When interest rate changes-bond yields adjust through

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1. Xavier borrowed $492,000 to finance the purchase of a home. His mortgage amortization was 25 years at a rate of 4%, compounded semi-annually. Payments are made monthly. If Xavier increases his monthly mortgage payment by 10% and holds them at level, how much quicker can he pay his mortgage down?

43.34 months

56.99 months

61.00 months

75.00 months

2. When interest rate changes, bond yields adjust through:

a. changes in present value of the principal. b. changes in price. c. changes in the term to maturity. d. changes in the coupon payment. e. none of the above.

Reference no: EM132073068

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