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Consider a fully amortizing PLAM as follows. $100,000 Mortgage 7% Interest 30 Years Monthly Payments Loan balance adjusted for CPI every year This loan was

Consider a fully amortizing PLAM as follows.

$100,000 Mortgage

7% Interest

30 Years

Monthly Payments

Loan balance adjusted for CPI every year

This loan was made 5 years ago, and now the CPI unexpectedly increases by 10%. As a result, the market interest rate increases from 7% to 10%.

How much value does this mortgage lose if it can be sold on the secondary market?

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