Suppose you are buying your first condo for $190,000, and you will make a $15,000 down payment. You have arranged to finance the remainder with a 30-year, monthly payment, amortized mortgage at a 6.8% nominal interest rate, with the first payment due in one month. What will your monthly payments be?

a. $1,231.68 b. $1,140.87 c. $1,238.66 d. $1,134.44 e. $1,477.78

The real risk-free rate is 3.95%, inflation is expected to be 2.35% this year, and the maturity risk premium is zero. Taking account of the cross-product term, i.e., not ignoring it, what is the equilibrium rate of return on a 1-year Treasury bond? (Round your final answer to 3 decimal places.)

a. 6.393% b. 4.043% c. 6.300% d. 3.150% e. 2.443%