In October 2019, the average rent for a two-bedroom apartment in Ottawa was approximately $1,720 per month. Whereas the average house price was approximately $465,000. Assume for all payments that they are made at the end of each period.

Question 21 (1 point)

Based on the 5.5 percent mortgage rate (compounded semi-annually), what would be the Effective Annual Rate for this mortgage rate?

Question 21 options:

	5.235%
	5.576%
	6.551%
	5.023%
	6.356%

Question 22 (1 point)

What would be the Effective Monthly Rate for this mortgage rate? (1 mark)

Question 22 options:

	0.4532%
	0.4722%
	0.2937%
	0.3715%
	0.3485%

Question 23 (2 points)

Based on 5.5 percent mortgage rate (compounded semi-annually), what would be the largest mortgage amount that one could afford, based on a 20-year mortgage with monthly payments that are equal to the average rental payment of $1,720. (2 marks)

Question 23 options:

	$251,318.22
	$420,465.15
	$345,213.25
	$272,840.41
	$284,200.75

Question 24 (1 point)

Based on the same mortgage rate above (i.e. 5.5% semi-annually compounded with monthly payments), what would be the mortgage payments on the average Ottawa house (assuming 90% financing) of $465,000. (1 mark)

Question 24 options:

	$3,112.82
	$2,638.25
	$3,010.62
	$2,864.18
	$2,574.56

Question 25 (1 point)

Assume that you invest the difference between the mortgage payment (Question 24) and the rental payment in a balanced mutual fund that averaged a 5 percent return (compounded monthly) for 20 years, approximately how much would you have accumulated (Future Value) (1 mark).

Question 25 options:

	$470,295.49
	$477,429.85
	$501,944.32
	$351,251.28
	$384,274.23

Question 26 (1 point)

Assume that the house prices increase an average of 3 percent per year (annual compounding) for the next 20 years, what would the future value of the $465,000 house. (1 mark)

Question 26 options:

	$839,841.72
	$975,212.74
	$756,891.25
	$902,561.44
	$912,272.45