Questions from Financial Markets

Q: Why is the 15-year mortgage attractive to homeowners? Is

Why is the 15-year mortgage attractive to homeowners? Is the interest rate risk to the financial institution higher for a 15-year mortgage or a 30-year mortgage? Why?

Q: Explain the use of a balloon-payment mortgage. Why might

Explain the use of a balloon-payment mortgage. Why might a financial institution prefer to offer this type of mortgage?

Q: Describe the graduated-payment mortgage. What type of homeowners would

Describe the graduated-payment mortgage. What type of homeowners would prefer this type of mortgage?

Q: Describe the growing-equity mortgage. How does it differ from

Describe the growing-equity mortgage. How does it differ from a graduated-payment mortgage?

Q: Why are second mortgages offered by some home sellers?

Why are second mortgages offered by some home sellers?

Q: Describe the shared-appreciation mortgage.

Describe the shared-appreciation mortgage.

Q: Explain the rights of common stockholders that are not available to other

Explain the rights of common stockholders that are not available to other individuals.

Q: Explain the liquidity premium theory.

Explain the liquidity premium theory.

Q: How do IPOs perform over the long run?

How do IPOs perform over the long run?

Q: Discuss the concept of asymmetric information. Explain why it may motivate

Discuss the concept of asymmetric information. Explain why it may motivate firms to repurchase some of their stock.