The expected rate of increase in housing prices rises

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1. If mortgage rate rises from 5% to 10% but the expected rate of increase in housing prices rises from 2% to 9%, are people more or less likely to buy houses?

2. A lottery claims its grand prize is $10 million, payable over 5 years at $2 million per year. If the first payment is made immediately, what is the grand prize really worth?Use the interest rate of 6%.

Reference no: EM131245938

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