Question

Assume that you decides to buy a house for $187,600. You will pay 20% down payment by your saving and fund the remaining amount (i.e., 80% of the house price) using a mortgage loan. The bank offers 30-year mortgage with monthly interest 0.5313%. You will pay backthe loan in equal amount at the end of each month for the next 30 years. (In other words, just like real-world practice, you will pay back the loan using equal-amount monthly payments).  How much is your monthly payment for this mortgage loan?   

             A) 863

         B) 936

             C) 1,021

         D) 1,121

         E) 1,211

Kodak has a bond with 10 year until maturity, a coupon rate of 12%, and selling for $1,200. This bond pays coupon payment annually. What is the yield to maturity of this bond?     

         A)           6.1%.

             B) 7.1%.

             C)       8.9%.

             D)       9.9%.  

         E)           12%.

Answer 1

Calculate the monthly payment as follows:

Monthly payment $936.

---------------------------------------------------

b.

Calculate the Yield to maturity as follows:

Yield to maturity is 8.9%.

Please rate the answer, payment will be given to one question only but i answered two questions.