by multiplying the periodic interest rate by the ending balance for a given period. b) For​ fixed-rate fully amortized mortgage​ loans, more of the fixed payment goes towards principal as we approach the end of the loan term. c) We can find the amount needed to pay off a​ fixed-rate fully amortized mortgage loan at any point in time by...

  • 3. An increase in either the risk-free rate or the risk premium on a fixed-rate mortgage...

    3. An increase in either the risk-free rate or the risk premium on a fixed-rate mortgage results in a higher required rate of return when investing in the mortgage and therefore causes mortgage prices to decrease. true or false

  • True or False: True or False: If you do not pay your student loans, your wages...

    True or False: True or False: If you do not pay your student loans, your wages may be garnished.    True or False: The only goal of inventory management is to never suffer a stock-out (i.e., runs out of a product). True or False: You will pay less FICA taxes if you have more dependents. True or False: Actions which increase cash flow will always increase net income. True or False: it is a good idea to purchase an extended warranty...

  • You have issued a 30 year a fixed rate mortgage loan to finance the purchase of...

    You have issued a 30 year a fixed rate mortgage loan to finance the purchase of a home. Interest rates decline every year for four years after you have issued the mortgage loan. You are now locked into paying an interest rate that is above the market rate. There is no way out of this financial contract until the maturity date of the mortgage (thirty years from origination). True or False A tenant should carefully negotiate with the landlord the...

  • In general, the REPO rate is higher than FED FUND rate. True or False True False...

    In general, the REPO rate is higher than FED FUND rate. True or False True False uces

  • Debt financing is considered riskier than equity financing because of its required payments of interest and...

    Debt financing is considered riskier than equity financing because of its required payments of interest and principal. True or False

  • Fixed assets have a useful life longer than a year. True False

    Fixed assets have a useful life longer than a year. True False

  • Consider a floating rate mortgage loan of $250,000 for amortization period of 15 years. Assume monthly...

    Consider a floating rate mortgage loan of $250,000 for amortization period of 15 years. Assume monthly mortgage payments and mortgage rate reset period every 3 months. The mortgage rate will be reset as follows: Mortgage rate the beginning-of-the-period prime rate + 3%. Mortgage rate will be compounded monthly. Suppose the prime rate today is 2.5% per annum while at the beginning of the next quarter it is expected to be 3% annum. Calculate monthly mortgage payments in the first month...

  • T/F True/False True or False? The formula only be used to complete calculations when a maximum...

    T/F True/False True or False? The formula only be used to complete calculations when a maximum of two parts is stacked together. 11. T = H-F may True or False? If a.010" diameter position tolerance is used on two stacked parts, the clearance hole diameter for a fixed fastener condition must be larger than the clearance hole diameter for a floating fastener condition 12. True or False? It would be extremely restrictive, if not impossible to meet, a tolerance of.000"...

  • True or​ False:  Annuities are unequal cash flows that go on for a finite period of...

    True or​ False:  Annuities are unequal cash flows that go on for a finite period of time. There are 3 formulas on our formula sheet that contain the variable​ “PM True or​ False:  We can determine which​ “PMT” we’re being asked to solve for by noting what the problem provides in terms of r and n. True or​ False: ​ "When given the annual withdrawals desired during the retirement​ period, the FVA tells us the amount we should have accumulated...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT