The duration of a $200,000 fixed-rate, 15-year mortgage with a nominal annual rate of 5.5% is 7. Required: Calculate the expected percentage change in value if the required rate decrease to 5 % immediately after the mortgage is issued.

The duration of a $200,000 fixed-rate, 15-year mortgage with a nominal annual rate of 5.5% is 7. Required: Calculate the expected percentage change in value if the required rate decrease to 5 % immediately after the mortgage is issued.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 18P

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The duration of a $200,000 fixed-rate, 15-year mortgage with a nominal annual rate of 5.5% is 7.

Required: Calculate the expected percentage change in value if the required rate decrease to 5 % immediately after the mortgage is issued.

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