Question 1(10 marks) Assume that 3 years ago you arranged a mortgage of $100,000 at j2 =10% (2 means compounded semi-annually) amortized over 25 years with monthly payments and a 5-year term. Rates now have dropped to j2 = 8%. You want to terminate the contract and sign a new one with the lower rates. But you don't have any prepayment options specified in the current contract. If you decide to prepay all outstanding balance right now, possible charge: (a) (3 marks) three month interests (b) (5 marks) interest rate differential (c) (2 marks) Based on your calculations, how much penalty to charge if you have a fixed-rate mortgage? What if a variable-rate mortgage? Question 1(10 marks) Assume that 3 years ago you arranged a mortgage of $100,000 at j2 =10% (2 means compounded semi-annually) amortized over 25 years with monthly payments and a 5-year term. Rates now have dropped to j2 = 8%. You want to terminate the contract and sign a new one with the lower rates. But you don't have any prepayment options specified in the current contract. If you decide to prepay all outstanding balance right now, possible charge: (a) (3 marks) three month interests (b) (5 marks) interest rate differential (c) (2 marks) Based on your calculations, how much penalty to charge if you have a fixed-rate mortgage? What if a variable-rate mortgage