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- Which one of the following statements about a fixed-rate mortgage (FRM) loan is correct? a. The monthly payment of the FRM loan changes over the life of the loan. b. Each monthly payment contains the interest payment component and principal repayment component. The size of each component remains unchanged over the life of the FRM loan. c. Each monthly payment contains the interest payment component and principal repayment component. As time goes by, the size of the interest component increases and the size of the principal component decreases, but the sum of the two components remain unchanged. d. Each monthly payment contains the interest payment component and principal repayment component. As time goes by, the size of the interest component decreases and size of the principal component increases, but the sum of the two components remain unchanged.What are the Effects of Maturity on Monthly Payments on Fully Amortizing Loans?With regard to mortgages, how is the monthly payment including principal and interest categorized as an annuity?
- The loans which are to be repaid within a short period (a year or less) are referred to as: O a. Fixed liabilities O b. Long-term liabilities O c. Contingent liabilities O d. Current LiabilitiesA mortgage has the following terms: Amount: $750,000 Rate: 6.25% Amortization (Years): 30 Term (Years): 20 Please determine the following: What is the Monthly Payment? In preparing an Income Statement, what is the Interest Expense for years 1 – 5? What is the Principal Balance at the end of year 6? What is the value of the loan at the expiration? If rates remain constant (flat), what would the benefit be to refinance this loan after year 10? do all the questions 1-5 and show the formulas in excel and show how you got itCalculate the modified duration of a 30-year mortgage with level annual payments of principal and interest, assuming the interest rate on the mortgage and the current market interest rate are both 9%. A B U D 8.87 9.67 10.27 11.20 E 12.20
- Calculate the modified duration of a 30-year mortgage with level annual payments of principal and interest, assuming the interest rate on the mortgage and the current market interest rate are both 9%. A B C 8.87 9.67 10,27 11.20 12.20Use an amortization table (Use Spreadsheet application such as Excel) that determines the monthly mortgage payment based on interest rate of 35% and a principal of GHS1000,000 with a 15-year maturity and then for a 30-year maturity. Is the monthly payment for the 15-year maturity twice the amount for the 30-year maturity or less than twice the amount? Explain.in a fully amortized mortgage, during the last years of the loan, the lender applies A. most of the monthly payment to interest on the loan. B. the monthly payment equally to interest on the loan and the outstanding principal balance. C. all of the monthly payment to the outstanding principal balance. D. all of the monthly payment to interest on the loan. E. most of the monthly payment to the outstanding principal balance.
- Which of the following statements is true about 15-year and 30-year fixed-payment mortgages? A. A 30-year mortgage will likely have an interest rate lower than that on a 15-year mortgage. B. Borrowers pay more total interest over the life of a 30-year mortgage than on a 15-year mortgage assuming the same interest rate on both mortgages. C. The remaining balance on a 30-year loan declines more quickly than on a 15-year mortgage with the same interest rate. D. Both A and B are true. E. Both B and C are true. F. Both A and C are true. G. All three (A, B and C) are true.(Note, this is how mortgage payments are calculated.) Payments on a loan are amortized when a fixed amount is paid at the end of each time period in order to pay off both the principle of the loan and the interest accumulated up to that point. At the end of each period, interest is charged on the amount still owing. Let P be the initial amount of the loan, and i > 0 be the interest rate charged (per period), R the size of the per period payment (paid at the end of each period), and Pt the amount that is still owed after t periods. So P0 = P(a) Find P1.(b) Find a first order linear recurrence for Pt.(c) Show that the solution to your recurrence relation isPt = (P-(R/i))(1+i)^t + (R/i)In addition to the UFMIP (up-front mortgage insurance premium), the owner-occupant borrower who decides to use an FHA mortgage loan will normally pay an additional annual mortgage insurance premium (MIP) that depends on the loan-to-value ratio and the term of the loan. For loans with maturity longer than fifteen years and a loan to value ratio that is greater than 95%, the MIP will be what percentage of the average annual loan balance? Multiple Choice 0.25% 0.50% 1.10% 0.85%