Exam (elaborations)
GEB 3006 FINAL EXAM QUESTIONS AND ANSWERS
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GEB 3006 FINAL EXAM QUESTIONS AND ANSWERS
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GEB 3006 FINAL EXAM QUESTIONS AND ANSWERSIf you buy a larger size of a product, the price per unit (such as price per ounce) will
always be lower. - Answers-False
The price per unit of items bought in a warehouse club such as Sams or Costco will
always be lower than a regular retail store. - Answers-False
Retailers commonly offer new items at significantly higher prices, then plan to market the
goods down later to ultimately achieve the desired gross margin goal. - Answers-True
Which of the following would provide the most objective information about a product? -
Answers-A food product ingredient label.
In most cases, service warranty contracts provide excellent protection and are generally
good deals. - Answers-False
Assume you spent $250 for a pressure washer that will save you $50 a year in rental
costs.
Using simple payback, how long will it take to get your money back? - Answers-5 Years
It is never a good idea to prepay something for a discount due to the risk involved. -
Answers-False
Which of the following statements is TRUE? - Answers-Real estate commissions are
usually 6% and paid by the seller.
Monthly escrow for property taxes and insurance can add up to ____ more to the
mortgage payment. - Answers-40%
PITI stands for principal, interest, taxes and insurance. - Answers-True
The housing expense ratio of PITI divided by gross monthly income should not exceed a
maximum of ____ - Answers-28% for conventional loans and 29% for FHA loans
The total debt ratio of (PITI + long term debt obligations) divided by gross monthly income
should not exceed _____. - Answers-36% for conventional loans and 43% for FHA loans.
Before shopping for a house, buyers should get _______ for their mortgage. - Answers-
Preapproved
Assume a homeowner is paying Private Mortgage Insurance (PMI).
At what point should the homeowner contact the mortgage company and request that
PMI be stopped? - Answers-When the homeowner's equity in the house reaches 20%.
, In order to get the lowest interest available, your FICO score should be: - Answers-760
and above
Assume that a house is sold for $300,000. The square footage is as follows:
Area under air conditioning and heating 2,800 Garage 400 Patio 200 Total 3,400
The cost per square foot as traditionally calculated in the real estate industry is: -
Answers-$107.14
In comparison to a 15 year fixed rate mortgage, a 30 year fixed rate mortgage will: -
Answers-Pay more in total interest over the life of the loan
A homeowner decides to get a second mortgage at 7% to pay down credit card debt with
an interest rate of 20%. While this appears to be a good move, the primary risk is that the
homeowner could lose his/her home if they fail to make payments on the new second
mortgage. - Answers-True
Which of the following would tend to have the highest interest rate at any given time. -
Answers-Home equity line of credit (HELOC)
Fixed rate home mortgages should be refinanced when interest rates - Answers-
Decrease.
Assume you pay $3,000 in closing costs to refinance your mortgage at a new rate of 4%.
You will save $100 per month for the next 30 years. How long must the homeowner stay
in the house using TVM breakeven? - Answers-31.66 months
Which of the following statements is TRUE? - Answers-Early in the life of a mortgage,
most of the payment goes toward interest with very little being applied to principal.
The primary risk of having an adjustable rate (ARM) mortgage is: - Answers-Interest rates
could increase.
Which of the following are features of a conventional or conforming mortgage? - Answers-
All of the above.
Which of the following closing costs are paid by the seller? - Answers-Real estate
commissions.
When purchasing homeowners insurance you should always: - Answers-All of the above.
If you need life insurance because of a large mortgage or dependent children, you should
normally buy: - Answers-Term life because it's cheaper.
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