Answer:
prime mortgage insurance (PMI) is an insurance that mortgage lenders require when borrowers make a down payment of less than 20% of the purchase price of the house.
We are not given any table, so I looked in the internet to find one that can be used as an example:
outstanding principal = $142,000 - 17% = $117,860
- mortgage term equal or less than 15 years
- base loan amount is less than $625,000
- loan to value ratio = 1 - down payment = 83%, which means it is ≤ 90%
- bps = 45
total yearly premium = principal x bps = $117,860 x 0.0045 = $530.47
monthly PMI payment = $530.47 / 12 months = $44.20
Answer: 5%
Explanation:
Use an Excel worksheet to determine the internal rate of return:
Investment or Cost = $100,000. This will be negative in the computation.
Cashflow = $5,000 per year
Fourth year cashflow = 5,000 + liquidation value = $105,000
IRR = 5%
Instead of living in a service economy, we now live in a(n) Mixed economy.
Explanation:
- A mixed economy consist of both private and government /state owned economies which share control of owning, making, selling, and exchanging good in the country.
- U.S. and France are two example of Mixed Economy
Payments is the correct word for the blank
The PV gain is 0.56 for an arbitrageur.
<u>Explanation</u>:
PV of the strike price is 60e-(12 
4/12) = $57.65
PV of dividend is 0.80e-(12 1/12) = $0.79
where 5 < 64 - 57.65 - 0.79
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The arbitrageur should buy the option and short stock, this above condition is missing in 10.8 condition.
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The arbitrageur ought to contribute $ 0.79 of this at 12% for one month to deliver a profit of $0.80 in one month and the remaining $ 58.21 is put resources into four months in 12%, without considering the benefit that figures it out.
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If the stock price declines below $ 60 of every four months, the arbitrageur loses $ 5 spent on the choice however gains on an extremely short position, the arbitrageur shorts when the stock price is in $ 64 and deliver profit with PV of $ 0.79 and closes the short position when the stock price is $ 60 or less because $ 57.65 is the PV of $ 60 the short position generates at least 64-57.65-0.79 = 5.56
The PV gain at least 5.56-5.00
0.56
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If the stock price is above $60 at option when exercised and arbitrageur buys stock for $60 for four months and closes the short option. The PV of 60 is $57.65 and the dividend is 0.79 and gain in a short position and exercise the short option it results in 64-57.65-0.79= 5.56 and gains on PV is 5.56-5.0 = 0.56
