Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Calculate the housing expense ratio and the total obligation ratio (in %) for the following mortgage applications. (Round your answers to two decimal places.)
| Applicant | Monthly Gross Income |
Monthly PITI Expense |
Other Monthly Financial Obligations |
Housing Expense Ratio (%) |
Total Obligations Ratio (%) |
|---|---|---|---|---|---|
| Emerson | $2,900 | $777 | $290 | % | % |
Expert Solution
Step 1
Housing expenses ratio is the ratio which represents the income expenses and the gross income incurred monthly. Hosing expenses consist of expenses associated with the house. The total obligations ratio is the ratio between the monthly debt payment of individual and the gross income.
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