2. Which of the following statements is NOT CORRECT, assuming positive interest rates? a. A 15-year, $100,000, mortgage will have larger monthly payments than an otherwise similar 30-year mortgage.b. If an investment pays 10% interest compounded annually, its effective rate will also be 10%.c. A 30 year mortgage for a 200,000 house with an interest rate of 5% with monthly payments of $825 would never get paid off.d. All of the above statements are true

3. A mutual fund manager has a $400,000,000 portfolio with a beta = 1.2. Assume that the risk-free rate is 6 percent and that the market risk return is 10 percent. The manager expects to receive an additional $50,000,000 in funds soon. She wants to invest these funds in a variety of stocks. She wants the expected return of the new funds to be 14.5% percent. What should be the average beta of the new stocks added to the portfolio? a. .875 b. 1.125 c. 1.25 d. 3.5 e. none of the above