course hero based on the net amount of funds, what is the true interest rate of each loan?

What was the interest rate on Franklin’s 20-year Treasury bond?

May 01, 2017 · B) based on the net amount of funds ,what is the true interest rate of each loan? true interest rate = 0.04082 = 4.08% = 0.04545 = 4.55% Loan 1 2 Face Value $500,000 $500,000 Interest rate 4% 4.5% Net amount ( Face value – carries fees) $500,000 - $10,000 = $490,000 $500,000 - $5,000 = $495,000 Interest Rate $500,000 x 4% = $20,000 $500,000 x 4.5% = …

What is the total amount of interest on a mortgage?

CHAPTER 9 INTEREST RATE AND ITS ROLE TO FINANCE An interest rate is defined as the proportion of an amount loaned which a lender charges as interest to the borrower, normally expressed as an annual percentage. It is the rate a bank or other lender charges to borrow its money, or the rate a bank pays its savers for keeping money in an account. An interest rate is …

How does a loan work?

A short period loan carries a low interest rate. 3. Volume of Loan: Rate of interest also depends on the amount of loan. Usually, a borrower pays low interest if he borrows larger amount of money. A small amount of loan may be available if a high rate of interest is paid. 4. Nature of Security: Interest rate varies with the nature

What is a pass-through collateral pool mortgage?

B) The net savings from installing a zero-balance account to eliminate the float. C) The average daily float multiplied by twice the annual yield on short-term investments. D) The opportunity cost of the net float at a 3.5% rate of interest. E) The number of cheques times the average amount per cheque times the annual yield. Answer: A

What does "c." mean in investment?

c.)An investment whose interest rate increases year after year

Does APY take compound interest into account?

a.)APY takes compound interest into account, whereas EAR does not.

Is APY less than APR?

a.)For the same loan, the APY is typically less than the APR.

What is a mortgage loan?

Mortgage- It is a loan which property or real estate is kept as security and loan is known as a mortgage. Wherein the borrower receives cash and enters into an agreement with the lender. The borrower makes payments to the lender until the amount with interest is paid completely

Why should points be considered when deciding whether to take a mortgage?

Factors like interest rate and time period should be considered. This is because; the points lead to variation in the interest rates. And the time period as it depends on the time period the borrower expects to hold the mortgage

What is collateral pool?

a security created when one or more mortgage holders form a collection (pool) of mortgages and sells shares or participation certificates in the pool. The cash flow from the collateral pool is "passed through" to the securityholder as monthly payments of principal, interest, and prepayments.

What caused the subprime mortgage crisis?

Hedge funds, banks, and insurance companies caused the subprime mortgage crisis. Hedge funds and banks created mortgage-backed securities. ... When the Federal Reserve raised the federal funds rate, it sent adjustable mortgage interest rates skyrocketing. As a result, home prices plummeted, and borrowers defaulted

What is a buyer who does not have enough cash to buy a home?

The buyers who do not have enough cash in their hand to buy a new home. Usually opt for mortgage loans. There are several options available in the market for mortgage loans , so the buyers decide what suits them the best as per their situation

Does interest go up or down on an adjustable rate mortgage?

On the other hand, the interest may go up and down in adjustable rate mortgage. Unlike, fixed rate mortgage many ARM will start at a lower interest rate.