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Unformatted text preview: discount rate (opportunity cost) exceeds the mortgage rate. 6. Adjustable rate mortgages (ARMs) commonly have all of the following except: e) Inflation index 7. The annual percentage rate (APR) was created by: a) The Truth-in-Lending Act of 1968 8. On a level-payment loan with 12 years (144 payments) remaining, at an interest rate of 9 percent, and with a payment of $1,000, the balance is: c) 87,871 1 Chapter 15: Mortgage Calculations and Decisions 9. On the following loan, what is the best estimate of the effective borrowing cost if the loan is prepaid in six years? d) 8.7 percent 10. Lender’s yield differs from effective borrowing cost (EBC) because: c) EBC accounts for additional up-front expenses that lender’s yield does not. 2 Loan amount: $100,000 Interest rate: 7 percent Term: 180 months Up-front costs: 7% of loan amount...
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- Spring '10
- Annual Percentage Rate, Mortgage loan, Professor Clements, identical 15-year loan