Loan first payment goes to paying interest

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Reference no: EM131852641

1. A declining-balance loans for $2000 entails paying $183.36 for each of twelve months, for a total of about $2200 in payments. The loan's periodic interest rate is 18% per year or 1.5% per month. How much of the loan's first payment goes to paying interest (to the nearest dollar)?

$18

$24

$30

$36

$42

2. You have a 25-year maturity, 9.5% coupon, 9.5% yield bond with a duration of 10 years and a convexity of 135.0. If the interest rate were to fall 120 basis points, your predicted new price for the bond (including convexity) is _________.

$1,109.60

$1,099.88

$1,091.32

$1,119.30

Reference no: EM131852641

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