The following seven (7) questions (including this one) refer to these facts: You have purchased a new home for $250,000 and want to obtain a conforming mortgage by putting down 20%.

Your mortgage provider offers you three alternatives:

A: a fixed-rate 30-year mortgage at 9% with no points

B: a fixed-rate 30-year mortgage at 8.25% with 2 points

C: a fixed-rate 15-year mortgage at 7% with no points

You will want to note the above mortgage terms on a separate piece of paper as you answer the subsequent, related questions.

What is the effective annual yield on mortgage A?