Which of the following 4 loans has the lowest interest rate risk tothe lenders?Loan 1Loan 2Loan 3Loan 4Initial Interest rate 5.00%3.75%4.50%4.00%Loan Maturity (in30303030years)Margin above then/a3%3%3%indexeveryAdjustment interval n/aevery year every yearyear1% per3% perInterest rate capn/aNoneyearyearLoan 1Loan 2Loan 3Loan 4O Cannot determine

Interest rate risk is the risk of change in the interest rate due to changes in the market and this…

Answered: Which of the following 4 loans has the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Fill in the missing values A through D in the table for a loan of $10,000, if the interest rate is compounded at 10% per year.
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Loan Amount Loan Term Fully Amortized Interest Rate Origination Fee Prepayment Penalty 7.5% 8.1% 9.6% Old Loan 4,000,000 30 years Yes 7% 3% 7% 10.1% New Loan What is the internal rate of return of refinancing the old loan at the end of Year 10? (choose the closest answer) 6.8% 20 years Yes 5.5% 4% 3%
Suppose the term structure of interest rates is shown below: Term Rate (EAR%) 1 year 5.00% 2 years 3 years 5 years 10 years 20 years 4.50% 4.30% 4.30% 4.25% 4.15% The present value of receiving $1000 per year with certainty at the end of the next three years is closest to:
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2. Problem 5.17 (Effective Interest Rate) еВook You borrow $225,000; the annual loan payments are $30,017.40 for 30 years. What interest rate are you being charged? Round your answer to the nearest whole number. %
Please correct answer and don't use hand rating
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Question 1: Part A. The current 10 year treasury note is approaching the important threshold of: a) 2.75% b) 2.95% c) 3.25% d) 2.0% Part B. In a real estate investment, you may want to obtain a mortgage. In so doing, which year would you expect to see the highest amount of principal pay-down (in a payment mix of principal and interest)? a) year 15 b) year 20 c) year 10 d) year 25Part C. In a Fast Market, you would rather sell a stock using a: a) Market Order b) Market On Close Order c) Limit Order d) Market On Open OrderPart D. Given that equity markets are asymmetric in their respective moves, markets are said to take________________________ a) the slow grind higher into perpetuity b) the stairs down and the elevator up c) the stairs up and your mom home d) the stairs up and the elevator down Part E. It is said that traders have come to employ the use of technical analysis potentially for all of the following reasons except:…
Given the following Adjustable Rate Mortgage (ARM): Loan amount: Term: $100,000 20 years, monthly payment Discount point: 0 Origination fee: $8,000 Teaser rate: 7.25% Margin: 225 basis points Rate caps: 2.5% annually, 6% lifetime Market Index: 1 EOY Index 8.6% 9.5% 2 3 4 5 10.5% 11.5% 10.5% What are the proper interest rates for calculating the monthly payments from year 2 t lifetime cap) 10.85%, 11.75%, 12.75%; 13.75%; 12.75% 10%, 11.75%, 12.75%; 13.5%; 12.75% O None of the above is all correct O 9.75%, 11.75%, 12.75%, 13.25%, 12.75%
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