305 Ch. 14-19
A cash inflow or outflow that is forecasted to occur once over the analysis period, should be entered in the _________ register. Multiple choice question. I PMT FV PV
FV
A fixed (level) cash inflow or outflow (ex., monthly or annually) should be entered in the Multiple choice question. PV register I register PMT register FV register
FV register
Which of the following describes an early payment mortgage? Multiple choice question. In any month, the borrower makes a principal payment that is larger than the scheduled principal payment The borrower pays off the loan completely with one extra principal payment prior to loan maturity. The borrower makes her monthly payment a few days before the due date.
In any month, the borrower makes a principal payment that is larger than the scheduled principal payment
Which of the following mortgages typically places more of the interest rate risk to the lender? Multiple choice question. ARMs with rate caps LPMs early payment mortgages ARMs without rate caps
LPMs
Under the Real Estate Settlement and Procedures Act (RESPA), which of the following costs should be included in the EBC calculation? Multiple select question. Buyer's title insurance Loan origination fees Appraisal fee Discount points
Loan origination fees Appraisal fee Discount points
Nancy is a rational, financially unconstrained borrower. She is looking for a $100,000 LPM mortgage to finance her purchase of a beach house. Bank of America offers her two options, one with 15-year term and one with a 30-year loan term. Assume no up-front financing costs for both loans. Also assume Nancy would discount all future loan payments at the contract interest rate. Which loan is the least costly and therefore the better choice? Multiple choice question. 30-year loan Nancy is always indifferent between the two options. Assuming the same interest rate for both loans, Nancy is indifferent between the two options. 15-year loan
Nancy is always indifferent between the two options.
Which of the following type of real estate investment is the generally considered the least risky? Multiple choice question. "Raw" land held for future development Office properties Hospitality properties Properties net leased to a high quality tenant
Properties net leased to a high quality tenant
Which of the following characteristics describe(s) the type of properties that are the focus of the quarterly RERC survey? Multiple select question. Located in non-major metropolitan areas Relatively new Market values greater than $10 million Not fully leased
Relatively new Market values greater than $10 million
Arbitrage means taking advantage of temporary differences in market prices to make a profit. Assume two real estate companies, A and B, both operate in New York area and focus on office properties. You have determined that Company A's shares have an intrinsic value of $20 per share but are trading at $22 per share, while Company B's shares are worth $25 per share but are trading at $22 per share. What would a rational investor (or an arbitrageur) do to take advantage of this price difference (no short-selling constraint and transaction fee)? Multiple choice question. Buy company A's shares only. Sell short company B's shares, buy the same number of company A's shares. Buy company B's shares only. Sell short company A's shares, buy the same number of company B's shares.
Sell short company A's shares, buy the same number of company B's shares.
Which of the following statements is correct? Multiple choice question. The cash flows for an ordinary annuity all occur at the beginning of each period. The cash flows for an annuity due must all occur at the beginning of each period. The cash flows for an annuity may vary from period to period, but they must occur at regular intervals, such as once a year or once a month. If an uneven cash flow stream has regular intervals, such as once a year, then it is an annuity.
The cash flows for an annuity due must all occur at the beginning of each period.
Which of the following characteristics are associated with fully amortizing, level-payment mortgages? Multiple choice question. The mortgage interest rate varies over time. At maturity, the loan balance is non-zero. The periodic payments are constant over time.
The periodic payments are constant over time.
Which of the following statements is correct? Multiple choice question. Timelines are not useful for visualizing complex problems prior to doing actual calculations. A timeline is not meaningful unless all cash flows occur annually. Timelines can only be constructed for annuities where the payments occur at the end of the periods, i.e., for ordinary annuities. Timelines can be constructed to deal with situations where some of the cash flows occur annually but others occur quarterly.
Timelines can be constructed to deal with situations where some of the cash flows occur annually but others occur quarterly.
Which of the following investments is generally considered the least risky? Multiple choice question. U.S. Treasury securities "Raw" land held for development Technology stocks Office properties
U.S. Treasury securities
The interest rate on ARMs originated by federally insured U.S. banks must be tied to a public index that is not controlled by the lender. The most common ARM indexes in the home loan market track interest rates on Multiple choice question. corporate bonds global debt instruments US Treasury securities the debt lenders use to finance mortgages
US Treasury securities
Assume an investment is expected to be worth $10,000 at the end of ten years and that you expect to earn 10% (annually) on investments of similar risk. The present value of this investment opportunity to you is therefore $3,855. Which of the following is true? Multiple choice question. If you pay $5,000 today for this investment, you will earn more than a 10% return You're happy to pay $3,000 for this investment today. If you invested $3,000 for 10 yrs. at 10% you wouldn't accumulate $10,000 at the end of 10 yrs. You're happy to pay $5,000 for this investment today. If you invested $5,000 for 10 yrs at 10% you wouldn't accumulate $10,000 at the end of 10 yrs.
You're happy to pay $3,000 for this investment today. If you invested $3,000 for 10 yrs. at 10% you wouldn't accumulate $10,000 at the end of 10 yrs.
The balance of a partially amortizing mortgage loan at loan maturity is not zero and is typically satisfied with: Multiple choice question. a balloon payment an up-front payment jumbo payment an early payment
a balloon payment
The most common type of single-family home mortgage loan is? Multiple choice question. a fixed-rate, level-payment loan that does not fully amortize over the loan term. an adjustable rate loan that does not fully amortize over the loan term. a fixed-rate, level-payment, fully amortizing loan. an adjustable rate, fully amortizing loan.
a fixed-rate, level-payment, fully amortizing loan.
Which of the following loan characteristics must be considered when calculating the EBCs of two ARM products? Multiple choice question. initial adjustment period initial interest rate margin all of the characteristics must be considered rate caps
all of the characteristics must be considered
When you invest in a risky investment, you should expect to earn Multiple choice question. at least what you could earn on an alternative investment of equal risk at most what you could earn on a risky investment of similar risk what you earned on the last investment of similar risk
at least what you could earn on an alternative investment of equal risk
A primary reason why ARM interest rates are typically lower than those on otherwise comparable LPMs is because Multiple choice question. lenders are exposed to more prepayment risk with ARMs lenders have to keep ARM rates low to attract borrowers lenders are exposed to more interest rate risk with ARMs borrowers and lenders share the interest rate
borrowers and lenders share the interest rate
The increase in the value of a one time (lump sum) investment that grows at a given rate will be greatest with __________ compounding. Multiple choice question. monthly quarterly annual daily
daily
As the opportunity cost of waiting for future cash flows increases, the present value of those future cash flows ___________. Multiple choice question. remains the same increases decreases
decreases
Holding constant the contract interest rate and the number of discount points, the borrower's effective borrowing cost ____________ as the expected number of years the loan is outstanding ___________. Multiple choice question. increases, increases increases, decreases decreases, decreases decreases, increases
decreases, increases
Opportunity cost is the return the investor is forgoing on an alternative investment of _____ risk in order to invest in the current opportunity.
equal
True or false: All else the same, a change in the discount rate affects the present value of a 15-year loan more than a 30-year loan.
false
True or false: An annuity due is defined as a fixed amount of money paid or received at the end of every period.
false
True or false: At the maturity of a partially amortizing loan, the borrower must sell the property and use the sale proceeds to pay of the lender.
false
True or false: Federal law requires that home loans have 30-year or 15-year terms/maturities.
false
True or false: An ordinary annuity is defined as a fixed amount of money paid or received at the beginning of every period.
false, it's the end
An investment is expected to be wealth increasing if the NPV is ________ zero. Multiple choice question. less than equal to greater than
greater than
According to the RERC data displayed in Exhibit 14-2, mean required rates of return on high quality real estate investments Multiple choice question. have been trending upward since 2009 have been trending downward since 2009 have shown no clear pattern since 2009
have been trending downward since 2009
The ARM market was first developed in the early 1980s in response to ________ interest rates. Multiple choice question. high and stable low and volatile high and volatile low and stable
high and volatile
A borrower should consider making extra principal payments on a level-payment mortgage (assuming they are allowed) Multiple choice question. if the dollar amount of those extra payments could be invested at a higher rate than the interest rate on the loan if the dollar amount of those extra payments could not be invested at a higher return than the interest rate on the loan. if the borrower believes interest rates are going to rise.
if the dollar amount of those extra payments could not be invested at a higher return than the interest rate on the loan.
The compounding of interest causes the value of an investment to grow at an _____ rate.
increasing
With an interest-only mortgage, the amount of interest paid each period ______ over time. Multiple choice question. increases is constant decreases
is constant
The "total" yield on an investment opportunity Multiple choice question. is equal to current yield plus the appreciation yield ignores the periodic "dividend" generated by the investment should not be confused with the IRR
is equal to current yield plus the appreciation yield
The maximum amount the lender should be willing to lend today should be equal to the ________ of the expected mortgage payments, discounted at the _____________. Multiple choice question. present value, contract interest rate present value, lender's opportunity cost future value, lender's opportunity cost
present value, lender's opportunity cost
In competitive mortgage markets, lenders must _________ the contract interest rate in exchange for _________ up-front financing costs such as discount points. Multiple choice question. reduce, more increase, more increase, fewer reduce, fewer
reduce, more
Future benefits are discounted because of ________. tax liabilities risk opportunity cost compounding
risk opportunity cost
If the (going-in) IRR exceeds the investor's required rate of return, the investor Multiple choice question. should reject the investment does not have enough information to determine if the investment will enhance wealth should accept the investment if she has the required equity investment available
should accept the investment if she has the required equity investment available
Cost associated with obtaining ownership of the property Multiple choice question. should be included in the EBC calculation only if they are paid to third-party service providers should not be included in the EBC calculation should be included in the EBC calculation
should not be included in the EBC calculation
On a fixed-rate, level payment mortgage, the present value of the remaining payments at any point in time is equal to Multiple choice question. the present value of the remaining payments discounted at the borrower's opportunity cost (discount rate) the present value of the remaining payments discounted at the lender's opportunity cost (discount rate) the present value of the remaining payments discounted at the contract rate of interest
the present value of the remaining payments discounted at the contract rate of interest
As the perceived risk of expected future cash flows increases, Multiple choice question. the required (expected) return should increase the actual (realized) return will increase the required (expected) return should decrease
the required (expected) return should increase
All else equal, an increase in up-front financing costs has a larger impact on the effective borrowing cost Multiple choice question. the larger is the loan amount the longer is the expected holding period the shorter is the expected holding period
the shorter is the expected holding period
The expected (required) IRR of an investment is composed of a risk-free rate and the required risk premium. The risk-free component is compensation for Multiple choice question. the time value of money idiosyncratic risk default risk
the time value of money
In addition to discount points, home mortgage borrowers usually pay which of the following as up-front financing costs? Multiple select question. title insurance brokerage commissions a loan origination fee loan application and document preparation fee
title insurance a loan origination fee loan application and document preparation fee
In the real estate appraisal business, the IRR is often referred to as the ________. Multiple choice question. appreciation yield current yield dividend yield total yield
total yield
True or false: Borrowers who expect to keep the loan outstanding for a long period of time should generally consider paying discount points to buy down the interest rate.
true
True or false: The U.S. Federal Reserve ("The Fed") periodically increase interest rates when the risk of overheated economy is perceived. Rate hikes are viewed as bad for real estate investors because the present value of future cash flows is inversely related to the magnitude of the interest rate used for discounting.
true
True or false: borrowers typically get to choose the number of discount points they pay but not the loan origination fee.
true
Holding the contract interest rate constant, the effective borrowing cost increases as _____________. Multiple choice question. up-front financing costs increase the borrower's holding period increases the borrower's equity down payment increases
up-front financing costs increase
Timelines are useful because they allow us to _____ the time pattern of money returns.
visualize
Which of the following type of real estate investment is typically considered the most risky? Multiple choice question. Office properties under development Existing apartment properties "Raw" land held for development Existing office properties
"Raw" land held for development
Assume you have obtained an interest-only mortgage. The loan amount is $300,000, payments will be made monthly, the (annual) interest rate is 4%, and the loan term is 30 years. What is the monthly payment? Multiple choice question. $1,000 $1,432.25 $1,200 $12,000
$1,000
Suppose you are buying your first condo for $300,000 and you will make a $60,000 (equity) down payment. You have arranged to finance the remainder (loan amount=$240,000) with a 30-year, monthly payment, fully amortized mortgage at a 6% annual interest rate. What will be your monthly payment? Multiple choice question. $1,438.92 $1,505.91 $1,341.57 $1,462.77
$1,438.92
Assume that a piece of land is currently valued at $50,000. If this piece of land is expected to appreciate at an annual rate of 5% per year for the next 20 years, how much will the land be worth at the end of 20 years? Multiple choice question. $132,665 $123,861 $100,899 $123,860
$132,665
Suppose a U.S. Treasury bond will pay a lump sum of $3,000 five years from now. If the current required rate of return on this 5-year treasury bonds is 4.5%, how much is the bond worth today? Multiple choice question. $2,150.32 $2,361.81 $1,928.78 $2,407.35
$2,407.35
What is the PV of an ordinary annuity (rounded to the nearest dollar) with 10 annual payments of $2,700 if the appropriate interest rate is 5.5%? Multiple choice question. $18,367 $21,435 $19,334 $20,352
$20,352
An apartment property has a projected net income of $15,000 per year, and its projected net sales price after five years is $300,000. Considering its risk, you require a 14% annual return on this investment. How much would you be willing to pay for it today? Multiple choice question. $199,435.35 $207,306.81 $214,516.28 $194,235.09
$207,306.81
An office building has a projected net income of $45,000 per year, and its projected net sales price after five years is $250,000. Considering its risk, you require a 16% annual return on this investment. How much would you be willing to pay for it? Multiple choice question. $237,326.81 $254,521.25 $239,295.12 $266,371.47
$266,371.47
Kathy currently has $15,000. How much will she have after 8 years if she leaves it invested at 8.5% with annual compounding? Multiple choice question. $20,583.32 $21,667,11 $22,807.01 $28,809.07
$28,809.07
You want to buy a new sports car 5 years from now, and you plan to save $5,800 per year, beginning one year from today. You will deposit your savings in an account that pays 6% interest. How much will you have just after you make the 5th deposit, 5 years from now? Multiple choice question. $32,695 $35,260 $34,657 $36,063
$32,695
You want to buy a new sports car 5 years from now, and you plan to save $5,800 per year, beginning one year from today. You will deposit your savings in an account that pays 6% interest. How much will you have just after you make the 5th deposit, 5 years from now? Multiple choice question. $32,695 $36,063 $34,657 $35,260
$32,695
The average annual return for the S&P 500 since its inception in 1928 through 2014 is approximately 10%. Assume a person invested $1.00 in the S&P 500 Index every year since the end of 1928. It would have grown into $ by the end of 2014
$36,278.66
Suppose a firm expects to receive the following cash flows over the next four years: Year 1: $1,200 Year 2: $1,200 Year 3: $1,500 Year 4: $1,000 Discount rate=10% What is the present value of this uneven cash flow stream? (round to the nearest cent) Multiple choice question. $3892.63 $4900.00 $4281.89 $3921.12
$3892.63
Jake has just taken out a 15-year mortgage for $80,000 at an (annual) interest rate of 6% with equal end-of-month payments. How much interest will he pay in the second year of the mortgage? (round to the nearest cent) Multiple choice question. $9,206.09 $6,995.96 $4,498.40 $3,602.63
$4,498.40
Joe borrows $80,000 at 6% for 30 years with monthly amortization. Assume that the mortgage payment is made on the last day of the month. How much interest will he pay in the first year of the mortgage? (round to the nearest cent) Multiple choice question. $4,773.28 $4,371.20 $4,910.03 $400.00
$4,773.28
Noah wants to quit his job and return to school for a MBA degree at the end of two years. He plans to save and deposit $2,000 per month, beginning immediately from the beginning of first month. He will make monthly deposits in an account that pays 3% nominal interest (0.25% monthly). Under these assumptions, how much will he have accumulated at the end of two years? Multiple choice question. $49,529 $49,405 $45,645 $44,424
$49,529
Assuming a 7% discount rate, the present value of the right to receive $10,000 at the end of 10 years is _________. If you must wait until the end of year 11 to receive the $10,000, the present value decreases by ________. Multiple choice question. $3,855.43, $359.49 $5,083.49, $332.56 $4,750.93, $310.81
$5,083.49, $332.56
Ben Franklin invested 1,000 pounds (about $50,000 today) at the beginning of the year 1785. Assume the average annual return he earned from 1785 to the end of 1984 (200 years) was 2.4%. How much was Franklin's investment worth at the end of 1984? (Round your answer to the nearest cent). Multiple choice question. $5,211,421.41 $5,740,653.48 $4,978,335.15 $6,109,451.03
$5,740,653.48
Paul wants to buy a new condo six years from now and plans to save $8,000 per year for the down payment, beginning one year from today. He will invest in a fund that offers an 8% return. How much will Paul have accumulated after he makes the 6th deposit, 6 years from now? Multiple choice question. $65,260 $58,687 $56,063 $54,657
$58,687
Mary currently has $5,000. How much will she have after 6 years if she leaves it invested at 5.5% with annual compounding? Multiple choice question. $7,239.89 $6,894.21 $5,911.01 $6,223.22
$6,894.21
Assume a $100,000 ARM with 30-year (monthly payments) maturity and an initial rate of 6%. The interest rates is to remain fixed for the first 5 years. If the ARM rate rises to 6.5% at the beginning of year 6 (end of year 5), what is the new payment in year 6? (round to the nearest cent) Multiple choice question. $631.63 $599.55 $628.31 $629.88
$628.31
Assume a $100,000 ARM with 30-year (monthly payments) maturity and an initial rate of 6%. The interest rates remains fixed at 6% for the first three years. If the ARM rate rises to 6.5% at the beginning of year 4 (end of year 3), what is the new payment in year 4? (round to the nearest cent) Multiple choice question. $631.63 $629.88 $630.64 $599.55
$629.88
You just inherited some money, and a broker offers to sell you an annuity that pays $5,200 at the beginning of each year for 20 years. You could earn 5.5% on your money in other investments with equal risk. What is the most you should pay for the annuity today? Multiple choice question. $65,560 $50,953 $56,936 $62,142
$65,560
An apartment requires an initial investment of $200,000 has a projected net income of $15,000 per year for five years. Its projected net sales price after five years is $300,000. Considering its risk, you require a 14% annual return on investments of this type/risk. What is the NPV of this project? Multiple choice question. $7,766.11 $7,143.35 $7,306.81 $7,452.09
$7,306.81
You sold a car and accepted a note (promise to pay) from the buyer that obligates the buyer to pay you $1,000 at the end of year one, $2,000 at the end of year two, $2,000 in year three, $2,000 in year four, and $2,000 at the end of year five. What was the effective price you received for the car, assuming an interest rate of 5.0%? (Round your answer to the nearest whole number.) Multiple choice question. $6,446 $6,277 $5,987 $7,707
$7,707
Last year, Harvey Realty Inc.'s sales were $450 million. If sales grow at 12% per year, how large (in millions) will they be 5 years later? Multiple choice question. $786.05 $771.74 $793.05 $816.16
$793.05
Equity Real Estate Investment Trusts are REITs that invest in and operate commercial properties. From 2000 to 2006, equity REITs delivered an average annualized return of 22.9%. John invested $5,000 in equity REITs at the beginning of every year from 2000 to 2006. How much was his investment worth at the end of 2006? Multiple choice question. $83,409.15 $85,785.25 $86,810.74 $70,635.27
$86,810.74
Assume a $100,000 monthly payment mortgage loan with 30-year term. The lender is charging an annual interest rate of 10% and two discount points at origination. Up-front financing costs paid to third parties total $1,000. Assuming the mortgage is held outstanding by the borrower for the full 30 years, the lender's yield is ________ percent. (round to two decimal places) Multiple choice question. 12.15 10.24 11.43 10.37
10.24
Assume a $100,000 monthly payment mortgage loan with 30-year term. The lender is charging an annual interest rate of 10% and two discount points at origination. Up-front financing costs paid to third parties total $1,000. Assuming the mortgage is held for five years and then prepaid, what is the EBC on this mortgage? Multiple choice question. 10.37% 10.00% 10.79% 10.52%
10.79%
At any point in time, which of the following ARM products typically has the highest effective borrowing cost, all else equal? Multiple choice question. 5/1 ARMs 7/1 ARMs 10/1 ARMs 3/1 ARMs
10/1 arms
Educational Realty Corporation is considering a student housing investment which is expected to produce $41,000 at the end of every year for three years. If the company invests $100,000 today, what is the IRR of this investment? Multiple choice question. 11.11% 12.01% 11.25% 10.00%
11.11%
Given the following information, calculate the effective borrowing cost. Loan amount: $300,000, Term: 30 years, Interest rate: 12%, Discount points: 2, Other up-front costs to close the mortgage not paid to the lender: $4,000. Assume monthly payments and that the borrower does not prepay the loan prior to maturity. Multiple choice question. 12.27% 12.46% 12.60% 12.00%
12.46%
Given the following information, calculate the effective borrowing cost. Loan amount: $300,000, Term: 30 years, Interest rate: 12%, Discount points: 2, Other up-front costs to close the mortgage not paid to the lender: $4,000. Assume monthly payments and that the borrower does not prepay the loan prior to maturity. Multiple choice question. 12.46% 12.60% 12.27% 12.00%
12.46%
Tom is developing an apartment building in downtown Boston. He requires an 20% going-in IRR on equity on the expected 20-year investment. The current 20-year Treasury bond (T-bond) yield is 3%. What is the risk premium on Tom's investment? Multiple choice question. 20% 6% 15% 17%
17%
Maxwell Realty Corporation is considering an apartment investment that is expected to produce an after-tax cash flow of $2,000 at the end of year one, $2,025 in year two, $2,050 in year three, $2,075 in year four, and $2,100 in year five. If the company invests $9,500 today, what is the IRR of this investment? Multiple choice question. 2.65% 2.82% 2.57% 2.31%
2.57%
Debbie qualifies to borrow $250,000 on a mortgage at 6% for 30 years with monthly payments. Based on this information, determine the remaining loan balance at at the end of year three (round to the nearest cent). Multiple choice question. 251241.34 240210.18 240280.71 234251.45
240210.18
A borrower is choosing between a 15-year $100,000 mortgage and a 30-year $100,000 mortgage. Assume both would have the same contract interest rate and no up-front financing costs would be associated with either loan. If both loans remain outstanding until they are fully amortized, on which loan would more interest be paid? Multiple choice question. The 30-year mortgage The 15-year mortgage
30
________ year mortgages are a common form of LPM, but _________ year mortgages are also popular. Multiple choice question. 30, 10 15, 5 15, 30 30, 15
30, 15
The average annual return for the S&P 500 since its inception in 1928 through 2014 is approximately 10%. assume a person invested $1.00 in S&P 500 Index in the end of 1928. It would have grown to $ in the end of 2014 (Round your answer to the nearest cent).
3628.87
The ______ ARM has become the most popular ARM product in recent years. Multiple choice question. 3/1 1/1 7/1 5/1
5/1
A loan for $250,000 is made for 15 years at 6% annual interest. The lender and borrower agree that payments will be made monthly. Assuming three discount points are charged by the lender and the borrower will keep the loan outstanding to maturity, what will be the lender's yield? Multiple choice question. 6.70% 6.00% 6.48% 0.54%
6.48%
Assume an industrial building can be purchased for $1,500,000 today. The investment is expected to yield cash flows of $80,000 for each of the next five years (with the cash flows occurring at the end of each year), and can be sold at the end of the fifth year for $1,625,000. Calculate the internal rate of return (IRR) on this investment. Multiple choice question. 9.20% 3.14% 10.37% 6.78%
6.78%
For how many years will the contract interest rate be fixed with a 7/1 adjustable-rate mortgage (ARM)? Multiple choice question. One year Six years Seven years Five years
7
For a $300,000 loan at a 12% annual interest rate with a 30-year amortization period, how many discount points would the lender have to charge to increase the lenders' yield to 13%? Assume monthly payments and no prepayment of the mortgage by the borrower prior to maturity. Multiple choice question. 7.01 7.51 7.29 6.95
7.01
Assume a $250,000 mortgage loan with 15-year term. The lender is charging an annual interest rate of 8% and three discount points at origination. Other up-front financing costs paid to other service providers (i.e., not the lender) total $1,000. What is the lender's yield on the loan? Assume monthly payments and no prepayment prior to loan maturity.
8.51% (effective borrowing cost)
An investor originally paid $22,000 for a vacant lot 12 years ago. If the investor is able to sell the lot today for $63,000, what would be her annual rate of return (rounded to the nearest full percent)? Multiple choice question. 5% 11% 7% 9%
9%
Which of the following characteristics distinguish APR from EBC? (check all the correct answers) Multiple select question. APR assumes no prepayment. APR ignores appraisal fees. APR ignores origination fees. APR ignores discount points.
APR assumes no prepayment. APR ignores appraisal fees.
Consider a mortgage with discount points paid to the lender and some up-front financing costs paid to third parties. If prepayment prior to maturity occurs, which of the following will be the highest? Multiple choice question. EBC Lender's yield Rate caps APR
EBC
