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An adverse market delivery charge rate depends on the credit score of the borrower, the amount borrowed, and the loan-to-value (LTV) ratio. The LTV ratio
An adverse market delivery charge rate depends on the credit score of the borrower, the amount borrowed, and the loan-to-value (LTV) ratio. The LTV ratio is the ratio of amount borrowed to appraised value of the home. For example, a homebuyer who wishes to borrow $250,000 with a credit score of 730 and an LTV ratio of 80% will pay 0.5% (0.005) of $250,000 or $1250. The table below shows the adverse delivery charge for various credit scores and an LTV ratio of 80%. Answer parts (a) through (c). Credit Score Charge Rate 659 3.5% 660-679 2.75% 680-699 1.75% 700-719 1% 720-739 0.5% 740 0.25% C (a) Construct a function C = C(s) where C is the adverse market delivery charge and s is the credit score of an individual who wishes to borrow $300,000 with an 80% LTV ratio. $10500 if s 659 $ 8250 if 660 s 679 $ 5250 if 680 s 699 C(s) = $ 3000 if 700 s 719 $ 1500 if 720 s739 $ 750 if s 740 (Simplify your answers.) (b) What is the adverse market delivery charge on a $300,000 loan with an 80% LTV ratio for a borrower whose credit score is 727? $
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