Question

FHA, Veteran's Administration (VA) loans, and other government-subsidized loans presented by realtors to their customers are designed primarily to help people

	a.	purchase cars.
	b.	address excessive credit card balances.
	c.	pay for college for their children.
	d.	pay realtor fees.
	e.	purchase a home.

Private Mortgage Insurance (PMI) is used to

	a.	maintain monthly mortgage payments if the consumer becomes ill.
	b.	reimburse the original purchase value of the house to the bank if the borrower defaults.
	c.	insure the borrower against damage to the home.
	d.	insure the bank to receive at least 20% of the original purchase value of the house if the borrower defaults.
	e.	insure the bank against the loss of housing value relative to the mortgage.

I am offered by banks (or, more precisely, depository institutions). I promise to pay interest from a fixed beginning date to a fixed maturity date. Customer withdrawal before maturity results in a penalty. Who am I?

	a.	a Savings Deposit
	b.	a Certificate of Deposit
	c.	a Money Market Mutual Fund
	d.	a Money Market Deposit Account
	e.	a Checking Account

Answer 1

Answer 1:

Correct answer is:

e. purchase a home

Explanation:

FHA, Veteran's Administration (VA) loans, and other government-subsidized loans presented by realtors to their customers are designed primarily to help people primarily to purchase a home.

US department of Veteran Affairs intervene when a veteran is having trouble making their home payments

As such option e is correct and other options a, b, c and d are incorrect.

Answer 2:

Correct answer is:

b.	reimburse the original purchase value of the house to the bank if the borrower defaults.

Explanation:

Private Mortgage Insurance (PMI) is for mortgage lender's benefit to pay the balance due to the mortgage lender in the event borrower default on the home loan. This is required to be taken in case when down payment is less than 20%.

As such option b is correct and other options a, c, d and e are incorrect.

Answer 3:

Correct answer is:

b.	a Certificate of Deposit

Explanation:

Certifcate of deposits are pays fixed interest from a fixed beginning date to a fixed maturity date. Customer withdrawal before maturity results in a penalty.

Savings Deposit does not charge penalty on withdrawal.

Checking account does not pay interest.

Money Market Mutual Fund and a Money Market Deposit Account do not pay interest from a fixed beginning date to a fixed maturity date.

As such option b is correct and other options a, c, d and e are incorrect.