Question

Which of the following statements is true?

	a.	Due to payment risk, the interest rates at the beginning of a fixed rate mortgage and adjustable rate mortgage of the same term are the same.
	b.	The monthly payment on a 15 year fixed rate mortgage equals exactly two times the monthly payment on a 30 year fixed rate mortgage with the same interest rate.
	c.	Both of the above statements are true.
	d.	Neither of the above statements are true.

I am offered by banks and am considered a bank deposit. I pay interest to the depositor, but offer a restriction regarding the maximum number of checks that can be written per month. Who am I?

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

In the context of a home mortgage, escrow refers to monthly consumer payments to a bank account that

	a.	covers the one-time costs needed to purchase a home.
	b.	divides the payment into interest and principal.
	c.	covers payments to property taxes and sometimes homeowner's insurance.
	d.	establishes a line of credit based on the mortgage.
	e.	enables the bank to sell the mortgage.

Answer 1

1. d) Neither d the above statements are true

As, theinterest rates at the begining of a fixed rate mortgage and adjustable rate mortgage of the same term are not same, the adustable rate mortagage is set below the market rate in comparison to fixed rate mortagage. and

when the period of loan is more ,interest is more paid in comparison to shorter period loan although the emi amount is much lesser than shorterm loan.

2. d a ) Money Market Deposit Account

As it put restriction on the numbers of deposits and withdrwal that can be made each month.

3 .c) Covers payments to property taxes and some times homeowners insurance

An escrow account refers to a saving account which is managed by mortgage servicer.escrow account cover the the estimated real estate taxes and insurance premiums of home owner.