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You would like to borrow $245,000 using a 30-year, 1-year ARM indexed to the 1-year Treasury security with a 2.75 percent margin and 2/6 caps (2 percent per year and 6 percent lifetime). The initial interest rate on this loan is 2.75 percent. The lender is charging you. 1.50 points and $1,200 in miscellaneous fees to close the loan.
Resolve all four parts of the last problem assuming that the loan has a 20 percent payment cap instead of 2/6 interest rate caps.
a. What is the initial payments on this mortgage?
b. If the 1-year Treasury security is yielding 2.25 percent at the first adjustment date, what is your payment on this loan during the second year?
c. Suppose that the 1-year Treasury is yielding 2.75 percent at the second adjustment date. What is the new payment on this loan during the third year?
d. Assuming that you pay of the loan at the end of the third year, what yield did the lender earn on this loan?
Assume that starting in year 6 capital spending does NOT grow 2.50% but becomes equal to depreciation instead. Estimate the value of the firm.
What is the bond’s yield to maturity if the bond is selling for $900?
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What is YTM of a 5-year zero-bond that costs $1,000 today and promises to pay $1,611? - ompute the yield-to-maturity of a two-year bond that costs $25,000 today and pays $1,000 at the end of each of the 2 years.
A bond has a duration of five years and a yield to maturity of 9 percent. If the yield to maturity changes to 10 percent, what should be the percentage price change of the bond?
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If the price of ABCD is 160 at expiration and you buy the calls back at parity, what is the gain or loss from the short call position?
During October 2014, Thimble collects the offal from the factory, and on October 30 places it in storage bins in Thimble's warehouse to await shipment.
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