QUESTION 4

1. Monthly mortgage payments can change year to year because of changes in:

   		principal & interest payments.
   		interest & insurance payments.
   		tax & insurance payments.
   		principal & tax payments.

1 points

QUESTION 5

1. You are paying 6% on your fixed-rate mortgage & earning 5% on your stock index fund. You are almost certain the stock market will remain steady for the foreseeable future. You recently received money from a very generous aunt. You decide either to invest the money in your stock index fund or pay down your mortgage. Your tax rate is 20%. What should you do?

   		Invest in the index fund because your after-tax mortgage cost is 4.8% & you are earning an after-tax rate of 4% on your index fund.
   		Pay down your mortgage because your after-tax mortgage cost is 4.8% & you are earning an after-tax rate of 4% on your index fund.
   		None of the analyses is correct.
   		Invest in the index fund because your after-tax mortgage cost is 4.0% & you are earning an after-tax rate of 4.8% on your index fund.

1 points

QUESTION 6

1. If you pay off part of your mortgage early, the payment you make goes to the:

   		interest.
   		None of the categories listed.
   		principal.
   		taxes.
   		insurance.