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%