Subprime Lending and NINJA Loans Quiz
18 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the defining characteristic of NINJA loans?

  • No need for proof of income or assets (correct)
  • Verification of income and assets
  • Low interest rates for the first year
  • High profitability for lenders

What unethical behavior did banks engage in with NINJA loans?

  • Strict adherence to all regulations
  • Making no effort to verify the ability to pay (correct)
  • Excessive verification of applicant details
  • Raising interest rates abruptly

How did subprime lending differ from traditional mortgage lending?

  • Higher risk for lenders (correct)
  • Lower risk for lenders
  • Higher interest rates for borrowers
  • Lower profitability for lenders

What impact did the rise in interest rates have on borrowers with teaser rate mortgages?

<p>Higher monthly payments (D)</p> Signup and view all the answers

What were the consequences faced by borrowers when property prices stagnated in 2006?

<p>Difficulty in repaying the loan (B)</p> Signup and view all the answers

In what way did the film The Big Short illustrate the financial crisis?

<p><em>The Big Short</em> revealed people who predicted the crisis (B)</p> Signup and view all the answers

What unethical behavior was exhibited by brokers and lenders in the context of selling mortgages?

<p>Selling mortgages to customers who were likely to default (B)</p> Signup and view all the answers

What strategy did big lenders like Countrywide employ by offering loans for 80% of the mortgage along with second loans for the remaining 20%?

<p>NINJA loans (C)</p> Signup and view all the answers

What is one of the causes of the global financial crisis as mentioned in the text?

<p>Growth of the financial sector disproportionate to other industries (A)</p> Signup and view all the answers

What shift in focus is noted about bankers in relation to the financial sector?

<p>Concentrating on writing algorithms for faster trades (A)</p> Signup and view all the answers

What did the financial sector increasingly create instead of focusing on personal and business finance needs?

<p>Secondary and derivative markets for trading financial instruments (C)</p> Signup and view all the answers

Which term is associated with providing loans to individuals who have No Income, No Job, and No Assets?

<p>NINJA loans (D)</p> Signup and view all the answers

What percentage of mortgages sold were accounted for by mortgage brokers, according to the text?

<p>60% (B)</p> Signup and view all the answers

In what percentage of cases investigated, customers had self-certified their income?

<p>50% (C)</p> Signup and view all the answers

Which major mortgage lender approached the government for support in September 2007?

<p>Northern Rock (A)</p> Signup and view all the answers

What type of obligations were used to slice loans into tranches when packaging mortgages into securities?

<p>Collateralised debt obligations (C)</p> Signup and view all the answers

Which bank required a £45 billion bailout from the UK government in September 2008?

<p>RBS (D)</p> Signup and view all the answers

What year did Lehman Brothers fail when it could not sell its vast tranches of mortgage-backed securities?

<p>2008 (A)</p> Signup and view all the answers

More Like This

Quiz
4 questions

Quiz

ImprovingTundra avatar
ImprovingTundra
0% APR and Subprime Lending
44 questions

0% APR and Subprime Lending

UnselfishUnderstanding avatar
UnselfishUnderstanding
Subprime Mortgage Crisis
4 questions
Subprime Lending Market Overview
65 questions

Subprime Lending Market Overview

StateOfTheArtGuitar9327 avatar
StateOfTheArtGuitar9327
Use Quizgecko on...
Browser
Browser