Suppose you are shopping for a mortgage and the lender presents you with a long menu of loan options. For each option, there is a discount point charged and an interest rate given. The amount of the point ranges anywhere from -1% to 3%. When would it be optimal for you select a loan with a point of 2%? (Assume there is no affordability constraint, ie: you have the money to buy whatever point you would like). O If you have a very short holding period O Never O If you have a very long holding period O Only when the point is equal to the effective borrowing cost O Always

Suppose you are shopping for a mortgage and the lender presents you with a long menu of loan options. For each option, there is a discount point charged and an interest rate given. The amount of the point ranges anywhere from -1% to 3%. When would it be optimal for you select a loan with a point of 2%? (Assume there is no affordability constraint, ie: you have the money to buy whatever point you would like). O If you have a very short holding period O Never O If you have a very long holding period O Only when the point is equal to the effective borrowing cost O Always

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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What is the current rate of interest for a 30-year mortgage? Is this a reasonable rate of return for the financial institutions? Are you willing and able to borrow at this rate (no need to disclose personal financial information, just is this attractive to you and why)? Are banks willing and able to make loans? Why or why not? Add the refreances or coteation work please
You are interested in purchasing an automobile but you require financing. The dealer has provided you with several loan options to finance the purchase. Your market rate of return for the risk that you pose various lenders is 7%; The automobile that you want to purchase has a sticker price of $35,000 and a competitive market value of $31,000. Here are your loan options Loan 1: loan has a term of 60 months, a contractual rate of interest of 8% and requires a down payment of $1500 for the purchase of the car. The loan allows you to claim a rebate of $1000 on the car at purchase. Loan 2: The loan has a term of 72 months, a contractual rate of 7.5% and requires a down payment of $500 for the purchase of the car. The loan allows you to claim a $500 rebate Loan 3: The loan has a term of 36 months a contractual interest rate of 0% and requires $4000 down. No rebate is available for this option. What is the monthly payment for loan 2 (rounded to the nearest whole…
How does compound interest make your money "work for you"? Multiple Choice O It provides an interest deduction when you pay your loan off early. You earn interest on interest in addition to interest on principal. It provides an interest deduction if you take out a loan for longer than one year. It provides higher interest rates on larger loans with longer time horizons.
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
For the second mortgage application, calculate the percentage of appraised value and the potential credit (in $ ). \table[[\table[[Appraised],[Value]],\table[[Lender's],[Percentage]],\table[[Percentage of],[Appraised Value (in $)]],\table[[Balance of],[First Mortgage]],\table[[Potential],[Credit (in $)]]],[$356,900,75%,$,$196,500,$
Suppose you are shopping for a mortage and the lender presents you with long menu on loan options. For each option, there is a discount point charged at an interest rate given. The amount of the point ranges anywhere from -2% to 3%. When would it be optimal for you select a loan with a discount point of 3%? Group of answer choices 1) Only when the point is equal to the effective borrowing cost 2) Never 3) Only with ARM 4) If you have a very short holding period 5) If you have a very long holding period
You have been given the choice to reduce your mortgage interest rate for each point received by the lender at closingyou decided to give points , on a $500,000 loan, how much money will you be needing to bring to close to cover your points?
Which of the following statements is CORRECT? Question 2 options: a) The proportion of the payment that goes toward interest on a fully amortized loan increases over time. b) An investment that has a nomiral rate of 6% with semiannual payments will have an effective rate that is smaller than 6%. c) If a loan or investment has annual payments, then the effective, periodic, and nominal rates of interest will all be different. d) The present value of a 3-year, $150 ordinary annuity will exceed the present value of a 3-year, $150 annuity due. e) if a loan has a nominal annual rate of 7%, then the effective rate will never be less than 7%.
Choose a Mortgage Loan Banks and other lending institutions offer a wide variety of mortgage loans that can be tailored to the financial situations of most people who want to buy a house. Several of the more common types of mortgage loans are described below. • Conventional fixed-rate mortgages charge the same rate of interest over the term of the loan. They typically require a substantial down payment of 20 percent or more of the home's purchase price and have terms that can last from 15 to 30 years. • Adjustable-rate mortgages charge an interest rate that initially is lower than that charged on a conventional fixed-rate mortgage. This rate, however, will be adjusted as prevailing interest rates change. They also require a substantial down payment and have terms that last from 15 to 30 years. Federal Housing Authority (FHA) mortgages are available to first-time homeowners at fixed interest rates that are normally similar to those charged on conventional fixed-rate mortgages. Because…
Consider the following options for a $153,000 mortgage. Calculate the monthly payment and total closing costs for each option. Which option would Clearly explain why you chose the option that you chose. you choose? Option 1: a 30-year fixed-rate loan at 4.3% with $1500 closing cost and no points • Option 2: a 30-year fixed-rate loan at 3.8% with $1200 closing cost and 2 points
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