1. Consider a reverse annuity mortgage in which a retired couple receives monthly payments of 500 for a period of ten years and the total repayment amount is 80,000. The interest rate of this mortgage is closest to

1. 4.76%
2. 5.56%
3. 5.91%
4. 6.24%

2. A 20-year fully amortising mortgage loan with a fixed interest rate of 2% and monthly repayments was made 10 years ago for 200,000. Now the borrower makes a one-time mortgage repayment of 40,000. The new monthly repayment is closest to

1. 571
2. 624
3. 644
4. 701

3. Uncertainty of cash flows can vary significantly across property types. Which of the following property types is often considered to have the most uncertain expected cash flows?

1. Apartment
2. Industrial
3. Office
4. Hospitality

4. Assume that an industrial building can be purchased for 1,5000,000 today, is expected to yield cash flows of 80,000 for each of the next five years (with the cash flows occurring at the end of each year), and can be sold at the end of the fifth year for 1,600,000. Calculate the internal rate of return (IRR) for this transaction.

1. 5.0%
2. 6.5%
3. 9.5%
4. 10.0%

5. Which of the following statements is FALSE?

1. The secondary mortgage market enables the issuer to sell existing mortgages and thereby replenish funds with which new loans can be originated.
2. When issuing mortgage-backed bonds, the issuer retains ownership of the underlying mortgage to the bondholders.
3. One major difference between mortgage securities and corporate bonds is that mortgage securities tend to be overcollateralized.
4. When the coupon rate of a MBB exceed market interest rates, the price of the bond will be greater than its par value.