Question
Which of the following statements regarding a 30-year (360-month) $100,000 fixed-rate mortgage is CORRECT? (Ignore all taxes and transactions costs.) a. Because it is a
Which of the following statements regarding a 30-year (360-month) $100,000 fixed-rate mortgage is CORRECT? (Ignore all taxes and transactions costs.)
a. Because it is a fixed rate mortgage, the amount paid in interest per payment is constant.
b. With an amortized loan, a bigger proportion of each month's payment goes toward interest in the later periods.
c. The remaining balance after three years will be $100,000 less the total amount of principal paid during the first 36 months.
d. The monthly payment on the mortgage will steadily decline over time.
Shrek Corporation's stock has a required return of 11.00%, the risk-free rate is 3.00%, and the market risk premium is 4.00%. Now suppose there is a shift in investor risk aversion, and the market risk premium increases by 2% (risk-free rate stays the same). What is Shrek's new required return?
16%
15%
13%
14%
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