Question
Mortgage Valuation (APR/YTM, expected yield/YTC) Q8. A 30-year FRM loan of $100,000 is issued at an annual interest rate of 6% with monthly amortization. There
Mortgage Valuation (APR/YTM, expected yield/YTC)
Q8. A 30-year FRM loan of $100,000 is issued at an annual interest rate of 6% with monthly amortization. There are no discount points or underwriting fees charged on this loan. What is the expected yield on this loan at years 1, 5, 10, and 30? What is the APR?
Q9. A 30-year FRM loan of $100,000 is issued at an annual interest rate of 5.50% with monthly amortization. However, the borrower is required to pay 2 discount points. What is the expected yield on this loan at years 1, 5, 10, and 30? What is the APR?
Q10. How do you compare the mortgages characterized in Q8 and Q9?
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
Concise 6th Edition
324664559, 978-0324664553
