1. You have just purchased a new warehouse. To finance the purchase, you’re arranged for a 39- year mortgage loan for 75 percent of the $3,290,000 purchase price. The monthly payment on this loan will be $16,200. What is the APR on this loan? What is the EAR on this loan?
2. You buy a 1-year put option and sell the corresponding call option. Both options are written on 1 share of IBM stock and both have an exercise price of $90. In addition, you also buy 1 share of IBM stock. What is the net payoff you receive from this 3-asset portfolio if at expiration the price of each share of IBM stock is $33?