14. You currently have a mortgage payment of $1,798 on an existing 7% mortgage w

Question

14. You currently have a mortgage payment of $1,798 on an existing 7% mortgage with a balance
of $200,000 and 15 years remaining. How many months would you need to live in the home
to obtain a simple payback (no MARR) on a new loan at 5% for 15 years with a refinance
charge of $2,500? (Pick the closest answer.)
a. 23
b. 18
c. 12
d. 26

15. You plan to buy a $200,000 home. The bank suggests two options: (1) 10% down payment,
$100/month PMI for the first 4 years, 30-year mortgage at 6% APR, and (2) 20% down
payment, 30-year mortgage at 5% APR. What is the difference in the total mortgage
payments (including interest, principal, and PMI) between these two options on the 30
th
payment?
a. $415
b. $215
c. $220
d. $320

16. You shorted a stock that was $80 per share at the time of your short. Six months later you
purchased the stock to cover your short for $100 per share. Assuming that you incurred $5
per share in total fees for your Short position, what was your total profit (per share) on this
transaction?
a. $15
b. $25
c. -$20
d. -$25

17. You purchased a stock (long) for $75 per share and held it for 3 years, when you sold it for
$95 per share. At the end of your 1st, 2nd and 3rd year, you earned $2 in dividends each.
Did you achieve an investment return in excess of 10% per year?
a. Yes
b. No
c. Cannot determine with the available information

Explanation / Answer

14) b

15) a

16) c

17) b

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