Why would lenders, in general, tend to set loan maturities (not amortization, but when the loan must be repaid) equivalent to the expected holding period of the property (or longer)?

Q: To which element does the following definition correspond: It is a format where interest and…

A: Loan A loan refers to the amount which is borrowed from a financial or a non-financial institution.…

Q: A mortgage is a O short-term amortized loan that is secured by financial assets. O long-term…

A: A mortgage loan is a secured loan in which you borrow money by pledging your property as collateral…

Q: Which of the following is true of an unsecured loan? A. They are exclusively for cars, houses, and…

A: Loan can be defined as money that somebody lends other person in exchange of some interest that is…

Q: Why is the cost of financing with a sale-leaseback essentially the same as the return from…

A: Introduction: Financing costs are nothing but the interest and other costs that the company incurred…

Q: Give and explain the factors that affect the interest rate on the loan

A: Following are the factors that affect interest rate on the loan:  1. Supply and Demand Interest…

Q: Determine the indifference price for a property that had an assumable below-market-rate loan?

A: Indifference price is the price at which the investor is indifferent to investing in any of the two…

Q: What interest rates should be used in determining the amount of interest to be capitalized? How…

A:

Q: Why is it appropriate to compare the cost of lease financing with that of debtfinancing?

A: Cost of lease financing is the cost that is bear by the lessee who have owned the right from the…

Q: The time value concept/calculation used in amortizing a loan is

A: Time value of money (TVM) means that the amount of money received in the present period will have…

Q: If the lessee and lessor use different interest rates to account for a finance/sales-type lease,…

A: Lease is agreement where lessor (asset owner) allows lessee (tenant) to use lessor’s asset for…

Q: Assuming the borrower is in no danger of default, under what conditions might a lender be willing to…

A: There can be majorly two possibilities under which a lender may accept a lesser amount than that of…

Q: What contingencies are commonly found in permanent or take-out loan commitments? Why are they used?…

A: The contingencies found in permanent or take-out loan commitments and their use are as follows: A…

Q: t relevant assertion should be used to record loans receivable net of an allowance for loan losses…

A: A loan receivable is that the amount of money owed from a human to a creditor (typically a bank or…

Q: What is defined as the interest on a load or principal that is based only on the original amount of…

A: The right answer is option (D) simple interest

Q: What factors must be considered when deciding whether to refinance a loan after interest rates have…

A: Individuals always consider refinancing the loan when interest rate falls because they think they…

Q: What is the process of calculating the remaining balance of different types of loans?

A: The remaining balance of a credit plan equation can be part of two sections, the future estimation…

Q: Security deposits, which are refundable to the lessee upon lease termination, are treated as prepaid…

A: Leases is an agreement or contract between two parties under which one party provides it's asset for…

Q: What does “assignment” mean and why would a lender want to assign a mortgage loan?

A: Mortgage assignments refer to a document that shows that a mortgage is transferred from the original…

Q: How are leases and installment notes the same? How do they differ?

A: Lease  Lease is a contractual agreement whereby the right to use an asset for a particular period of…

Q: What is the indifference point under the net present value? When would there be a discount on a…

A: SOLUTION- NET PRESENT VALUE = PRESENT VALUE OF CASH INFLOW - PRESENT VALUE OF CASH OUTFLOW.

Q: What is meant by the term “off-balance sheet financing”? When do leases provide such financing and…

A: Financing in the normal course means the company has taken a loan from the investor when there is a…

Q: Why might a wraparound lender provide a wraparound loan at a lower rate than a new first mortgage?

A: Introduction: Wraparound mortgage is a type of loan in which loans are given to borrowers, who is…

Q: What is meant by a “purchase-money” mortgage loan? When could a loan not be a purchase-money…

A: A purchase-money mortgage loan is a loan that home sellers provide to the buyers of the home. Buyers…

Q: If there is evidence that an impairment loss on loans and receivables has been incurred, the amount…

A: Impairment Loss = Carrying Value - Recoverable amount Recoverable Amount is higher of the…

Q: Loans and receivable should be measured subsequent to initial recognition at *   a. Amortized cost…

A: The question is multiple choice question. Required  Choose the Correct Option.

Q: How does compound interest affect the loans you undertake? For example, how would this  affect…

A: Interest is an additional value which is charged on borrowed or deposited amount. Interest can be an…

Q: How is interest expense determined in a finance lease transaction? How does the approach compare to…

A: Lease:   Lease refers to a contractual agreement whereby the right to use an asset for a particular…

Q: If a person charges interest on a loan transaction equivalent to the inflation rate than will it be…

A: Time value of the money is the value of the money which a person must use in order to know how much…

Q: When a company sells an asset and simultaneously leases it back, what criteria must be met to apply…

A: Sale-Leaseback approach:   In the sale-leaseback approach, the owner of the leased asset sells it…

Q: What is a compensating balance? What effect does a compensatingbalance requirement have on the…

A:

Q: The borrowing base used to guarantee collateral on an operating line of credit is highly dependent…

A: Borrowing base means the maximum amount that a borrower can borrow from a lender. Any excess of…

Q: When dealing in the world of mortgage pools and derivative investments, the notion of effective…

A: Effective duration usage is generally in the case of hybrid securities that can be further…

Q: In the PMT function, what is not true about the rate argument? Group of answer choices It assumes an…

A: Rate argument in PMT function is required and not optional and it assumes annual interest rate and…

Q: How does mortgage securitisation impact the financial market?

A: Mortgage securitisation or mortgage backed security is similar to a bond and is made up of a bundle…

Q: RUE OR FALSE? The effect of a lender agreeing to give the borrowing entity a grace period after the…

A: Current liabilities: Current liabilities are the obligations that are to be met within a year or 12…

Q: Which alternative should the borrower choose, assuming he will own the property for the full loan…

A: Mortgage: It is the loan taken for the purchase of a house or any specific land or other sorts of…

Q: When an asset is acquired and a note payable is assumed, explain how acquisition cost of the asset…

A:

Q: Should liability for rent deposit be amortized? Why or why not?

A: The assets are amortized as they provide benefits for the long period.

Q: The original amount of money in a loan transaction is known as what?

A: Introduction: A loan is nothing but an amount of money lent from one or more individuals or…

Q: Collateral security is used by the lender when interest is not paid on time the loan is not repaid…

A: Collateral is type of a security that the borrower gives to the lender as a security the loan taken.…

Calculating the Return On A Loan