A loan officer states, "Thousands of dollars can be saved by switching to a 15-year mortgage from a 30-year mortgage." Calculate the difference in payments on a 30-year mortgage at an interest of 0.75% a month versus a 15-year mortgage with an interest rate of 0.7% a month. Both mortgage are for $100,000 and have monthly payments.

1) What is the monthly payment committed by the 30-year mortgage? And the total payment?

2) What is the monthly payment committed by the 15-year mortgage? And the total payment?

Specifications for a piece of material used in the manufacture of a bed mattress require that the piece be between a Lower and Upper value (in inches) centered around the process mean. The process that produces the piece yields a mean of 52 and a standard deviation of 0.7 inches. The distribution of output is normal. Within what values will 85.2 percent of sample means fall, if samples of n = 13 are taken and the process is in control?

Question 5 options:

51.353 , 52.646

50.987 , 53.012

51.719 , 52.28

50.255 , 53.744

None of the Above

Carbon monoxide​ (CO) emissions for a certain kind of car vary with mean 2.3 g/mi and standard deviation 0.7 g/mi. A company has 80 of these cars in its fleet. Let y(overbar) represent the mean CO level for the​ company's fleet.

​a) Estimate the probability that y(overbar) is between 2.4 and 2.6 g/mi.

​b) There is only a 55​% chance that the​ fleet's mean CO level is greater than what​ value?

Show your work on TI-84

recall that the definition of arbitrage required the satisfaction of three conditions: one about weights, one about risk, and one about returns. Consider the following scenario in a one factor APT:

What is the expected return of an arbitrage portfolio composed of all three assets, x, y, and z. Weights will be between +1 and -1. Answer is 5.38. please show how to do.

An agricultural runoff diversion system discharges into a small river. The runoff has thefollowing characteristics: flow = 100 m3/min, DO = 3 mg/L, and BOD = 150 mg/L. The riverflows at1000 m3/min and has zero BOD and 9 mg/L of DO. Given that saturation DO is 9.5mg/L, kd is 0.4 day-1, and the ka is 0.7 day-1, calculate the DO and BOD remaining in the stream1.5 days after the discharge event.

Explain the difference between a call option and a put option. Explain the difference between an American option and European option. Find the value of a call option using the binomial option pricing formula for single period when given the following information: you have an option with 6 months until expiration, the payoff in the up scenario is $12, and the payoff in the down scenario is $0, the risk-free rate is 5%, the weight for the up scenario is 1.1, and the weight for the down scenario is 0.7.

A manufacturer of sports equipment has developed a new synthetic fishing line that the company claims has a mean breaking strength of 7.5 kilograms with a standard deviation of 0.7 kilogram. Test the hypothesis that µ = 7.5 kilograms, against the alternatives: (a) µ 6= 7.5; (b) µ > 7.5; (b) µ < 7.5. Given that a random sample of 50 lines is tested and found to have a mean breaking strength of 7.8 kilograms. Use a 0.01 level of significance α, compute the corresponding P–values.

Jeanne Lewis is attempting to evaluate two possible portfolios consisting of the same five

assets but held in different proportions. She is particularly interested in using beta to compare

the risk of the portfolios and, in this regard, has gathered the following data.

Portfolio Weights

Asset Asset Beta Portfolio A Portfolio B

1 1.3 10% 30%

2 0.7 30% 10%

3 1.25 10% 20%

4 1.1 10% 20%

5 0.9 40% 20%

Total 100% 100%