Which of the following statements about interest rates according to the material covered in the lecture are TRUE:Interest rates on interest only loans are normally higher than principal and interest loans. Interest rates on residential investments loans (for investment properties) are also usually higher than for loans for owner-occupied homes.If variable interest rates are expected to increase in the future, choosing a variable interest rate on a new home loan will likely reduce your interest expenses compared to choosing a fixed interest rate on a new home loan.Question 10AnswerNeither of the statements are true (both are false)Only statement 1 is trueOnly statement 2 is trueBoth statements are true (neither are false)

Multiple Choice QuestionWhich of the following explains the interest rate in terms of the supply of and demand for funds available for lending and borrowing?Multiple choice question.The loanable funds theory of principalThe loanable funds theory of incomeThe loanable funds theory of interestThe supply and demand for money

If we think about interest rates as the price of money, thenGroup of answer choicesgreater supply of money will lower interest rates.lower supply of money will raise interest rates.all of these are true.lower demand for money will lower interest rates.greater demand for borrowing will increase interest rates.

One advantage of a variable interest rate over a fixed interest rate is that a variable rate:A.is often lower initially.B.offers borrowers more flexible terms.C.increases when the market rate increases.D.can be used for large purchases.

Which of the following will result in a higher interest rate on a loan?A.A large amount of paperwork necessary to administer the loanB.High resale marketability of the loanC.Short time until the loan must be repaidD.Low risk that the borrower will fail to pay back the loanE.Tax exemption on the interest income for the loanSUBMITarrow_backPREVIOUS

1.Question 1Which of the following statements are true concerning borrowing decisions?1 pointBorrowing decisions are based on rational calculations and transactional analysisBorrowing decisions are based on rational calculations, transactional analysis, as well as psychological and social factorsBorrowing decisions can magnify returns but not lossesMost people in developed countries have more equity than debtWhen interest rates are at historic lows, it is a good idea to borrow