The term "mortgage annual constant" refers to which of the following?

The mortgage annual constant represents the fraction of the mortgage amount that is paid annually as part of the regular mortgage payments. It is essentially the total annual payment divided by the original loan amount, which includes both principal and interest. This value helps lenders and borrowers understand the total cost of borrowing on an annual basis and allows for quick comparisons between different loans based on their payment structures.

In this context, the mortgage capitalization rate (Rm) reflects the relationship between the annual payments and the outstanding mortgage amount, making it the correct answer. It provides a clear measure of the cost associated with the mortgage, allowing those involved in financing or real estate investments to assess the financial implications of their decisions effectively.

The other terms do not directly relate to the concept of mortgage annual constant. Net operating income pertains to the income generated from a property after operating expenses, the overall yield rate involves the total return on an investment including cash flows over time, and effective gross income refers to the total income a property generates after accounting for vacancy and credit losses, none of which specifically describe the annual payment structure of a mortgage.