Question:

Joseph would like to borrow Sh. 114,000 using adjustable- rate mortgage instrument with 15- year armortization schedule; 4.5% initial interest rate, 2% margin and 2% annual interest cap. Assume that the laon is indexed to 1-yeaer treasury rate, and this index is to have value of 5% at the end of the year and 7.5% at the end of the second year. Joseph's expected holding period is 3 years.

Required:

For the first three years calculate,

(i)PMT

(II) The Mortgage ending balance

(iii) The total interest paid. (15Marks)

Question:

Discuss six real estate investment strategies (17Marks)

Explain three characterstic of adjustable rate mortgage (6Marks)