with the rapid growth of subprime mortgages. This type of mortgage is typically lent to people with poor credit at a higher rate than normal residential mortgages in order to account for the increased risk of the loan.1 Subprime lending became legal during the 1980s after three Acts were implemented.2 More specifically‚ the Depository Institutions Deregulation and Monetary Control Act‚ in 1980‚ which preempted state interest rate caps; the Alternative Mortgage Transaction Parity Act‚ in 1982‚ which
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The Long Depression 1873-1878/1896 & Its Similarities to Today’s Great Recession It is often said‚ “That those who do not study the history of the past are doomed to repeat its mistakes‚” This is of particular interest in examining the causes‚ the issues themselves‚ social reform‚ greed‚ credit‚ high unemployment‚ the labor movement‚ technological growth‚ immigration‚ corruption‚ capital and tax issues along with a multitude of other conditions experienced during the Long Depression of 1873-1878
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MBA 6410 Project Part 1 The Financial Accelerator and the Flight to Quality One puzzle that has long plagued business cycle analysis is the existence of large fluctuations in aggregate economic activity that arise from what seem to be small shocks. This anomaly is what motivated the research into the financial accelerator. The financial accelerator is a possible explanation for these disproportional fluctuations. Changes in the credit market amplify and spread the initial shocks. This is explanation
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Preferred stock is a type of equity. Preferred stock is like long-term debt in that it typically promises a fixed payment each year. In this way‚ it is a perpetuity. Preferred stock is also like long-term debt in that it does not give the holder voting rights in the firm. Preferred stock is like common stock (and other equity claims) in that failure to make a preferred stock payment does not set trigger corporate bankruptcy. In the event of corporate bankruptcy‚ preferred stock has a higher priority
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date of the contract. amortized Paid off in stages over a period of time. Each payment on a loan consists of the accrued interest and an amount that is applied to repay the principal. When all of the payments have been made‚ the loan is paid off (fully amortized). anchor currency The currency to which a coutry fixes its exchange rate. annuity An insurance product that provides a fixed stream of payments. appreciation Increase in a currency’s value. arbitrage Elimination of a riskless
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questions in the exam booklet‚ not on this paper) A.1 Which of the following statements with regards to mortgage loans is false? (a) (b) (c) (d) Mortgage loans are usually made on a credit foncier basis. A ‘balloon’ payment may be necessary at maturity. Most life insurance companies specify a minimum amount for mortgage finance‚ usually upwards of $200‚000. The main source of mortgage finance for companies has traditionally been superannuation funds. A.2 A non-bank bill may be more difficult
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Final Examination – Anderson Princiles 1. Airspace above a parcel of land is: (a) real property (b) personal property (c) an encumbrance (d) a fixture 2. All of the following are real property except: (a) fruit trees (b) chattels (c) stock in a mutual water company (d) built-in stove 3. In a dispute over fixtures‚ courts tend to favor: (a) sellers over buyers (b) landlords over tenants (c) lenders over borrowers
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EXERCISES AND PROBLEMS ch 1 Carry Yoki’s Lounge consists of the following. Carry‚ the owner believed that people would come to hear a band play on Friday‚ Saturday‚ and Sunday evening. During the remainder of the week‚ she believed her customers would watch sporting events on several television sets located throughout the lounge. Carry employed two bartenders‚ three servers‚ two assistant servers‚ two cooks‚ one dishwasher and a clean-up person. She had a bar‚ 15 barstools‚ 4 tables‚ 40 chairs
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Chapter 14 Questions 1.Securities in the mortgage markets are collateralized by real estate. 6.The down payment means that if the borrower chooses not make payments on the loan‚ the borrower will suffer some financial loss. This increases the likelihood that the borrower will continue to make the promised payments. 7.Lenders may require private mortgage insurance. 13.The bank accepts the home as security and advances money each month. When the borrower dies‚ the borrower’s estate sells the property
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------------------------------------------------- Top of Form 1. (TCO 1) Which one of the following actions best matches the primary goal of financial management? increasing the net working capital while lowering the long-term asset requirements improving the operating efficiency‚ thereby increasing the market value of the stock increasing the firm’s market share reducing fixed costs and increasing variable costs increasing the liquidity of the firm
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