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Question a. Discuss two types of risk that a lender may face if he offers a fixed-rate mortgage loan to a borrower? (4 marks) b.
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a. Discuss two types of risk that a lender may face if he offers a fixed-rate mortgage loan to a borrower? (4 marks)
b. Can the lender reduce the risks you mentioned in (a) if he uses the price-level-adjusted mortgage (PLAM)? Explain. (4 marks)
c. Discuss two limitations of PLAM. (4 marks)
d. If you are going to borrow, would you prefer an adjustable rate mortgage tor a fixed rate mortgage? Explain. (8 marks)
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