Group No.
____
I. Identification
1. the bank advances funds to the owner on a monthly schedule to in able him to eliving
expenses he thereby increasing the balance of the loan which in secured by the real estate.
________________
2. Mortgage-backed security is also known as? ________________________
3. is an insurance policy that guarantees to make up any discrepancy between the value of
the property and the loan amount, should a default occur. _________________________
4. the lender lowers the interest rate in the mortgage in exchange for a share of any
appreciation in the real estate (if the property sells for more than a stated amount, the
lender is entitled to a portion of the gain). ______________________________
5. These are loans that are secured by the same real estate that is used to secure the first
mortgage. __________________
6. These mortgages are originated by banks or other mortgage lenders but are guaranteed by
either the government or government-controlled entities. __________________________
7. is tied to some market interest rate, (e.g., Treasury bill rate) and therefore changes over
time.It usually have limits, called caps, on how high (or low) the interest rate can move
in one year and during the term of the loan. _____________________________
8. To obtain a mortgage loan, the lender also requires the borrower to make a down payment
on the property, that is, to pay a portion of the purchase price. ______________________
9. are long-term loan secured by real estate. Both individuals and businesses obtain
mortgages loans to finance real estate purchases. _________________
10. There are contracts to exchange cash flows as of a specified date or a series of specified
dates based on a notional amount and fixed and floating rates. _____________________
İİ. True or False
1. Future contract calls for delivery on a specific date, whereas a forward contract permits
the seller to decide later which specific day within the specified month will be the
delivery date.
2. A derivative is a financial instrument that requires no initial net investment or little net
investment relative to other types of contracts that have a similar response to changes in
market conditions.
3. Forward contract is an agreement between a seller and a buyer that requires that seller to
deliver a particular commodity (say com, gold, or soya beans) at a designated future date,
at a predetermined price.
4. Unlike a futures contract, a forward usually is not traded on a market exchange.
5. Gains and losses on forward contracts are paid only when they are closed out.
