Question 2

a) A loan of 100,000 is repayable by equal quarterly payments for 4 years. The effective rate of interest is 7% pa. REQUIRED

I. Find the equal quarterly payment amount. II. Draw the amortization schedule for the loan repayment. III. What is the interest portion paid on the 6th payment? IV. What is the total interest paid after the 12th payment?

b) Give a brief description of the following types of financial investments and list the risks and benefits associated to each type of financial investments I. Cash II. Fixed Income Securities III. Equity IV. Property