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IV (Mortgage-Backed Securities) 15 points You purchase an MBS 9, 30 year with a face value of $100,000 a) What is your monthly payment?
IV (Mortgage-Backed Securities) 15 points You purchase an MBS 9, 30 year with a face value of $100,000 a) What is your monthly payment? b) What is the interest and principal earned over 5 years c) What will the MBS be priced at the following yield/yrs survived scenarios Yield 6 percent 8 percent 9 percent Yrs Survived 1 year 5 years 8 years Price ? ? ? d) What would the price of a US 9, 30 years bond with a face value of $100,000 sell for at the above yield scenarios. V Answer True (T) or False (F) 1. The EAR is always less than the APR 2. Buying a stock on Margin is always less risky than buying it with cash 3. Stocks with a correlation of 0.75 is less risky than stocks with a correiation of 0.25 4. A discount security can have a price that exceeds its Face Value 5. A stock whose dividends are growing can never have a premium for growth which is negative. 2
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