Suppose a borrower with two mortgages deffaults. At the time of the default, the first lien has a balance of $200,000, and the second lien has a balance of $50,000. The borrower owes $5,000 in property taxes. The house sells for $150,000 in a foreclosure auction. How much of a deficiency will the first lien lender have? $150,000 O $55.000

Suppose a borrower with two mortgages deffaults. At the time of the default, the first lien has a balance of $200,000, and the second lien has a balance of $50,000. The borrower owes $5,000 in property taxes. The house sells for $150,000 in a foreclosure auction. How much of a deficiency will the first lien lender have? $150,000 O $55.000

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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3. Mr. H needs to borrow $13,000 for 3 years. He has a poor financial history, most lenders are willing to charge him a higher interest rate. He eventually finds a lender who would lend him the money at a rate of 15% per annum, compounded monthly. How much will Mr. H have to pay in compound interest to the lender? O O A) The compound interest Mr. H will have to pay is $7,331.22. The compound interest Mr. H will B) have to pay is $7,891.21. The compound interest Mr.H will C) have to pay is $5, 745.86. The compound interest Mr. H will D) have to pay is $6,777.07.
What if the seller’s repairs were $50,000? What if the first mortgage balance was $250,000
The Nicols are buying a house selling for $235,000. They pay a down payment of $35,000 from the sale of their current house. To obtain a 15-year mortgage at a 5% interest rate, the Nicols must pay 3.5 points at the time of closing. a) What is the amount of the mortgage? b) What is the cost of the 3.5 points?
If Bobby takes out a mortgage for 30 years at an interest rate of 4% and his monthly repayments are $835.48, what is the loan principal (that is, the balance of the loan at drawdown)? Give your answer to the nearest ten dollars. Do not include commas or the dollar sign in your answer.
15. Mortgage payments Mortgages, loans taken to purchase a property, involve regular payments at fixed intervals and are treated as reverse annuities. Mortgages are the reverse of annuities, because you get a lump-sum amount as a loan in the beginning, and then you make monthly payments to the lender. You've decided to buy a house that is valued at $1 million. You have $300,000 to use as a down payment on the house, and want to take out a mortgage for the remainder of the purchase price. Your bank has approved your $700,000 mortgage, and is offering a standard 30-year mortgage at a 12% fixed nominal interest rate (called the loan's annual percentage rate or APR). Under this loan proposal, your mortgage payment will be per month. (Note: Round the final value of any interest rate in percentage form to four decimal places.) Your friends suggest that you take a 15-year mortgage, because a 30-year mortgage is too long and you will pay a lot of money on interest. If your bank approves a…
Ten years ago Jim took a mortgage loan of $200,000 to be repaid in 20 equal annual installments of $30,197.34. The bank has told him that they would accept $145,000 today as payment in full for the remainder of the loan. What is the balance on this loan? If we assume that Jim has the money, what interest rate must he earn on alternative investments in order not to accept the bank offer?
2. Suppose you bought a condo for $200,000 financing it with a $40,000 down payment of your own funds and a $160,000 mortgage loan from a bank. D.you only put down $20,000 and borrowed $230,000 to buy the $250,000 house. Assuming that the market value of your house has fallen to $210,000 and ignoring interest and other costs, calculate your rate of return on your asset (ROA) and your rate of return on equity (ROE).
Consider two 1-year loans with a principal of $1 million and a default probability of 2% each. Assume that if one loan defaults, the other does not. Assume that in the event of default, the loan leads to a loss that can take any value between $0 and $1 million with equal probability, i.e., the probability that the loss is higher than $x million is 1-x. If a loan does not default, it yields a profit equal to $0.02 million. a) Compute the 1-year 99% Value at Risk (VaR) and Expected Shortfall (ES) of a single loan. b) Compute the 1-year 99% VaR and ES for the portfolio of both loans. c) Does the VaR and the ES satisfy the subadditivity property in this case?
13. Mortgage payments Mortgages, loans taken to purchase a property, involve regular payments at fixed intervals and are treated as reverse annuities. Mortgages are the reverse of annuities, because you get a lump-sum amount as a loan in the beginning, and then you make monthly payments to the lender. You've decided to buy a house that is valued at $1 million. You have $100,000 to use as a down payment on the house, and want to take out a mortgage for the remainder of the purchase price. Your bank has approved your $900,000 mortgage, and is offering a standard 30-year mortgage at a 10% fixed nominal interest rate (called the loan's annual percentage rate or APR). Under this loan proposal, your mortgage payment will be per month. (Note: Round the final value of any interest rate used to four decimal places.) Your friends suggest that you take a 15-year mortgage, because a 30-year mortgage is too long and you will pay a lot of money on interest. If your bank approves a 15-year, $900,000…
n this economy, there are 10,000 borrowers. Each person borrows $100 for a 1 year loan. For the lender not to make a loss, the lender must set an interest rate such that they earn at least as much as their outside option of not lending to people from all borrowers that did not default in this economy. In this case, the outside option is the risk-free interest rate on a 1-year US Treasury securtiy. The 1-year USTS pays annual interest rate of i = 0.03. What is the minimum interest rate that the lender will charge to borrow money in this economy
K The Nicols are buying a house selling for $345,000. They pay a down payment of $45,000 from the sale of their current house. To obtain a 20-year mortgage at a 4.5% interest rate, the Nicols must pay 2.5 points at the time of closing a) What is the amount of the mortgage? b) What is the cost of the 2.5 points? a) The amount of the mortgage is $ b) The cost of the 2.5 points on the mortgage is S C***

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