Financial Markets and Institutions

1. Compute the required monthly payment on a $200,000 20- year-fixed-rate mortgage with a nominal interest rate of 5%. What is the balance due at the end of the first year? Construct the amortization table for the 1" year (12 months). Show your work; do not use a mortgage calculator. 2. Consider a 10-year, fixed-rate mortgage for $100,000 at a nominal rate of 6%. What is the duration of the loan? If interest rates increase to 7% immediately after the mortgage is made, how much is the loan worth to the lender? 3. Suppose you have two offers on the mortgage in problem 1: an interest rate of 5% or interest rate of 4% with 2 discount points. If you intend to stay in the huse for 7 years, which offer do you accept, %5 or 4% with 2 discount points? Why? 4. On January 1st, a mutual fund has the following assets and prices at 4:00 p.m.: Stock Shares owned Price - 1,000 $ 1.97 4,000 $48.26 W N 1,000 $26.44 10,000 $67.49 2,000 $ 2.59 Calculate the net asset value (NAV) for the fund. Assume that 8,000 shares are outstanding for the fund. 5. A)Calculate the NAV of the following fund assuming 3,500 shares are outstanding. B)Calculate the percentage change in the NAV of the fund if stock C climbs to $33.41. Stock Shares owned Price A 450 $5.74 B 5,000 $65.10 C 2,500 $12.04 Cash n/a $4,368.40