A borrower is interested in comparing the monthly payments on four otherwise equivalent 30 year FRMs. All of the loans are for $300,000 and have a 5.0% interest rate. Rank the loans in size order of their monthly payments from smallest to largest: 1) Fully amortizing ($0 balance remaining at the end of the loan term) 2) Interest-Only ($300,000 balance remaining at the end of the loan term) 3) Partial Amortization ($200,000 balance remaining at the end of the loan term) 4) Negative Amortization ($400,000 balance remaining at the end of the loan term) a) 1, 2, 3, 4 b) 4, 3, 2, 1 c) 4, 2, 3, 1 d) 1, 3, 2, 4
A borrower is interested in comparing the monthly payments on four otherwise equivalent 30 year FRMs. All of the loans are for $300,000 and have a 5.0% interest rate. Rank the loans in size order of their monthly payments from smallest to largest: 1) Fully amortizing ($0 balance remaining at the end of the loan term) 2) Interest-Only ($300,000 balance remaining at the end of the loan term) 3) Partial Amortization ($200,000 balance remaining at the end of the loan term) 4) Negative Amortization ($400,000 balance remaining at the end of the loan term) a) 1, 2, 3, 4 b) 4, 3, 2, 1 c) 4, 2, 3, 1 d) 1, 3, 2, 4
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
Problem 1PS
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A borrower is interested in comparing the monthly payments on four otherwise equivalent 30 year FRMs. All of the loans are for $300,000 and have a 5.0% interest rate. Rank the loans in size order of their monthly payments from smallest to largest: 1) Fully amortizing ($0 balance remaining at the end of the loan term) 2) Interest-Only ($300,000 balance remaining at the end of the loan term) 3) Partial Amortization ($200,000 balance remaining at the end of the loan term) 4) Negative Amortization ($400,000 balance remaining at the end of the loan term)
a) 1, 2, 3, 4
b) 4, 3, 2, 1
c) 4, 2, 3, 1
d) 1, 3, 2, 4
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