Valuation and Financing Practice Question
Question
A salesperson is explaining a concept to a client involving discount points. Which statement is the most accurate exam answer? (Item 69)
Answer choices
- A. Recognize prepaid interest used to adjust loan yield.
- B. It is primarily a tax rule with no effect on brokerage practice.
- C. It removes the need for written disclosure if the licensee believes the client already knows.
- D. It can be ignored if the transaction is expected to close quickly.
Correct Answer
A. Recognize prepaid interest used to adjust loan yield.
Explanation
The correct answer is A because discount points requires candidates to recognize prepaid interest used to adjust loan yield. The other options overstate the effect of custom, oral agreement, escrow, or independent salesperson action and do not reflect safe California exam practice.
Question details
- Difficulty: hard
- Domain: Valuation and Financing
- Objective: discount points