1. Write an expression showing the relationship among the amount borrowed on a fixed-payment loan, the payments on the loan, and the yield to maturity.
2. Assume that the interest rate is 10%. Briefly explain whether you would prefer to receive (a) $75 one year from now, (b) $85 two years from now, or (c) $90 three years from now?
Would your answer change if the interest rate is 20%?