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What is the contractual yield at issuance

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Question: Consider a $2 million, 7.5%, 30-year mortgage with monthly payments and an expected realistic prepayment horizon of eight years. What is the contractual yield (effective interest rate) at issuance over the expected life of the loan under the following circumstances?

a. No points or penalties

b. One point of disbursement discount

c. Two points of disbursement discount

d. Two points of disbursement discount plus one point of prepayment penalty

Reference no: EM131734743

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