1) What is the fair price of a 2-year $100,000 T-note with no coupon payment if the current market interest rate is 5%? 2) If you obtain a 30 year mortgage loan of $200,000, find your monthly payment if annual interest rate is 3%, 6%, or 9%. 3) You want to buy a 10% coupon bond with a face value of 100,000 that yields 6% to maturity of 5 years. What is the price of the bond you want to buy? 4) What is the yield to maturity if a bond has a price of $10,000 and pays $150 of interest annually forever? 2. Suppose you have $50,000 annual disposable income and would like to spend 30% of the income on the mortgage payment. 1) Find the highest affordable house price if a 30-year mortgage rate is 6.0%. 2) Due to low interest policy, as of January 10 of 2015, the 30 year mortgage rate was dropped to 3.0%. Find the highest affordable house price. 3) Following time series plots shows the relationship between a 30 year conventional mortgage rate and Case-Shiller home price index from 2000 to 2007. Carefully explain the relationship between mortgage rate and house price for the periods. FRED -. 30-Year Conventional Mortgage Rate (right) S&P/Case-Shiller 20-City Composite Home Price Index (left) (Continuously Compounded Annual Rate of Change) (Percent) 2000 2001 2002 2003 2004 2005 2006