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1. 2. You buy a house for $230,000. You put $40,000 down, and get a 15-year fixed APR 5.5 percent loan for the rest.

1. 2. You buy a house for $230,000. You put $40,000 down, and get a 15-year fixed APR 5.5 percent loan for the rest. How much is your monthly payment? What is the EAR for this 5.5 percent APR? A 8.75 percent coupon bond with 30 years left to maturity is priced to offer a 5 percent yield to maturity. You believe that in one year, the yield to maturity will be 6.35 percent. If this occurs, what would be your profit by holding the bond for one year? The payments are made semi-annually.

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