Assume you are looking to buy a house for $250,000 with a 25-year mortgage at 12% APR fixed, estimate the monthly mortgage payment. How much money from the monthly payment goes towards equity in the first month? Second month?

Assume that current rates are expected to increase. What will happen to the value of MBS and CDO securities in this market?

What impacts does a financial institution have on its investors when it purchases a large number of mortgage-backed securities and why? Provide an example.