1a.

Jeff purchased a house costing $200,000. He put 20% down and borrowed the balance negotiating a 4.20% conventional fixed-rate mortgage loan with a maturity of 15 years Approximately, how long would it take Jeff to repay one-half of the original loan principal balance if payments are made as agreed?

	A.	7 years and 11 months
	B.	10 years and 2 months
	C.	8 years and 2 months
	D.	8 years and 8 months
	.	E. 7 years and 7 months

1b.

Consider a non-carryover 2-year adjustable-rate mortgage with the repricing frequency of one year. The initial teaser rate is 6.5% and it has annual and lifetime caps of 2% and 5%, respectively. What is the highest level that the mortgage rate can reach after four years (i.e., at the beginning of year 5)?

	A.	9.5%
	B.	10.5%
	C.	8.5%
	D.	12.5%
	E.	11.5%