What’s your Borrowing I.Q.? Take the Test and Win the Title

Here’s a chance for you to test your borrowing intelligence quotient.  Some of the questions were covered in previous posts and some are brand new material.  I’ve wanted to be the devious professor who gives the brutally hard test with no notice.  Remember, I’m the professor so there’s only one right answer to each question, mine.  So here you go.  Good luck.

  1. When the rate of return on an investment is greater than the interest rate on borrowed money used to finance some or all of the investment,  ____________ _____________ is generated.
  2. My primary residence is an investment.  True or false? _____________
  3. The 30-year fixed rate mortgage has built-in ________________ that allows you to go back to the 30-year payment from the optional 15-year payment.
  4. You can create a ___________________ 15-year mortgage by making additional principal payments on a 30-year mortgage.
  5. Consolidating your banking business can lead to better terms and pricing on bank loans and other products.  True or false? _____________
  6. The cost of debt should never be a primary factor in the decision to buy or invest.  True or false? _____________
  7. Making extra principal payments as a form of forced savings is a good use of your money.  True or false? _____________
  8. Financing and tax considerations are always a primary factor in evaluating any major purchase or investment.  True or false? _____________
  9. A person that uses most or all of their investible cash during their lifetime to repay their mortgage will eventually end up __________ rich and __________ poor.

10. It’s a good idea to borrow money for a major purchase assuming your business sales or personal income will grow substantially in the future.  True or false? _____________

Send your answers by leaving a comment to this post.  I’ll announce the winner in a future post.  The honorary rank of Pro Borrower will be given to the person with the highest score.  In the case of a tie, the first person’s answers received will win the title.  Good luck and thanks for participating.

About Michael Shelton

Your Business Coach Facilitating Delegation and Work Group Engagement Michael Shelton has over twenty-five years of business and military accomplishments, including extensive experience with one of the largest, publicly traded real estate investment trusts (REIT). He is a qualified business coach with assignments in cross-functional work group management, strategic planning, unit leadership, joint venture acquisitions, executive education, mentoring, training and merger integration. Michael has accumulated best practices for building committed work groups from more than $4 billion of capital markets transactions and commercial property development. He served as a commissioned officer and helicopter pilot in the U.S. Army, and earned his MBA from The University of Arizona. Michael has served as a major conference panelist and is the author of Cash Flow Rich, Winning Ways to Evaluate and Finance Real Estate. Today, he helps business owners get more work group engagement as President and CEO of Shelton Business Services, LLC in Scottsdale, Arizona. Disclaimer: I don't offer investment, legal or tax advice. Talk to your broker, accountant or lawyer for investment, tax and legal help. I might own stock in the companies I mention on-line. My posts, tweets and other on-line activity are my personal thoughts and don't represent my employer or company.
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