The value of the nicest home on the block will be reduced by the existence of inferior properties on the same block. This is known as the principle of:
a. regression.
b. highest and best use.
c. progression.
d. substitution.
Answer: a. regression.
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When the assets and liabilities of an FI are not equal in size, efficient hedging of interest rate risk can be achieved by
A. increasing the duration of assets and increasing the duration of equity. B. issuing more equity and reducing the amount of borrowed funds. C. not exactly matching the maturities of assets and liabilities. D. issuing more equity and investing the funds in higher-yielding assets. E. efficient hedging cannot be achieved without the use of derivative securities.
When you receive and record a gift deed, which could adversely affect your title?
A. Creditors of the grantor B. Rights of parties in possession C. Prior unrecorded deeds given for valuable consideration D. All of these