Question 1: Consider all questions below

1. Compare the monthly payments and total loan costs for the following pairs of loan options. Assume that both loans are fixed rate and have the same closing costs.

You need a ?$200,000 loan.

Option? 1: a? 30-year loan at an APR of 9.5?%.

Option? 2: a? 15-year loan at an APR of 9%.

Find the monthly payment for each option.

The monthly payment for option 1 is ?$

The monthly payment for option 2 is ?$

?(Do not round until the final answer. Then round to the nearest cent as? needed.)

Find the total amount paid for each option.

The total payment for option 1 is ?$

The total payment for option 2 is ?$

?(Use the answers from the previous step to find this answer. Round to the nearest cent as? needed.)

Compare the two options. Which appears to be the better? option?

A. Option 2 is the better? option, but only if the borrower can afford the higher monthly payments over the entire term of the loan.

B. Option 1 is the better? option, but only if the borrower plans to stay in the same home for the entire term of the loan.

C. Option 2 will always be the better option

D. Option 1 will always be the better option.

2. Compare the monthly payments and total loan costs for the following pairs of loan options. Assume that both loans are fixed rate and have the same closing costs.

You need a ?$80,000 loan.

Option? 1: a? 30-year loan at an APR of 5.55?%.

Option? 2: a? 15-year loan at an APR of 5.15?%.

Find the monthly payment for each option.

The monthly payment for option 1 is ?$

The monthly payment for option 2 is ?$

?(Do not round until the final answer. Then round to the nearest cent as? needed.)

Find the total amount paid for each option.

The total payment for option 1 is ?$

The total payment for option 2 is ?$

?(Use the answers from the previous step to find this answer. Round to the nearest cent as? needed.)

Compare the two options. Which appears to be the better? option?

A. Option 2 is the better? option, but only if the borrower can afford the higher monthly payments over the entire term of the loan.

B. Option 1 is the better? option, but only if the borrower plans to stay in the same home for the entire term of the loan.

C. Option 2 will always be the better option

D. Option 1 will always be the better option

Question 2: Answer all questions below

Question 1 :1 point: Semistrong form efficiency implies: I a] All historical market information, including prices and volume. is included in the price. I b] All information, both public and private is already incorporated in the price. I c} Superior returns may be obtained by the analysis of past prices and volumes. d] All public information is already incorporated in the price. Question 211 point]- Which ofthe following is NOT an empirical challenge to market efficiency? I a] small stocks tend to outperform large stocks I b] value stocks tend to outperform growth stocks I c] investors appear to react slowly to earnings announcements di stocks sometimes return more than their expected return s, and at othertimes return less than their expected returns Question 3 [1 point]- Which ofthe following should not lead to an increase in market efciency? I a] Information is available faster I b] Infon'nation is available at a lower cost cjl There are more assets {for example, number of stocks) in the market for the same number of market participants I d] There are more participants in the markets for the same number ofassets Question 411 polnt] An exchange rate regime is one under which rates of exchange are determined in the market on the basis of predominantly private transactions is called: 1. (a) Explain what is meant by the transition probability matrix of a homogeneous Markov chain. [5 marks] (b) Explain what is meant by the stationary distribution of a Markov chain? [5 marks] (c) A Markov chain has transition probability matrix, A, with entries Ouj; and stationary distribution . Write down an expression for the entries of the reverse Markov chain. [5 marks (d) Consider the following transition probability matrix of a homogo- neous Markov chain, with three states i,j and k (the TPM is in that order). If the stationary vector of the chain is (1/9, 2/9, 2/3), determine whether the Markov chain is reversible. 1 /0.2 0.2 0.6 0.1 0.6 0.3 4 \\0.1 0.1 0.8 [5 marks] (e) Let X1, X2, Xa be a sequence of random variables resulting from the above Markov chain. If X1 = i and Xs = j what is the probability that X2 = k? [5 marks]QUESTION 23 An overheating economy is one where O A. Workers' job performance lags due to slow changes in technology. O B. Actual real GDP is below the full employment level of GDP. O C. The full employment level of GDP is almost equal to actual real GDP. OD. Actual real GDP is above the full employment level of GDP. QUESTION 24 The long-run aggregate supply curve is A. Upward sloping because of the effects of price level changes on real GDP. O B. The same as the short-run aggregate supply curve. O C. Vertical at the full-employment level of real GDP. O D. Horizontal at the full employment price level.Question 2 Complete the following table for a given country and show how can you determine if the country faces an inflation in 2018? Nominal GOP2017 Nominal GDP 2014 Real GDPXD18 P P Q P C 2 A I 3 3 3 R GOP Question 3 - What is the purchasing power of (1000) Rails after (7) years if the inflation rate is (4%) per year? What are the similarity and difference between "Minimum Wage Laws" and "Theory Of Efficiency Wages"? Question 4 A theatre that sells a ticket for a comedy show. The ticket price is 3 Rials to have a seat and watch the show. There is a snack to be given to each ticket buyer that cost 1 Rial. Now, consider this scenario: There are about 50 seats that are not sold and the show is few minutes to start and there is a standby customer willing to buy the ticket by price less than 3. What is the minimum price the theater can offer? Explain the logic about your answer. Question 5 A government is trying to reduce inflation but this has led to higher unemployment. Explain the role of the prices stickiness in causing this tradeoffs