Use reverse mortgage to supplement their income

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Reference no: EM132060981

1. Which of the following statements is NOT correct?

if there are TWO identical call options, but one:

a) Has a longer time to maturity, it will have a higher price.

b) Has a lower strike, it will have a higher price.

c) Has an underlying asset with a higher volatility of returns, then the option will have a higher price.

d) Has an underlying asset with a higher price, then the option will have a higher price.

e) Has a lower price, then it should be sold

2. A Retired Couple has decided to use Reverse Mortgage to supplement their Income by taking a Reverse Mortgage on their home currently valued at $350,000. A Bank has agreed to get into the deal with a Reverse Mortgage Rate of 5% over next 15 years for up to 80% of the home value. According to your calculation, the Couple could receive a Monthly Supplemental Income of:

a. $ 1,309

b. $ 2,214

c. $ 1,048

d. $ 1,557

Reference no: EM132060981

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