Suppose you decide to take out the $1 million 30-year fixed rate mortgage at 4%. How much
Question:
Suppose you decide to take out the $1 million 30-year fixed rate mortgage at 4%.
How much money money will you pay in interest in the 181st payment (units: dollars)?
The current 6-month short rate sits at 3% per year. The mean growth rate of the short rate is 3%; the volatility of short rate growth is 25%.
What would be the 6-month short rate in the up state at time t=0.5 (units: % per year)?
The current 6-month short rate sits at 3% per year. The mean growth rate of the short rate is 3%; the volatility of short rate growth is 25%.
What would be the 6-month short rate in the down state at time t=0.5 (units: % per year)?
The current 6-month short rate sits at 3% per year. The mean growth rate of the short rate is 3%; the volatility of short rate growth is 25%.
Consider a 1-year floater indexed to the short rate with a face value of $100.
What is the payout to this floater at time t=0.5 (units: dollars)?
The current 6-month short rate sits at 3% per year. The mean growth rate of the short rate is 3%; the volatility of short rate growth is 25%.
Consider a 1-year floater indexed to the short rate with a face value of $100.
What is the payout to this floater at time t=1.0 if the up state is realized at time t=0.5 (units: dollars)?
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba