The next four questions are related to your purchase of your first home for $700,000.

You have just purchased the house and have put a 20% down payment, and will borrow the remaining amount. The 30-year fixed rate loan has an Annual Percentage Rate (APR) of 2.875%. You will make monthly payments for the life of the loan.

Your effective interest rate is closest to which of the following?

Select one:

a. 2.855%

b. 2.875%

c. 2.986%

d. 2.938%

e. 2.913%

How much is your monthly payment?

Select one:

a. $1,000 to $1,500

b. Less than $1,000

c. $2,000 to $2,500

d. $1,500 to $2,000

e. More than $2,500

Assume that you make payments for one year. How much have you reduced the principal balance that is, the amount that you owe on the loan?

Select one:

a. $15,000 to $20,000

b. $5,000 to $10,000

c. $10,000 to $15,000

d. More than $20,000

e. Less than $5,000

After one year, how much have you paid in interest?

Select one:

a. More than $20,000

b. $15,000 to $20,000

c. Less than $5,000

d. $10,000 to $15,000

e. $5,000 to $10,000