MONEY AND BANKING TEST EXAM (10 MARKS) 1. If you want to finance new house with a purchase price of $10,000 at an interest rate of 14% over 5 years, what will your annual payments be? Prepare loan amortization schedule? 2. The price of a bond is $920 with a face value of $1000 which is the face value of man bonds. Assume that the annual coupons are $100, which is a 10% coupon rate, and tha there are 10 years remaining until maturity. Calculate yield to maturity using try an error method? 3. Explain the importance of financial system? 4. Differentiate compounding and discounting using examples? 5. Assume the expected inflation rate to be 4 percent. If the current real rate of interest is 6 percent, what is the nominal rate of interest to be?