Dimension 1

Question #1 You would like to buy a home. Unfortunately, you have no cash to pay the whole price of the house. So, you are taking mortgage to finance the purchase. Now you are shopping for the best mortgage.

A. What financial model you will use in order to estimate the mortgage you can take?

B. List three necessary values you have to know in order to compute the value of the mortgage.

C. What assumptions you are making when you are computing the mortgage payments?

Dimension 2

Question #2: A. What is P/E ratio and how it is used?

2. List 2 examples of Liquidity ratio

Dimension 3:

Question # 3: A. Briefly explain the meaning of NPV and IRR. B. Under what two conditions would make NPV and IRR similar?

Dimension 4

Question #4

According to CAPM, the expected return on a risky asset depends on three components. Describe each component, and explain its role in determining expected return of an investment in the capital markets.