1. Tom Burke bought a home in Virginia for $125,000. He puts down 40% and obtains a mortage for 30 years at 11%. If Tom could have obtained a 1% reduction from 11% to 10% in the mortgage rate, by how much would his monthly payment be reduced?
2. What do entrepreneurs with little capital most often do to finance their businesses?
3. The expected return on the market portfolio is 11.6%, while treasury bills are yielding 3.7%. What expected return is predicted by the CAPM for a stock with a beta of 1.5?