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
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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Please show all work for 1 & 2
Transcribed Image Text: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 All Answ
Click Save and Submit to save and submit. Click Save All Answers to save all answers.
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