Questions from Financial Markets

Q: “Because corporations do not actually raise any funds in secondary markets

“Because corporations do not actually raise any funds in secondary markets, they are less important to the economy than primary markets.” Comment.

Q: Consider a 30-year fixed-rate mortgage for $500

Consider a 30-year fixed-rate mortgage for $500,000 at a nominal rate of 6%. What is the difference in required payments between a monthly payment and a bimonthly payment (payments made twice a month)...

Q: Consider the following options available to a mortgage borrower:

Consider the following options available to a mortgage borrower: What is the effective annual rate for each option?

Q: Two mortgage options are available: a 15-year fixed-

Two mortgage options are available: a 15-year fixed-rate loan at 6% with no discount points, and a 15-year fixed rate loan at 5.75% with 1 discount point. Assuming you will not pay off the loan early,...

Q: Two mortgage options are available: a 30-year fixed rate

Two mortgage options are available: a 30-year fixed rate loan at 6% with no discount points, and a 30-year fixed-rate loan at 5.75% with 1 discount point. How long do you have to stay in the house for...

Q: Two mortgage options are available: a 30-year fixedrate loan

Two mortgage options are available: a 30-year fixedrate loan at 6% with no discount points, and a 30-year fixed-rate loan at 5.75% with points. If you are planning on living in the house for 12 years,...

Q: Consider a shared-appreciation mortgage (SAM) on a $

Consider a shared-appreciation mortgage (SAM) on a $250,000 mortgage with yearly payments. Current market mortgage rates are high, running at 13%, of which 10% is annual inflation. Under the terms of...

Q: Consider a 30-year graduated-payment mortgage on a $

Consider a 30-year graduated-payment mortgage on a $250,000 mortgage with yearly payments. The stated interest rate on the mortgage is 6%, but the first annual payment is calculated assuming a 3% rate...

Q: Consider a growing equity mortgage on a $250,000 mortgage

Consider a growing equity mortgage on a $250,000 mortgage with yearly payments. The stated interest rate on the mortgage is 6%, but this only applies to the first annual payment. Thereafter, the annua...

Q: Rusty Nail owns his house free and clear, and it’s worth

Rusty Nail owns his house free and clear, and it’s worth $400,000. To finance his retirement, he acquires a reverse annuity mortgage (RAM) from his bank. The RAM provides a fixed monthly payment over...