9. What is the payment commencing in month 49? 10. What is the loan balance at the end of 60 months?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Assume a 3/1 floating rate mortgage for $700,000 has an
initial rate of 1.75%. The loan resets with a margin of 200
basis points applied to the one-year treasury rate upon reset.
At the end of the initial three year period, the one-year
Treasury is 1.50%. At the end of four years, the one-year
Treasury is 2.00%.
9. What is the payment commencing in month 49?
10. What is the loan balance at the end of 60 months?
Transcribed Image Text:Assume a 3/1 floating rate mortgage for $700,000 has an initial rate of 1.75%. The loan resets with a margin of 200 basis points applied to the one-year treasury rate upon reset. At the end of the initial three year period, the one-year Treasury is 1.50%. At the end of four years, the one-year Treasury is 2.00%. 9. What is the payment commencing in month 49? 10. What is the loan balance at the end of 60 months?
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