Asked by Chris Milano on May 28, 2024
Verified
What is a sub-prime housing loan?
A) A housing loan made at an interest rate below the prime rate.
B) A housing loan made at a low interest rate to a unqualified customer.
C) A housing loan made at a high interest rate to a unqualified customer.
D) A housing load made at a fixed rate of interest.
Sub-prime Housing Loan
A type of loan that is offered at a rate above prime to individuals who do not qualify for prime rate loans, often due to a poor credit history.
Prime Rate
The Prime Rate is the interest rate that commercial banks charge their most credit-worthy customers, often used as a benchmark in setting rates for various types of loans.
Unqualified Customer
A customer who does not meet the necessary criteria or requirements set by a business or a regulatory body to purchase certain products or services.
- Understand the concept and implications of sub-prime lending.
Verified Answer
JW
jessica wynneMay 30, 2024
Final Answer :
C
Explanation :
A sub-prime housing loan is a loan provided to a borrower who has a poor credit history or does not meet the typical requirements for a prime loan. These loans often come with a higher interest rate because the borrower is seen as a higher risk.
Learning Objectives
- Understand the concept and implications of sub-prime lending.