Why might a lender conclude that interest-only mortgages are even within the commercial loan market somewhat risky? Please explain your reasoning briefly. (8 Points) Your answer When analyzing a fixed rate residential mortgage with fixed monthly payments over a period of 30 years, when would you expect to see the highest amount of interest payments, relative to principal payments? (4 Points) Month 1 (1st payment) Month 180 (Midpoint of payment schedule) Month 360 (final payment) It will remain the same through all payments Loans with a longer term and a higher interest rate are necessarily less advantageous than those with a shorter term and a lower interest rate. (2 Points) True False Imagine a potential homebuyer, who calculated that they can spent $2,000 per month on mortgage payments. If they want to pay back their mortgage over 20 years and the interest rate is currently at 9% per year: How much money can they currently receive from a bank (calculate the Loan Amount). You can disregard any potential additional costs. Please show your calculations and final result. (10 points) Your answerWhich statement is true about commercial mortgages? Please mark all that apply (6 Points) More money is invested in commercial mortgages than in residential mortgages. Commercial mortgages are less risky and generally more conservative than residential mortgages. Commercial mortgages are also issued without any real estate as collateral. Commercial mortgages tend to mature earlier than residential mortgages. Commercial mortgages are generally issued directly by the federal government. In reality, borrowers often encounter additional mortgage costs beyond those that directly contribute to the lender's yield. (2 Points) True False What is the major benefit of balloon mortgages for the borrower within the commercial loan industry? (4 Points) O Balloon Mortgages have taxation advantages when compared to other forms of mortgages. O Balloon Mortgages offer lower interest rates than other mortgages. O Balloon Mortgages have a structure that benefits real estate developers especially. O Balloon Mortgages do not have to be fully repaid. The present value of a loan is equivalent to the sum of future payments associated with this loan. (2 Points) True FalseEmpirical data confirms that the risk premium for commercial mortgages is sensitive to economic uncertainty. Risk premiums increased above their equilibrium level during the big recession. (2 Points) O True O False