Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
4th Edition
ISBN: 9780134083278
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Chapter 5, Problem 17P

Your mortgage has 25 years left, and has an APR of 7.625% with monthly payments of $1449.

  1. a. What is the outstanding balance?
  2. b. Suppose you cannot make the mortgage payment and you are in danger of losing your house to foreclosure. The bank has offered to renegotiate your loan. The bank expects to get $150,000 'or the house if it forecloses. They will lower your payment as long as they will receive at least this amount (in present value terms). If current 25-year mortgage interest rates have dropped to 5% (APR), what is the lowest monthly payment you could make for the remaining life of your loan that would be attractive to the bank?
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1. Which of the following assets is most likely to trade over the counter but still have high liquidity? a. A short-term Treasury bond b. A long-term corporate bond c. A short-term corporate bond d. A large-cap stock e. A small-cap stock 2. Assume you purchased 600 shares of XYZ common stock on margin at $35 per share from your broker. If the initial margin is 60%, the amount you borrowed from the broker is closest to _________. a. $8,500 b. $21,000 c. $29,500 d. $12,500 e. $16,000 3. You invest $1,550 in security A with a beta of 1.4 and $1,350 in security B with a beta of 0.4. The beta of this portfolio is closest to _____________ . a. 0.95 b. 0.90 c. 1.35 d. 1.05 e. 1.15 4.  Which of the following orders is most likely to increase the difference between the highest bid price and the lowest ask price? a. A large market order b. A large limit order c. A small limit order d. A small market order e. There will be no major difference between these 5.  Bond X is worth $91 today.…

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Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book

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