26. Company X's bonds mature in 10.0 years and have a YTM of 3.60%. 10-year treasury bonds (T-bonds) have a YTM of 0.87%. What is the premium investors require for investing in Company Xs bonds compared to T-bonds with the same number of years to maturity?

a.	4.47%
b.	2.73%
c.	1.37%
d.	1.50%
e.	0.24%

Mortgage Loan

A woman has decided to take advantage of her employer's new work-from-home policy and buy a house in the Sierra foothills. Her offer of $329,000 for a house in Coarsegold has been accepted. She will put 20% down and has been approved for 30-year mortgage with monthly payments. Her first payment is due a month from now.

____ 27. If the annual interest rate on her mortgage is 2.825%, how much will her monthly payments be?

a.	$1,084.98
b.	$1,216.64
c.	$1,127.48
d.	$1,463.77
e.	$1,047.00

____ 28. Refer to the Mortgage Loan scenario above. How much interest will she pay in the first month?

a.	$556.88
b.	$619.62
c.	$645.25
d.	$685.42
e.	$762.50

____ 29. Refer to the Mortgage Loan scenario above. What is the balance of the loan at the end of the first month?

a.	$261,199,00
b.	$262,363.33
c.	$262,757.93
d.	$262,744.05
e.	$262,734.64

____ 30. Refer to the mortgage payment that you calculated above.

The couples additional housing expenses are shown below. How much will their total monthly expenses be, assuming the following?

Expenses:

- Mortgage Payment

- Maintenance costs of $300/month

- Annual property taxes of 1.2% of purchase price

- Annual property insurance of $1,600

(Remember to divide the taxes and insurance amounts by 12 to get the monthly amounts)

a.	$1,889.82
b.	$1,808.77
c.	$2,212.09
d.	$1,847.31
e.	$2,036.38

____ 31. Refer to the mortgage loan scenario above. What is the effective annual rate (EAR) that they will pay on their home mortgage, if their annual percentage rate (APR) is 2.825%?

a.	2.862%
b.	3.222%
c.	3.170%
d.	2.815%
e.	3.750%