QUESTION 1 A bank makes a 30 year Fully Amortizing FRM for $2,000,000 at an annual interest rate of 4.75% compounded monthly, with monthly payments. What is the difference between the balance and the market value of the loan after 36 monthly payments if the interest rate rises to 5%? (Give the absolute value of the difference, so the answer should be a positive number.) QUESTION 2 A bank makes a 30 year Fully Amortizing FRM for $1,600,000 at an annual interest rate of 5% compounded monthly, with monthly payments. Suppose inflation is 2% per year, compounded monthly. What is the real value of the 120th payment? QUESTION 3 Assume the initial rate on a 1/1 ARM is 3.50%. The loan has a margin of +275 basis points above Libor. In one year after the loan is originated, the Libor is 2.00%. What is the fully indexed rate on the loan in one year? Save Click Save and Submit to save and submit. Click Save All Answers to save all answers. 45°F

QUESTION 1 A bank makes a 30 year Fully Amortizing FRM for $2,000,000 at an annual interest rate of 4.75% compounded monthly, with monthly payments. What is the difference between the balance and the market value of the loan after 36 monthly payments if the interest rate rises to 5%? (Give the absolute value of the difference, so the answer should be a positive number.) QUESTION 2 A bank makes a 30 year Fully Amortizing FRM for $1,600,000 at an annual interest rate of 5% compounded monthly, with monthly payments. Suppose inflation is 2% per year, compounded monthly. What is the real value of the 120th payment? QUESTION 3 Assume the initial rate on a 1/1 ARM is 3.50%. The loan has a margin of +275 basis points above Libor. In one year after the loan is originated, the Libor is 2.00%. What is the fully indexed rate on the loan in one year? Save Click Save and Submit to save and submit. Click Save All Answers to save all answers. 45°F

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 17P

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