12. If you borrow a loan of $1,000,000 from a friend at 6% for 10 years, and you make a $6,000 monthly payment back to her in the 10 years. What is your loan balance at the end of 10 years? (A) Zero (B) $836,121 [PV= -$1,000,000, n=10*12, I%=6/12, PMT=$6,000, then FV=$836,121] (C) $971,569 (D) $1,000,000 13. Hang Seng Bank (HSB) offers a fully-amortizing loan of $2,000,000 to Albert for 20 years at a fixed interest rate of 5%. If HSB has underestimated inflation rate by 1% when it set the interest rate, what is the financial loss suffered by HSB? Answer Box for Section A: 1. C 2. A 3. D 4. B 5. C 6. C 7. B 8. A 9. C 10. D 11. D 12. B 13. C Section B: Structured Questions(34 marks) Question 1 (12 marks) Compare the following terms: (a) Personal estate and real estate (4 marks) Personal estate (Personalty) includes all tangible and intangible things that are movable (e.g. cars, shares of stock, patent, etc.) Real estate (Realty) means land and all things permanently attached. It always refers to immovable things like buildings. (b) Notes and mortgages (4 marks) A note admits the debt and generally makes the borrower personally liable for the obligation. A mortgage is usually a separate document which pledges the designated property as security for the debt.