Question
Which of the following statement(s) is/are true? (Select the correct answer from the options below the statements) (1) A mortgage is a form of long-term loan that is secured on an asset, typically land and property (2) A mortgage is a form of equity and is attached to non-current assets, typically land and property (3) A mortgage may be for a long period: 20 years or more (1) and (3) (1) only (1) and (2) (2) and (3) - Previous
Answer
4.5
(217 Votes)
Ralph
Elite · Tutor for 8 years
Answer
(1) and (3)
Explanation
## Step1: The statements should be evaluated individually for their truthfulness in relation to mortgages.Statement (1) indicates that "A mortgage is a form of long-term loan that is secured on an asset, typically land or property." This definition aligns with the typical understanding of a mortgage. A mortgage is indeed a type of long-term loan which is secured by collateral - often real property like a home or land. Statement (2) asserts that "A mortgage is a form of equity and is attached to non-current assets, typically land and property." This statement is false. While a mortgage is attached to real property, it is not a form of equity. Mortgages are liability or debt-based financial instruments, not claims on the value of the property (equity). Lastly, statement (3) declares that "A mortgage may be for a long period: 20 years or more." Again, this is true. Mortgages typically involve loan agreements that last multiple decades, with 20, 30, or even 40 year mortgages being fairly common.## Step2: Combining the analysis of individual statements, with the options below these statements, only statements (1) and (3) are true, while the statement (2) is false.## Step3: Based on the defined format, present the correct option 'statements (1) and (3)' as the choice that correctly identifies the true statements.