Principle Mini quiz 9 - 17

Principle Mini quiz 9 - 17 - QUIZ What would be...

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QUIZ What would be characteristic of a market in transition from buyer's market to seller's market? Correct Answer > A. Prices would rise as supply decreases and demand increases Your answer was CORRECT Explanation: A seller's market is one that benefits sellers, in that prices are higher. Under the theory of supply and demand, higher prices are created by increased demand and diminished supply. The interest rate on a deed of trust would be most profoundly influenced by which of the following? Correct Answer > C. Supply of and demand for money Your answer was CORRECT Explanation: Interest rates are most directly influenced by the supply of and demand for loan funds. Increased demand for and decreased supply of funds available for mortgages will drive interest rates higher. All of the following factors would influence the movement of mortgage interest rates directly, except:
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Correct Answer > A. the rate of unemployment Your answer was CORRECT Explanation: In an inflationary market, interest rates would tend to rise. When interest rates are high and available funds are scarce, it is known as a tight money market. On the other hand, the rate of unemployment has no direct impact on the supply of and demand for mortgage funds. (It may, however, affect the money market indirectly. Higher unemployment generally means that fewer people are able to consider purchasing homes, so that the demand for mortgage funds decreases.) Which of the following will decrease the available supply of funds for mortgage lending? Correct Answer > D. A rise in the rates paid by government bonds Your answer was CORRECT! Explanation: If there is an increase in the yields paid by investments (such as stocks or bonds) that can be seen as competition to placing money in savings (or investing directly in mortgage-backed securities), then more investment funds will be directed into those and less money will be available for mortgage lending. More savings and more savable income will result in an increase in funds available for mortgage lending. And a decrease in demand for mortgage loans will result in an increase in the supply of available funds. If the Federal Reserve implemented a tight money policy, that would increase the: Correct Answer > D. use of second deeds of trust to finance home purchases Your answer was CORRECT Explanation:
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In a tight money market, interest rates increase. This may make it impossible for consumers to purchase properties that they would be able to purchase under normal economic conditions. To facilitate the sale of their property in a tight money market, sellers may need to provide secondary financing, taking back a second deed of trust to cover part of the purchase price and closing costs. In a tight money market, home sales and construction would be diminished because of the scarcity of funds. The Federal Reserve could create a tight money market by:
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This note was uploaded on 01/29/2012 for the course REAL 1 taught by Professor Haynes during the Fall '11 term at West Valley.

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Principle Mini quiz 9 - 17 - QUIZ What would be...

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