Final payment be if the annual payments are constant

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Reference no: EM132053873

1. Consider a one-period binomial model of 6 months. Assume the stock price is $63.00, = 0.28, r = 0.05 and the stock's expected return is 14.0%. What is the true probability of the stock going up?

a. 48.2%

b. 56.6%

c. 46.4%

d. 52.4%

2. Axl will be borrowing $200,000 today to buy a house, and he will pay it back with 30 yearly payments starting one year from today. If the effective annual interest rate is 13%, how much will the final payment be if the annual payments are constant?

a. $20,000

b. $7,500

c. $33,000

d. $27,000

e. $6,700

Reference no: EM132053873

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