To finance the purchase of a new factory recently, youve arranged for a 40-year mortgage loan for 80 percent of then $1,400,000 purchase price. The monthly payment on this loan will be $10,300. What is the APR on this loan? What is the EAR in this case? (10)

Q. No. 2 (B). What is interest rate risk and what is the relation between interest rate risk and callable bonds. Explain with the help of an example of your own choice.