Valuation and Financing Practice Question
Question
A broker is supervising a transaction file involving discount points. Which statement is the most accurate exam answer? (Item 89)
Answer choices
- A. Recognize prepaid interest used to adjust loan yield.
- B. It is valid only when the buyer pays cash and no lender is involved.
- C. It prevents any later disclosure, even when new facts become known.
- D. It applies only to commercial property and never to residential transactions.
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