1. Which general statement regarding a $210,000 fixed rate mortgage for 20 years would apply to ignoring taxes and any transaction costs?
a) The monthly loan payments would remain constant for the life of the loan.
b) One-third of the interest would be pad at the end of 5 years.
c) Half way through repayment of the loan, the monthly payments towards the principle will be less for the remaining years of the loan.
d) The interest payments would be greater in the first 5 years and level off after that.
2. One benefit of limited liability is that owners' risks are lowered which in turn increases a firm's value.
a) True
b) False