The interest rate for the loan is 3.5% p.a. effective. Which of the following is the best next step before tr calculate the required monthly repayment for the mortgage? O a. Convert the 3.5% to a nominal annual rate compounding monthly, and use this new rate directly ta calculate the monthly repayments. O b. Divide 3.5% by 12 to work in months O c. Convert the 3.5% to an effective monthly rate, and use this rate directly to calculate the monthly герayments. O d. No interest rate conversion is needed. The 3.5% can be used directly.

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
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down options are the same for the
The interest rate for the loan is 3.5% p.a. effective. Which of the following is the best next step before trying to
calculate the required monthly repayment for the mortgage?
O a. Convert the 3.5% to a nominal annual rate compounding monthly, and use this new rate directly to
calculate the monthly repayments.
O b. Divide 3.5% by 12 to work in months
O c. Convert the 3.5% to an effective monthly rate, and use this rate directly to calculate the monthly
repayments.
O d. No interest rate conversion is needed. The 3.5% can be used directly.
The first repayment of the loan occurs on 1 August 2021, and the final repayment occurs on 1 July in the "final
year" as above. For each formula named below, select the corresponding valuation date (i.e. the point in time
when the formula lands you)
FV annuity due
v Choose.
1 July in the "final year"
FV ordinary annuity
1 June in the "final year"
PV ordinary annuity 1 August 2021
1 July 2021
PV annuity due
1 June 2021
1 August 2020
1 August in the "final year"
In preparation of yo 1 July 2020
te the interest charged on your loan so that you can claim
tn sha finnnnial uoar andina 30.une 2022.
Transcribed Image Text:All drop other 3 down options are the same for the The interest rate for the loan is 3.5% p.a. effective. Which of the following is the best next step before trying to calculate the required monthly repayment for the mortgage? O a. Convert the 3.5% to a nominal annual rate compounding monthly, and use this new rate directly to calculate the monthly repayments. O b. Divide 3.5% by 12 to work in months O c. Convert the 3.5% to an effective monthly rate, and use this rate directly to calculate the monthly repayments. O d. No interest rate conversion is needed. The 3.5% can be used directly. The first repayment of the loan occurs on 1 August 2021, and the final repayment occurs on 1 July in the "final year" as above. For each formula named below, select the corresponding valuation date (i.e. the point in time when the formula lands you) FV annuity due v Choose. 1 July in the "final year" FV ordinary annuity 1 June in the "final year" PV ordinary annuity 1 August 2021 1 July 2021 PV annuity due 1 June 2021 1 August 2020 1 August in the "final year" In preparation of yo 1 July 2020 te the interest charged on your loan so that you can claim tn sha finnnnial uoar andina 30.une 2022.
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