1. True or False: The monthly M1:M2 ratio has never changed by more than 5% between any 2 consecutive months within the last 5 years. Support your claim with data.
2. Han and Leia have taken out a $800,000, 5 percent, 30 year mortgage to pay for their new home. The first monthly mortgage payment is due a month from today. (a)Set up the problem clearly for solving their monthly mortgage payment amount. (b)How much is their monthly mortgage? (c)Jabba offers the option of paying their mortgage for 5 years (first 60 payments) or $250,000 in rebate when they make their final payment. Which option should they take?
3. On interest rate compounding: (a)True or False: If your bank compounds daily instead of annually, then your interest earned will be twice as much! You may assume the bank currently compounds your interest annually at 70%. (b)At what interest rate will that statement be completely precise? I.e., at what interest rate will the daily compounding be exactly twice that of the annual compounding at the end of 1 year?