User Account

All Pages

Original amount of the loan

Assignment Help Finance Basics
Reference no: EM131082553

A Bank makes a 360-month mortgage loan to a traditional (Prime) Borrower. The cost of the house was $250,000 and the original amount of the loan was $200,000. The Bank charged the Borrower an interest rate of 4.5%, which was a fair rate at the time. The Bank wants to test the likelihood that the loan will become "underwater" after two years. By how much would the house have to change in value each year for the Bank to be worried about this loan going under water?

a. -1.7%

b. -12.0%

c. -22.6%

d. -5.4%

e. -8.9%

Reference no: EM131082553

Questions Cloud

Is this adjusted association statistically significant : For every one-inch increase in mother's height, by how much would you expect child's height to increase, controlling for child gender and father's height?
What is the npv of the movie : What is the NPV of the movie if the cost of capital is 10.8%? According to the NPV rule, Should the movie be made?
Create longitudinal records for the females : create longitudinal records for the females.
Which uses less memory what is the dimension of each : . Which uses less memory? What is the dimension of each?
Original amount of the loan : A Bank makes a 360-month mortgage loan to a traditional (Prime) Borrower. The cost of the house was $250,000 and the original amount of the loan was $200,000. The Bank charged the Borrower an interest rate of 4.5%
Examine the time variable in the offline data : Try controlling for other variables that might affect this relationship.
Retained earnings and new borrowings : Maroon has 10 million shares of common stock outstanding. If all capital outlays are funded from retained earnings and new borrowings and if Maroon follows a residual dividend policy, what capital outlays are planned for the coming year?
Diversify into the home improvement field : Tyco Steel has decided to diversify into the home improvement field. As a result of this expansion, Tyco's beta value drops from 1.3 to 0.9, and the expected future long-term growth rate in the firm's dividends drops from 8 to 7%.
Determine whether these parameters should have default value : Use the find Globals () function available in code tools to check that the function is not relying on any global variables.

Reviews

Write a Review

Finance Basics Questions & Answers

  What must the expected return on the market be

A stock has an expected return of 14 percent, its beta is 1.20, and the risk-free rate is 5.8 percent. What must the expected return on the market be?

  You have obtained a seven year 8 percent loan with a bank

1.calculate future value of 5600 received today and deposited at 9 percent for three years.2.calculate the present

  After extensive research you believe the probability

after extensive research you believe the probability distribution for next years return on fb inc

  Find the amount that should be set aside today to yield

Find the amount that should be set aside today to yield the desired future amount.

  Liquidity ratios

Liquidity Ratios Current ratio [current assets / current liabilities] Quick ratio [(current assets - inventory) / current liabilities]

  Compute the increase retained earnings

Elite Trailer Parks has an operating profit of $200,000. Interest costs for the year was $10,000; preferred dividends paid were $18,750.00 and common dividends paid $30,000.

  Expected dividend yield and expected capital gains

Lucas Clinic's last dividend (D0) was $1.50. Its equilibrium stock price is $15.75 and its expected growth rate is a constant 5%. If the stockholders' required rate of return is 15%, what is the expected dividend yield and expected capital gains y..

  Provide information about initial simulated purchase price

Provide information about the initial simulated purchase price of your bonds. The following are several good online resources for bonds

  What would be the index value

Three stocks have share prices of $12, $75, and $30 with total market values of $400 million, $350 million and $150 million respectively. If you were to construct a price-weighted index of the three stocks what would be the index value?

  Explain the main characteristics of stocks and bonds and

describe the key characteristics of stocks and bonds and contrast a couple of key characteristics that make them so

  Similarities and differences between the two methods

There are two methods for constructing the statement of cash flows: the direct method and the indirect method. What are the similarities and differences between the two methods

  A money market security which consists of a par value of

question 1 you paid 98000 for a 100000 t-bill maturing in 120 days. if you hold it until maturity what is the t-bill

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd