Question 1 4 pts Your family recently obtained a 30-year (360-month) $100,000 fixed-rate mortgage. Which of the following statements is most correct? (Ignore all taxes and transactions costs.) The remaining balance after three years will be $100,000 less the total amount of interest paid during the first 36 months. The proportion of the monthly payment that goes towards repayment of principal will be higher 10 years from now than it will be this year. The monthly payment on the mortgage will steadily decline over time. > Question 2 4 pt Which of the following statements is most correct? (Assume that the risk-free rate remains constant.) If the market risk premium increases by t percentage point, then the required return on all stocks will rise by 1 percentage point. If the market risk premium increases by 1 percentage point, then the required return will increase by 1 percentage point for a stock that has a beta equal to 1.0. If the market risk premium increases by 1 percentage point, then the required return will increase for stocks that have a beta greater than 1,0, but it will decrease for stocks that have a beta less than 1.0. Question 3 4 pts Frank Lewis has a 30-year, $100,000 mortgage with a nominal interest rate of 10 percent and monthly compounding. Which of the following statements regarding his mortgage is most correct? The monthly payments will decline over time. The proportion of the monthly payment that represents interest will be larger for the last payment than for the first payment on the loan The total dollar amount of principal being paid off each month gets larger as the loan approaches maturity. Question 4 4 pts In the years ahead the market risk premium, (km - KrF), is expected to fall, while the risk-free rate, KrF, is expected to remain at current levels. Given this forecast, which of the following statements is most correct? The required return will fall for all stocks but will fall less for stocks with higher betas. The required return will fall for all stocks but will fall more for stocks with higher betas. The required return will fall by the same amount all D Question 5 4 pts Which of the following statements best describes what would be expected to happen as you randomly add stocks to your portfolio? Adding more stocks to your portfolio reduces the portfolio's company specific risk. Adding more stocks to your portfolio reduces the beta of your portfolio Adding more stocks to your portfolio increases the portfolio's expected return