Homework 10 (Due Monday, Oct. 24th)

Please add the following terms to your lecture notes. I did not get a chance to cover these in class. 

Liability is basically a requirement to pay income in the future. For example, if you do not own your vehicle outright, you are liable to pay the car payment each month. 

A loan is a lending agreement between the lender and the borrower. For example, before I paid off my car, my car loan was through Capital One. Capital One was the lender and I was the borrower at that time. I was required to adhere to the terms of the loan. 

If you stop paying your car payment each month, you default on the loan. 

A loan backed-security (otherwise known as a mortgage-backed security) is a large financial asset that is formed by pooling individual loans (for example home loans or mortgages) and selling shares in the pool to investors. 

I encourage you to become familiar with all the many terms provided in the Module 59 Power Point. I mainly focused on retirement in my lecture. 

Homework Directions: 

Watch the following video below regarding mortgage-backed securities (otherwise known as loan-backed securities), and provide a two paragraph summary in your own words. Make sure each paragraph includes five full sentences. 

https://www.youtube.com/watch?v=QwrO6jhtC5E Links to an external site.