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2 years ago

What is a collateral

Business

2 answers:

Vlad [161]2 years ago

7 0

NOUN

something pledged as security for repayment of a loan, to be forfeited in the event of a default

ADJECTIVE

additional but subordinate; secondary.

True [87]2 years ago

4 0

Answer:

Security for the repayment of the loan.

Explanation:

Collateral is simply called the security that is held by the lender to the person who takes the loan for they risk free payment of the loan back. In simple words, we can say that a collateral is something which is held as a guarantee by the lender till the payment of loan that he gave to an individual or the company. For example people usually put their Houses, plots, shops, their jewelry, etc, as a collateral in order to get loan from banks or other financial institutions. This collateral servers as a guarantee from the person who is taking the loan. If the person fails to give back the loan, the bank or financial institution will be liable to sell this collateral and get their loan back.

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Answer:

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Explanation:

Given:

Period= 30 years, Loan amount= $200,000,

Payments- Monthly,

Teaser rate for first 2 years = 4%,

Annual payment cap=5%, Composite rate on reset date= 6%

Annual rate for 2 years =4%

Monthly rate will be 4/12 = 0.3333% = 0.003333

n=30years=360 months

Monthly payment for first 2 years = $Pr(1+r)^n/((1+r)^n-1)$

= $200000\times0.0033\times1.033^{360}/(1.033^{360}-1)$

= 954.83

or by Excel function = PMT(0.003333,360,200000,0) = 954.83

Loan balance after 2 years = PV(0.003333,336,-954.83,0) = 192,812.36 or

Balance= $A(1+r)^n-PMT\times(1+r)^n-1)/i$

= $200000(1.0033)^{24}-954.83(1+0.003333)^{24}-1)/0.003333$

= 192,812.36

Composite rate is 6% but payment is capped at 5%. So new payment from year 3 is 954.83×1.05=1002.57=1003

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What is plagiarism? a. Stealing a digital image through a file-sharing network. c. Claiming someone else's written work as your

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3 years ago

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Why are entrepreneurs considered both spark plugs and catalysts of the free enterprise economy?

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2 years ago

Up in Smoke Tobacco Shops' bond carries a 9 percent coupon, pays interest semiannually, and has 10 years to maturity. What is th

lara [203]

Answer:

10%

Explanation:

Since the bond is selling at a discount, it means that the coupon rate is blow the market rate, so the actual rate must be higher. Since there is only one option with an interest rate above 9%, we must check to see if it works.

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we must determine the PV of the 20 coupons paid and the face value at maturity.

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