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) Amortgage 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)
Answer
4.2
(103 Votes)
Quentin
Master · Tutor for 5 years
Answer
By assessing each statement individually, both the first statement "(1) A mortgage is a form of long-term loan that is secured on an asset: typically land and property" and the third statement "(3) A mortgage may be for a long period: 20 years or more" are true while the second statement is not. Therefore, the correct answer is "(1) and (3)".
Explanation
## Step1: The first part of this problem is to understand what a mortgage is. Definition-wise, a mortgage is a kind of long-term loan where an asset (usually property or land) is used as security or collateral. Thus, statement (1) says that "A mortgage is a form of long-term loan that is secured on an asset: typically land and property" which is a correct description of a mortgage, making it a true statement. ## Step2: The second statement says, "A mortgage is a form of equity and is attached to non-current assets, typically land and property." While a mortgage is indeed attached to assets (like land or property), saying that it is a form of 'equity' is incorrect. Equity refers to the ownership interest in a property or business. It does not refer to money borrowed against a property which what a mortgage essentially is. Therefore, statement (2) is not true about a mortgage. ## Step3: The third statement, "A mortgage may be for a long period: 20 years or more," is also true. Most mortgages are indeed long-term loans that can span several decades, usually between 15 to 30 years, sometimes even more. Hence, statement (3) is true as well.