Assume a $250,000 mortgage loan with 15-year term. The lender is charging an annualinterest rate of 8% and three discount points at origination. Other up-front financing costspaid to other service providers (i.e., not the lender) total $1,000. What is the lender's yieldon the loan? Assume monthly payments and no prepayment prior to loan maturity.8.80%O 8.51%O 0.71%○ 8.58%

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Assume a $250,000 mortgage loan with 15-year term. The lender is charging an ahh interest rate of 8% and three discount points at origination. Other up-front financing cos paid to other service providers (i.e., not the lender) total $1,000. What is the lender's yie on the loan? Assume monthly payments and no prepayment prior to loan maturity. ○ 8.80% O 8.51% 0.71%

Assume a $250,000 mortgage loan with 15-year term. The lender is charging an ahh interest rate of 8% and three discount points at origination. Other up-front financing cos paid to other service providers (i.e., not the lender) total $1,000. What is the lender's yie on the loan? Assume monthly payments and no prepayment prior to loan maturity. ○ 8.80% O 8.51% 0.71%

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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Concept explainers

Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.

Question

Assume a $250,000 mortgage loan with 15-year term. The lender is charging an annual
interest rate of 8% and three discount points at origination. Other up-front financing costs
paid to other service providers (i.e., not the lender) total $1,000. What is the lender's yield
on the loan? Assume monthly payments and no prepayment prior to loan maturity.
8.80%
O 8.51%
O 0.71%
○ 8.58%

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