1. If a cake dealer offers to sell you an oven and finance it for 60 months with monthly payments of $429 and the market rate for loans is 6.6%, how much is the cake dealer charging you for the oven? (Round to the nearest dollar)
2. Suppose a single man has an annual income of $84,000. Interest rates are at 4% for a 30 year LPM (factor = .0047742), lenders require a down payment of 5%, PMI costs .78% of the OLB (divide by 12 for monthly payment) and insurance and taxes amount to 3.2% of the home value annually. He pays $1,550 per month to cover other debt obligations. Using a back ratio (DTI ratio) of 43%, he can afford a home priced at:
A. $249,600
B. $210,278
C. $185,936
D. $179,809
E. $129,171
2. A beta coefficient reflects the response of a security’s return to:
an unsystematic risk.
idiosyncratic risk.
a systematic risk.
the risk-free rate.
the market rate of return.