Homework answers / question archive / 1)If a homeowner defaults on their mortgage loan, under what circumstances would the mortgage lender agree to a short sale? 2)You are currently maintaining a conventional 30-year mortgage loan with your bank and the annual interest rate is 8%

1)If a homeowner defaults on their mortgage loan, under what circumstances would the mortgage lender agree to a short sale? 2)You are currently maintaining a conventional 30-year mortgage loan with your bank and the annual interest rate is 8%

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1)If a homeowner defaults on their mortgage loan, under what circumstances would the mortgage lender agree to a short sale?

2)You are currently maintaining a conventional 30-year mortgage loan with your bank and the annual interest rate is 8%. Your bank manager now offers you a 30-year adjustable rate mortgage (ARM) at 2% but the rate will be adjusted once each year. Evaluate your current mortgage and the new option in terms of the following: Risk that the monthly payment will change over the next 30 years, and, interest rate risk. Explain your understanding on the risk involved in this question and its impact on both financial institutions and customers.

3)Explain how each of the given factors may affect bond demand and supply during a period of robust economic growth: Wealth, Default risk, and General business conditions.

4)A bond has a PAR value of $1,000 with a 12% coupon and a 4% semi-annually compounded yield. What is

the bond’s duration given that there are two years left to maturity?