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Suppose a mid-sized regional bank has $1 million dollars which it is considering investing either in 30 year zero coupon Treasury bonds or in a jumbo 30 year fixed rate residential mortgage with fixed monthly payments of $5650.Assume that the treasury bonds are currently priced to yield 4% if held until maturity. Assume that the bank requires a premium of 150 basis points in the mortgage`s annualized yield over treasury bond yields before it will lend in the residential mortgage market.
A) Write down the present value equations that the bank would use to determined the annualized percentage rate of return on the residential mortgage. (Wherever possible, plug data from the above problem into the equations.
B) How will the bank use the information on the annualized percentage rate of mortgage obtained in part (a) when deciding whether to invest in T-Bonds or whether to make the residential mortgage?
Suppose we observe that as a firm decreases its price its total revenue decreases. Which of the following is a possible value of its price elasticity of demand. Which of the following will not cause a decrease in the demand for apples.
Many analysts in both developed and developing worlds have heavily criticized the cases of monopolies. Discuss using relevant examples whether it is a good policy for the government to completely eliminate monopoly power.
This line is aimed at the low end of the market and isn't constructed on a wheel base. Writing instruments. This line includes mechanical pens and pencils which are sold to the middle-market segment between the low-end products such as Bic and hi..
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Wages after inflation rise for most Americans by about 3% and for highly skilled workers by 7%. The stock market soars and home prices rise dramatically. If all other things are equal, what is the likely effect on the poverty rate
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in the 1970s congress imposed an excess profits tax on these companies. it did not do so this time? what does this
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If boyh bid the same amount, the $100 is split evenly between them. assume that eac of them has only two $1 bills on hand, leaving three possible bids: $0, $1,or$2 Write out the payoff matrix for this game and then find it's Nash equilibrum
explain what could happen in the future with each of these trends below and come up with three3 more trends not listed
Assume that keynesian model applies to the economy in the short-run. After the stock market fell sharply in 2008, the aggregate denabd decreased greatly around the world. using the aggregate supply and aggregate supply (ad-as) analysis, explain th..
1. gary and diane must prepare a presentation. as part of their presentation they must do a series of calculations and
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