Podcast
Questions and Answers
What is the primary return a lender expects on an investment?
What is the primary return a lender expects on an investment?
- Dividends
- Capital appreciation
- Liquidity
- Interest (correct)
What is the term for recapturing the amount originally invested?
What is the term for recapturing the amount originally invested?
- Yield of investment
- Return *on* investment
- Return *of* investment (correct)
- Capital gain
Which of the following is an example of an ownership investment?
Which of the following is an example of an ownership investment?
- Government bonds
- Savings account
- Corporate stock (correct)
- Certificates of deposit
Which investment type is characterized by generating interest income?
Which investment type is characterized by generating interest income?
What is the role of the Securities and Exchange Commission (SEC)?
What is the role of the Securities and Exchange Commission (SEC)?
What does the term 'principal' refer to in the context of a loan?
What does the term 'principal' refer to in the context of a loan?
From a lender's perspective, what is a loan considered?
From a lender's perspective, what is a loan considered?
What is the purpose of diversification in investment?
What is the purpose of diversification in investment?
Which of the following is a risk faced by mortgage lenders?
Which of the following is a risk faced by mortgage lenders?
Which of the following best describes the relationship between risk and yield for investors?
Which of the following best describes the relationship between risk and yield for investors?
What is the primary purpose of diversifying an investment portfolio?
What is the primary purpose of diversifying an investment portfolio?
Which of these represents a risk specifically associated with lending money?
Which of these represents a risk specifically associated with lending money?
Interest is a lender's primary return on the investment.
Interest is a lender's primary return on the investment.
What happens to market interest rates when the demand for mortgage funds exceeds the supply?
What happens to market interest rates when the demand for mortgage funds exceeds the supply?
In a loan agreement, the term provision primarily addresses the:
In a loan agreement, the term provision primarily addresses the:
Which of the following is considered a debt investment?
Which of the following is considered a debt investment?
What does the purchaser of a bond pay?
What does the purchaser of a bond pay?
Investors provide capital expecting to lose their initial investment.
Investors provide capital expecting to lose their initial investment.
Debt investments include loans, bonds, and savings accounts.
Debt investments include loans, bonds, and savings accounts.
The Securities and Exchange Commission regulates issuance and trading of securities.
The Securities and Exchange Commission regulates issuance and trading of securities.
Flashcards
Investment Capital
Investment Capital
Wealth accumulated through savings and made available to fund businesses, projects, or transactions.
Return on Investment
Return on Investment
The profit earned on an investment, exceeding the initial investment amount.
Return of Investment
Return of Investment
Getting back the original amount invested. Breaking even.
Ownership Investments
Ownership Investments
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Debt Investments
Debt Investments
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Mortgage Principal
Mortgage Principal
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Interest on a Mortgage
Interest on a Mortgage
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Loan as an Investment
Loan as an Investment
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Return on Investment (ROI)
Return on Investment (ROI)
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Asset Appreciation
Asset Appreciation
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Mortgage Loan
Mortgage Loan
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Loan Term
Loan Term
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Face Amount (or principal)
Face Amount (or principal)
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Risk and Yield Relationship
Risk and Yield Relationship
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Diversification in Investments
Diversification in Investments
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Risk of Default
Risk of Default
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Interest Rate Risk
Interest Rate Risk
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Prepayment Risk
Prepayment Risk
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Study Notes
Learning Objectives
- Identify key characteristics of investment.
- Explain how homebuyers use loans to purchase homes and how investment principles affect residential financing.
- List types of investments (ownership, debt, and securities).
- Distinguish between features and benefits of investment types.
- Discuss how investment characteristics (safety, liquidity, yield) affect investment risk.
- Discuss diversification and its effect on risk.
- Describe mortgage lender risks (default, loss, interest rate, prepayment).
- Summarize how market interest rates affect mortgage lending.
Suggested Lesson Plan
- Overview of Chapter 1 (Finance and Investment), reviewing learning objectives.
- Present lesson content, including:
- Borrowing money for a home
- Mortgage financing and affordability
- Discussing how mortgage financing works
- Identifying types of investments
- Explaining investment risk
- Detailing the concepts of risk of default, loss, interest rate, and investment.
- Highlighting the factors that influence market interest rates, including how they affect mortgage lending.
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Description
Test your knowledge on the key concepts in finance and investment, focusing on how homebuyers use loans and the principles behind different types of investments. This quiz will challenge you to identify investment characteristics, risks, and the impact of market interest rates on mortgage lending.
